Budget Management
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A successful project must be completed within a budget that has been approved by the client. Scope control and schedule control are extremely important to cost control. An increase in scope usually raises cost. Late delivery can also cause budgetary problems, as can an unusually tight schedule because of expediting and overtime costs.
A preliminary cost estimate based on current scope should be developed at the beginning of the project. It should be updated at critical milestones of the project, such as at the end of design development and during the release of construction documents.
The cost estimate for a typical project consists of the following elements:
- Interior construction and furnishings
- Permits
- Insurance
- Contingency
- Contractor’s general conditions and fees
- Design fees including those of special consultants
- Project management and construction management fees
- Financing costs
- Administrative costs and legal fees
It may also be beneficial to break down work into construction packages for higher visibility (for example, by the major divisions of the specifications, or by major subcontractor).