Creating Budgets That Stay on Track
Has your project ever come in over budget? If so, why did it run over? Was the issue something that was corrected quickly? And perhaps most importantly, do you know how to prevent it from happening again?
While project overruns are considered a regular occurrence by many in the construction industry, at Northpoint, we bring an uncommon level of expertise and insight to avoid this. Projects are always evolving; unexpected challenges arise and new information can change the course of construction. That’s why it’s so important to align your project with a team of professionals that not only have the industry expertise to establish a realistic budget, but anticipate the ups and downs of the ever-changing construction industry. The Northpoint Construction Team is comprised of experts who are adept at considering each component involved in a project, then devising the most effective construction plan and creating a realistic budget around these considerations.
Most often our clients come to us with floor plans, site plans or conceptual drawings and ask, “So, what’s it going to cost?” In order to develop a budget, we take into account a number of considerations. We’ve found that arming ourselves with each piece of the information outlined below is vital to creating realistic working budgets that stand up to the fluctuations associated with almost any construction project.
- Design/Consultant Fees
Most projects involve an architect and MEP engineer (HVAC, Electrical, Plumbing). Projects may also need structural and civil engineers, interior designers and LEED-certified consultants. Northpoint’s strong working relationships with these design professionals enables us to accurately gauge these costs into the budget.
- Utility Fees
By assessing the utilities in an existing building or the needs for a new building, we can better predict fees and adjust for required modifications where necessary, thus avoiding surprises after construction has begun.
- General Conditions/Requirements
Prior experience enables us to accurately budget for the labor, materials and miscellaneous costs involved in managing a project, including items such as dumpsters, temporary fencing and temporary office set up.
- Third Party Inspection/Testing
Inspections and testing costs can vary depending on the location of the project as well as lender and insurance requirements. Our experience in different locations and with different lenders and insurance carriers gives us the knowledge to establish reasonable allowances for these items in the budget.
- Site Logistics
We take into account considerations that are easy to overlook (but often affect the cost of a project) including parking costs, dumpster locations, temporary offices and stocking materials.
- Working Conditions/Hours
The type of working conditions a project requires can affect labor costs. This includes the rules and regulations of the building and local codes that may require overtime, additional supervision and/or work to take place at night/off hours.
- Estimating and Material Take Off (MTO)
We self-perform material take off services to ensure everything is accurately accounted for by our staff and subcontractors. This also allows us to get into the details of the project to work on constructability and scheduling.
- Subcontractor Input
Having good working relationships with subcontractors allows us to tap into their hands-on experience and provide realistic recommendations which help us accurately capture anticipated costs.
- Finishes and Equipment Selections
Lexus or Toyota? Considering the wide range of details like flooring, light fixtures and HVAC equipment that go into a project, it’s critical to identify the owner’s very specific design intent. Usually, the same look can be achieved with a variety of different products, so the budget needs to reflect each owner’s needs and preferences. Take for example, light fixtures: you can have the equivalent of a Lexus or a Toyota – both good products, just at different price points.
The contingency is used to help cover costs of unforeseen items or items that haven’t been designed yet. This is often a percentage added to the total cost of the project and based on how much information is provided (or not) at the time of creating the budget.
We pull together all of this information at the outset of each project to ensure every budget reflects the specifics of the project and meets the expectations of the owner. We do not provide budgets based on simple historical square foot costs. Each element of the project is quantified, and appropriate costs are assigned to the individual scopes of work.
Once we’ve amassed these considerations, a detailed proposal is provided and presented to ensure that all assumptions made during the process are clearly outlined. No one likes it when a project goes over budget – least of all us. We’ve found that taking all these considerations into account enables us to create a realistic budget that stays on track even in the face of the surprises that so often accompany any construction project.