Controlling Construction Costs in Times of Crisis

There is always some kind of crisis that will affect construction budgets; inflation, COVID-19, the rise of AI. Whatever the reason, it can be challenging to stay within your budget, even without these external factors. Therefore, construction projects must be safeguarded against any planned or unplanned budget constraints. No matter the economic climate, there are ways you can control your budget.

Start as you mean to go on: Estimates

There is very little room for error in the construction industry. Even the smallest mistake or inaccuracy could have mammoth consequences. That is why it is vital to outline everything clearly and accurately right from the start - before work on the project even begins. When you outline your project budget, actively step back and ask yourself, “Are the estimates accurate?”

It might sound obvious but it is the obvious steps that often lead to downfall; the oblivious confidence in a system that has never failed before. Meticulous attention to detail at this stage is critical, any mistakes made at this point could come back tenfold later in the project. Controlling your project’s budget will prove very difficult if you are dealing with inaccurate figures.

Don’t suffer in silence: Communication

Poor communication is a factor that can have severe consequences in any industry, and construction is no exception. Strong communication must be maintained at every stage of a construction project - once again, this includes before any physical work on the project has started. For example, during the planning stage, it is vital that all relevant parties have access to up-to-date project drawings. 

Budget control is rarely ever possible when everyone is working with different information. If one party does not have access to the full picture, they will work within these limited parameters. This means that they could be working well under or over budget. Establishing communication channels (whether this be email, weekly meetings or daily updates) will ensure that everyone has the correct information to work with.

Make sure you’re prepared: Risks

Risk management is crucial for the livelihood of the project and those working on it. I have spoken extensively about the importance of assessing risks to avoid disputes and health & safety violations. Assessing potential risks and preplanning for their fallout will help to ensure that any risks that do occur will not affect your budget. 

Some risks will be unforeseen and therefore it is important to have accurate documentation to deal with these risks when they occur. Once again, methodical preassessment before the start of a project will ensure that your budget is accurate and as well as any related documentation. 

Don’t fall short: Skills/Labour

Skill and labour shortages are the most prevalent threat to the construction industry right now. However, there are alternative avenues if you are struggling to find the required manpower. As mentioned at the beginning of this newsletter, construction technology such as AI has the potential to fill the labour gaps in construction projects.

It is important to be honest about the labour needed to complete a project on time and on budget. While adopting these technologies into your construction project may raise costs initially, it will give you greater control over your budget because you are able to accurately predict when and how a project will be completed.

Keep to the deadlines: Timekeeping

The further your project extends past its deadline, the more over budget you will be. It is common knowledge but it is a factor that can creep up on you unexpectedly. Taking into account what has already been mentioned in this newsletter will help you keep to the agreed deadlines. However, the importance of meticulous time management cannot be overstated.

Continuously missing deadlines is only going to rack up your budget, not to mention damage your reputation. Once again, preplanning and then ensuring no one deviates from this plan is crucial to controlling your budget. 

Mercantile Barristers have expertise in providing advice and representation in construction finance, whether they are businesses, individuals or commercial law solicitors. We also have experience in taking instructions from construction management solicitors representing their clients in proceedings concerning construction management before the county court, High Court, Court of Appeal and Supreme Court.