With a valued net worth of around 1.6 trillion U.S. dollars, the construction industry is one of the most significant sectors across the United States. Due to the sheer size of the sector, you can only begin to imagine all the effort, consideration, and teamwork it takes to get projects up and off the ground running.
One of the most important factors to consider when undertaking a construction project is the estimated costs and the budget to be set aside for completing it. This can be something even the most experienced project managers need help with. Ultimately, preparing for every hiccup along the road is impossible, but it doesn’t mean you can’t endeavor to make your plan as watertight as possible.
But, using several strategies and tools, your company can make better budget calculations and minimize unexpected circumstances in a few simple steps. Yet, how do you achieve this? Fortunately, this article outlines several ways to do so, including using construction cost management software, liability protection costs, utilities, tax, and much more.
Use Construction Technology Tools
In our rapidly evolving digital world, we use technology every waking moment. From using GPS mobile applications to calculate the best route to work to turn on lights and household appliances via voice-recognition tech, it is no surprise that technology has slowly filtered into our workplaces and their respective sectors over time.
Over the past couple of years, the construction industry has introduced several valuable tools that have made every day processes easier – budgeting being one! From augmented reality and building information modeling (BIM) to robotics and construction project cost management software – there are many tools for construction companies to take advantage of. The latter is one of the best construction technology for helping your business determine estimated project costs, allocate budget, and much more.
Find out more by visiting the websites of providers like Kahua, which specialize in creating cloud-based solutions in the construction industry. From construction project cost management software to project management software, consider visiting their website to learn more about their cloud-based systems and how they could help your company’s budget planning today.
Predict Labor Costs
Labor is one of the most substantial costs construction businesses face, or just about any business! Therefore, it is crucial to understand how to calculate estimated labor costs if you want your construction project to go without a hitch and to run a successful business overall.
In an ideal world, this would all be free. Still, when you have tradespeople, contractors, equipment operators, or any other construction professionals turning up to your site each day, they will all require a fee for their services, no matter how minor!
However, predicting labor costs can be incredibly challenging since everyone on site commands a different wage, and works additional hours. Yet there are several factors to consider that can make your predictions more accurate.
When trying to calculate estimated labor costs for your projects, remember to bear in mind the following:
- The hourly wage of employees, subcontractors, machine operators, and other working professionals on site.
- Any time an employee might have booked off as vacation or been off sick.
- Payroll expenses and workers’ compensation costs for all employees.
- Despite potentially falling under a non-contingency budget, don’t forget about non-billable and re-work time.
Think About Insurance And Bonds
Whether your next project involves adding something to a previous project or starting something entirely from scratch, your construction business must be covered by insurance to protect your project, workers, and business.
As a result, you will need to account for the cost of your policy (or policies!) and factor them into your overall budget. Not only will you be expected to fork out for insurance, but depending on the project you’re undertaking, you may also be asked to pay a bid bond or deposit to ensure that your business will follow the project through to the end. Although, these are more commonly seen in government construction projects than residential.
Alongside the costs of insurance and bonds, you may also want to factor in the prices of any builders or contractor associations (if you’re a member of any!). This is to get the most accurate predicted project costs possible.
Consider Utilities And Tax
Depending on your business’s construction project, you might have to have gas, water, or electric installations while on site. These utilities won’t be connected for free, so it is crucial that you also factor in the cost of any utilities that might be installed into your overall budget plan.
Your project could also be subject to local and state-level taxes, which should also be reflected in your overall budget. However, the amount you will have to pay depends on the size of your project and what work is being carried out, as the more extensive the project, the more tax you’ll have to pay.
If you’re confused or worried about the local and state-level taxes your business could be asked to pay, ensure to enlist the services of an accountant who will be able to walk you through all elements of construction finance, answer any questions, do calculations on your behalf, and much more.