Given the age of many homes in the Chicago metropolitan area, and the dynamics centered around housing and economics, construction projects can become very complex endeavors that require meticulous planning, efficient execution, and perhaps most importantly, accurate budgeting.
Unfortunately, poor construction budgeting (incorrectly low) can lead to a plethora of issues realized during the execution phase of the project, jeopardizing the success of a project. In this blog, I will delve into a few of the various pitfalls associated with inadequate budgeting in the construction industry and explore ways to overcome these challenges.
In the simplest terms, Scope Creep can be described as an unplanned change. Scope creep can and will influence the 3 main constraints of a project (Scope, Schedule, Budget)
One of the primary consequences of inaccurate construction budgeting is scope creep. As projects progress, changes may be required due to what some may identify as unforeseen circumstances but are more often associated with redevelopment improvements that are fundamental to remodeling an aged home. Without an accurate budget, these required changes can “creep” into any project, and lead to cost overruns and delays that could manifest into a devasting, and sometimes life-altering financial setback.
Have you ever heard that saying, “You get what you pay for”? Well, when working to execute a redevelopment project, especially on an older home, not only do you get what you pay for, but you also DON’T’ get what you DON’T pay for. In an attempt to stay within an inaccurately developed construction budget, there is a significant risk of compromising on the quality of both materials and workmanship. This can lead to immediate issues, or delayed problems that may not fully manifest until a few weeks or a few months AFTER your project has been completed. If a problem surfaces before the project is done, the project timeline could be delayed until the issue is corrected. If the issue occurs after the project is done, that means your life will be again disrupted for the issues to be corrected. And let’s not even talk about the possibility of not being able to locate the contractor who performed the work with low quality materials or workmanship…Which leads me to the next and final topic for this blog.
Unprofessional Service Providers
Some people are good at doing construction work. That is, they can install tile, hang drywall, paint, and a host of other construction activities. But in order to properly execute a construction project, the company you hire must be good at both construction, and the business of construction.
Commonly, when a construction service provider presents you with an inaccurate bid, usually inaccurately low, it’s because he/she doesn’t understand the cost of doing good business. In order for a construction firm to properly operate, it will have overhead costs. Overhead costs may include insurance, administration, vehicle, equipment, professional services, and a host of other fees required to function. Those costs are transferred proportionally to each job a contractor completes in a given year.
Unprofessional service providers typically don’t understand business, and this is translated into an inaccurately low budgets, which causes the very issues this blog seeks to identify.
Vaughn Harrison is an Engineering and Program Management Professional who has more than 15 years of experience in global organizations. He currently operates as a Consultant providing data-driven solutions to help businesses and governments (local and federal). In addition, because of his love for community and economic development, he also provides services as a Construction Consultant, helping various clients achieve construction and development-specific solutions. He is a stark individualist and thrives off of living his mantra, “Disrupting and Transforming the Status Quo”.