Considering Budgets Pre-Project

Consider Budgets Pre-Project

copyright Anders Adermark

Our concern at Sterling Building Materials is that your project comes in at or under budget. We want to keep you as a valued customer, so we are only successful when you are completely satisfied.

With that in mind, here is an article that we want to reprint. Much of this is common knowledge, but it never hurts to revisit basic budgeting principles again. Thanks to Emily Beach of eHow.com for these thoughts.

When it comes to preparing a construction budget, items such as building materials and installation costs are fairly easy to determine. These numbers are mostly taken from subcontractor’s bids, making the working portion of the budget relatively straightforward. The costs that are often overlooked are those relating to the construction site itself, as well as management, labor, and facilities. These costs are known as “General Conditions,” and include any expenses incurred on the job that are not directly related to building or purchasing materials.


Management costs

This includes the salary and labor burden of the project manager, project administrators, superintendent and assistants. Multiply the hourly salary of each of these individuals by the number of hours he or she will work on the project each week. Use your project schedule to determine how many weeks the project is expected to continue, and multiply this by the total weekly salaries to find total management expense.

Other labor costs

While most work on the project will be performed by subcontractors, the general contractor may also have some employees on the site. These individuals may be responsible for safety installations, covering scope gaps (like door installation and basic carpentry), or helping with cleanup and material storage. Multiply the weekly salary of these individuals by the length of the project to determine labor costs.

Costs of temporary office space

Most project managers and superintendents will work out of a job site office or trailer. These trailers may be owned or rented by the company. Determine the monthly cost of a trailer and multiply it by the duration of the project. Temporary office costs should also include things like internet and phone service, printers and copiers, and basic office supplies. Portable restrooms should also be included, as well as maintenance and delivery for these units.

Cost of temporary storage areas or other structures

These may include storage containers, temporary rooms for hardware storage, or any other temporary facilities relevant to the project. Depending on the area you’re working, you may also need to include environmental protection, such as silt fences or other barriers.

Safety costs

These are things like personal protective gear, signage, road blocks, guardrails, and canopies. If the job requires an on-staff safety inspector or inspection service, this cost should be included here as well.



Tools and supplies

Often, the superintendent or company laborers may need some basic tools, lumber, locks, cleaning supplies, or other equipment. Most projects include an allowance of a few hundred to a few thousand dollars each month for these types of purchases.

Insurance
Include insurance premiums, including liability, auto, and worker’s compensation. While these expenses may be paid annually, you should only include the amount applicable to the job, which can be determined by dividing annual premiums by 12. Multiply this monthly cost by the number of months in the project schedule.

Municipal

Add in the cost of permits, licenses, and municipal building inspections. The project scope should clarify whether these items will be paid for by the owner or the contractor.

Miscellaneous

Review the specifications manual and the project contract carefully to determine whether any other expenses should be included. Any items that are not clear should be discussed before the budget is presented to the owner.

 

Emily Beach

By Emily Beach, eHow Contributor. Emily works in the commercial construction industry in Maryland. She received her LEED accreditation from the U.S. Green Building Council in 2008 and is in the process of working towards an Architectural Hardware Consultant certification from the Door and Hardware Institute. She received a bachelor’s degree in economics and management from Goucher College in Towson, Maryland.