Turn construction budgets into planning and tracking tools.

Too often budgets are something that we just reflect upon and not use to manage in the moment.

1. Problems with budgets
   1. Estimating budgets are copied over as job costing budgets
   2. Budget is entered into accounting software, teams are given cost codes and no one ever looks until there is a problem
   3. They are only used to compare against cost when the project or work is finished
2. Create projections
   1. To get the most out of budgets you have to create projections – that’s their purpose
   2. Convert your estimating budget to a construction budget first
   3. Then use your planning and schedule to project the budget into the future
   4. Example
      1. Estimating Line Item: Install Pipe – 10,000LF @ $20 / LF
      2. Budget: Labor $5.60/LF Material $5.00/LF Equip $6.00/LF
      3. Daily Labor = Foreman($40), 2 Operators ($35) and 2 Laborers ($28) or $1,328 per day
      4. Month 1 labor projections and billings
         1. Billings = 21 days at 250′ per day = 5,250′ @ $20 = $105,000 in Billings
         2. Labor = 21 days @ $1,328 = $27,888 in labor costs
         3. Continue on with the others
   5. Track your projections
      1. Week 1 = Projected = 1,250′ of pipe with labor cost of $6,640
      2. Week 1 = Actual = 1,300′ of pipe with labor cost of $7,300
   6. Review and adjust
      1. Per the above you now need to review and see why it cost you so much labor in week 1
      2. Make adjustments as necessary

Key Questions:

1. Do you create construction budgets?

2. Do you create projections?

3. Do you track your projections?

4. How can you improve this process?

Take-Action Items:

1. Create project construction budgets

2. Create project projections

3. Track and adjust