How Smart General Contractors Manage Their Budgets

Few things can cause more stress — or more friction between owners and general contractors — than budget worries.

A smart GC goes the extra mile to avoid headaches and conflict around budgets. Here are some field-tested strategies to keep projects on budget and flowing smoothly.

Build the Right Team

Maybe the most important thing you can do for a project, both for efficiency and budget reasons, is to put together the right team for the job. This might seem pretty obvious, but we’ve all seen cases where poor hiring choices set back your schedule or budget.

Before the project starts, know how many of your workers you’ll need to allocate to the job and which subs you’ll be using. It’s not always easy to predict how new hires will perform on a jobsite, so when choosing subs, look for an established track record with the kind of project you’re working on and a bid that will help you stick to your budget.

It may seem backwards, but hiring some extra help can keep your budget on track, too. By bringing in someone to take over office duties, for example, you free up your own time to work on the project.

Get Clear Project Definitions

The GC and the owner should be in sync from day one. Easier said than done. Not only can miscommunications in the planning stage lead to delays and damaged owner/contractor relationships, it can wreak havoc with your budget.

Avoid the problem by meeting with the owner and key team members to get crystal-clear definitions of project scope. Taking a little extra time at the beginning to make sure you understand exactly what the owner wants can prevent nasty surprises later on. And be sure to keep a record of those conversations to help quickly resolve any disputes.

Include a Buffer in Your Budget for Unexpected Expenses

Hidden costs can sneak into even the most well-planned project. Certain fixtures you’d planned to use may not be available when you need them, or are only available from a more expensive source. Equipment breaks down occasionally, and you’ll need room in the budget to get quick repairs or rent a new machine. Few construction projects get to completion without at least one mistake, and mistakes cost money.

Building this buffer into your budget at the beginning can ease a lot of stress for everyone on the project.

Keep Careful Records

Tracking your daily cash flow is crucial to staying on budget through the life of the project. This can be as simple as logging expenditures in an Excel file, or you can look for software to help you out.

During the planning phase, make a note of where your major expenditures will be. Knowing how much your up-front costs are, as well as materials or subcontractors needed at various milestones, will help you assess your budget — and make adjustments as needed — as the project progresses.

Communicate With Your Team

Last but not least, you’ll need to stay in constant communication with your team so you know what’s going on with the project, whether you’re on-site or not. Delays due to problems on the site, or because your team had to wait for the go-ahead from you, can put a big dent in your budget.

A good project management app like FieldLens can help you keep up with your team and stay on top of the project to avoid costly delays.

You may have your own set of strategies for keeping your jobs on budget. Most of the time, it boils down to planning and communication. Put in the effort at the start of the job and it pays off later.

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