Whenever you’re working on a large commercial project, it’s important to plan out and organize a budget. Budgeting is crucial for meeting deadlines, and it also ensures client satisfaction since meeting budget goals or coming in under budget can save a client money while still delivering on expectations. Budgeting requires an eye for detail and regular review, but larger commercial project budgets tend to be more challenging to manage compared to smaller one-off projects. If you’re faced with the prospect of organizing a budget for a large commercial project and you’re feeling overwhelmed, below are some considerations:
Assign A Project Manager
When possible, assign a project manager to oversee the details of your project. A project manager is a person who is responsible for bringing together the various pieces of a large commercial project, and they can keep your budget organized and project deadlines on track by meeting with the various teams involved in a project. The project manager on a construction site, for example, will work with department heads to figure out the project’s needs for a construction materials budget. They will also work with the accounting department to present budgetary needs, and if a board of directors is in place at the construction company, the project manager will work with executives to present plans for approval.
Determine The Rate
When organizing a budget for a large commercial project, you also want to know the rate for the various costs involved. The rate is how costs are incurred over time, and knowing the rate of different costs is important because it allows a project manager to track expenses over time or plan expenses with deadlines in mind. Rates can change in the middle of a project as well, so this will need to be kept in mind. Some contractors, for example, will provide one rate for the first set number of hours on a project, but this rate can change once a particular threshold has been met.
Likewise, rates for materials can change based on economic factors that can affect supply and demand. If there is a shortage of a particular material that takes place in the middle of a project, you may need to make adjustments to a budget based on the current rate for the material. One way to avoid this is to obtain a quote for materials in writing before getting started on your project.
Keep A Separate Reserve
It’s important to include reserve funding in your budget for cost overruns, but this reserve needs to be kept separate from dedicated and general funds. The reserve should be included in the final budget for planning purposes, but as you begin to break down individual costs and phase or department costs, you don’t want to commingle the reserve funds. If you include the reserve funds within your overall budget, you may find that it’s too easy to end up dipping into these funds unnecessarily. This can lead to additional cost overruns, missed or extended deadlines and unhappy clients.
Factor In Quality Costs For Long-Term Planning
Quality costs involve the cost of an item or service and its expected performance over time. Materials of a lower quality often generate a lessened service life, meaning they may need to be repaired or replaced in time. This will end up costing more in the end, so if you want to get technical with budget planning, factor in the initial costs as well as the projected costs associated with quality. Not every budget requires this type of management, but some large projects that include many intricate pieces will.
Within quality cost budgeting, there are additional factors to be aware of and budget for. Quality assurance costs, for example, may need to be considered since in order to ensure a material or service is of a certain quality, someone may need to be hired and time may need to be taken to carry out inspections prior to and after work has been completed. Prevention costs should also be considered in the process as money may need to be spent to put measures in place to prevent failure or bolster quality.