Every organization manages its operations budget process each year. So why is budgeting for a construction project any different? In your annual budget process, you are building on an often years-long thread of operational and cost control history, and even in years of change and transition, the changes are usually relatively modest.
With a construction project, you’re starting with a blank slate and trying to anticipate things you have not encountered before. The skill set that you have developed in your annual budgeting process, except that it involves money, is quite different than what you will need for your project
Furthermore, the stakes can be higher. The cost of a construction project can easily exceed your annual budget. A significant cost overrun could threaten the health or even the existence of your organization.
The process of budget management, especially in the early stages of a project, isn’t so much about hitting an exact number as it is about setting an early expectation and guiding the stake holders in your organization on the journey of discovery, design and construction, all the time keeping them apprised of the budget status, risks and an array of choice and tradeoffs that you all face.
It’s important to acknowledge that there will be a substantial group of factors that you and your team simply can’t control, at least early on. Understanding, at least generally, what those are, making allowances for bad news and keeping stake holders informed is the key.
But, of course, at some point, there will be a number and you’ll have to hit it.
Link to:
Don’t worry about the budget … at first
The very early budget
Why is my project so far over budget?
Under Promise/Over Deliver – Expectation Management