How to get better at construction cost management

Construction can get pricey. In fact, sometimes projects become so expensive they don’t get completed at all. Higher costs are the biggest offender, but missed deadlines and upset clients also come with the territory. 

So what should you do if you need to finish a complicated construction project?

The answer is simple: Focus on construction cost management. 

That’s how you can finish projects within your budgets and deadlines. You also benefit from mitigating risk across your projects, potentially leading to more profits and happier clients.

Here’s some more information about construction cost management and tips to try out if you want to get better at managing construction costs.

What is construction cost management?

Construction cost management deals with budgeting, planning and completing projects. That might sound straightforward, but construction cost management can make or break any of your projects before they start. For instance, proper construction cost management can keep projects on budget and time.

Construction cost management is also necessary throughout the lifespan of your projects. You should keep it in mind as you go from planning costs and materials to executing. Otherwise, you might complete a project out of budget before you even start.

There’s more to construction cost management, which we’ll look at soon, but these are the basics. You may want to focus on more specific parts and functions of construction cost control, so consider that as you keep reading.

Why is construction cost management important?

First, ask yourself why construction is important. Well, for one, construction drives progress in every area of development. Nothing gets done without construction, and the cost is crucial to any project. 

For example, nobody would have a place to conduct business without construction. Even then, construction can cost too much to be feasible for many companies.

So what causes those issues? Bad data, mostly. Maybe contractors didn’t provide the correct information, you weren’t aware of new regulations or your estimates didn’t account for a problem that could occur. 

What does all that mean for you? Potential higher construction costs, missed deadlines or worse.

Color Houses, a historic renovation company in Houston, struggled with this until they switched to Buildertrend. The correct data ensures they can explain to clients why prices have changed throughout the project, making change orders (and projects overall) more seamless.

That’s why construction cost management is essential. Whether you’re in a project’s budgeting, estimating or monitoring phase, construction cost management is key.

How does construction budgeting work?

Like with any project, you need to budget. Construction budgeting isn’t difficult to wrap your head around either – you just have to know a few things. First, budgeting refers to gathering and analyzing all tasks to determine a project’s cost.

In construction, this process includes time phases, estimates and construction schedules, among other metrics. Your construction budget will depend on your circumstances – only you’ll know how to create yours.

Casey Construction Company – which handles commercial building projects in their hometown of Lago Vista, Texas – uses Buildertrend software to prevent budgeting concerns. 

As Amanda Worlow, one of the founders, described, “It’s not like the spreadsheet updates in real time, so before Buildertrend, we’d have to go back into DropBox and figure out where we stored the receipt.”

So if you’re unsure how to create your budget, there’s good news. Many tools and services like Buildertrend can fit your needs. You don’t have to brave the process alone. 

Before we move on: Does your company have efficient construction project cost management software?

How to stay on top of costs with construction change orders

Change isn’t always welcome. That said, it’s often necessary and inevitable – especially in construction. So what do you do when your construction plans change? It might seem like a scary thought, but there’s a solution.

A construction change order is what it sounds like: an order to modify a construction project. This might look like a doorway changing locations or something more expensive and less feasible. If you aren’t careful, these changes can derail your budget, so managing construction costs is key.

More than anything, construction change orders provide transparency regarding budget and timeline. The alternative could mean a project too far out of budget to complete, which creates issues for everyone involved.

How to leverage estimates for better construction cost management

Construction estimating software helps builders and contractors anticipate costs when planning a project. With Buildertrend’s financial services, contractors can automate calculations and data entry for quicker and more accurate estimating, resulting in more profits.

Accurate quantities and labor hours help businesses avoid delays and shortages with more precise scheduling. Buildertrend’s construction software allows companies to run their projects better, starting with error-free estimating and continuing through residential project management, communication and financials – all in one place.

Construction estimating software like Buildertrend can help you win more jobs. It can improve accuracy and efficiency. It allows builders to estimate and perform other tasks online, making it perfect for scaling or modernizing financial processes. With Buildertrend, you can take control of your construction costs and deliver your most profitable work yet.

How Buildertrend’s financial features help with cost management

By now, you have a good idea of what construction accounting entails for you and your business. However, you might not be sure about how you’ll complete your goals. Even with the information you have, a little help goes a long way. 

In this case, help can come in the form of Buildertrend – the perfect partner for construction cost management.

Need to make and receive payments quickly? Buildertrend Payments let you do that online. How about insurance? Buildertrend offers exclusive options tailored for construction projects. 

Buildertrend even makes financing easier, complete with loans, if you ever need to push a project to the next level.That’s just the start, though. Buildertrend offers much more, including construction bidding, budgeting and estimating tools. Interested? Schedule a demo today.

Construction cost management FAQs

Get answers to the most common construction cost management questions.