How do avoid cost overruns in construction projects?

Ordinary cost overrun causes

According to a global construction survey from KMPG, 69% of construction projects will go over budget by more than 10%, and only 31% come within 10% of their original plan. So it’s crucial to understand how to address cost overruns in projects. Frequently, overruns are from schedules and budgets being set improperly from the very early start of the project. So let’s find out the main reasons for cost overruns. 

Incorrect project estimates

Estimating is one of the most challenging jobs in construction. Estimates are high-risk and highly experienced required tasks. According to a survey from QuickBooks and TSheets, nearly a third of construction companies make less profit than expected based on their estimates. 

Due to the competitive nature of the bidding process, estimates may suffer from wrongful expectations of the scope of work included in the project. In many cases, some projects will be estimated on a one size fits all basis, with an unpredictable high chance of exceeding that initial estimate. Therefore, it’s crucial to your project’s success that you must be realistic about project deadlines and costs from architects and contractors in the pre-construction phase.

Poor site management

Design integrity, equipment condition, and quality control are just a few aspects of a project that need to keep on track during construction. Unluckily, this does not always go as planned, leading to massive cost overruns in construction projects. 

Even if there is a professional relationship between everyone involved, some projects are too large to keep up with every site change and new information daily that may travel too slowly across departments. So improving on-site communication with construction software can reduce some issues with site management. 

Site management often seems to be out of the control of a project manager. However, this complex problem can be controlled once the project manager has built a strong network of experienced site managers. Once connections have been made with outstanding site managers, they should understand and overcomes the complication of estimation in cost overruns.

How do avoid cost overruns in construction projects?

Pen and paper are limited in their effectiveness in complicated projects. There are hundreds of moving parts at any given time, and software has the advantage of automation. Calculation problems and missed project deadlines are costly mistakes. 

Besides, it is tough to manage a construction project productively. Therefore, knowing common hazards, planning for them early, and choosing the right software through AECIS, will lead to a high success rate and more profitable projects in the future.