Your team has been diligently at work, and it’s now time for your first construction cost estimate. You cross your fingers and open the email, scrolling quickly to the bottom line. Yikes. It’s often so much more than you hoped for. But be calm there’s a process that almost always improves the situation.
Depend on your project manager to manage this, but you need to stay engaged. Here’s what this process should look like. And by the way, make sure that there’s ample time in your schedule. Not much else can be done until the budget is resolved.
The project manager and architect should review the estimate in detail and then convene a meeting with the estimator, who is often the contractor. The team should go over every single line item in detail testing assumptions about scope and quality that the estimator has made. Some costs will seem reasonable, others too big and others too small. Even if the estimate is just where you hoped it would be, it’s important for you to engage this same process.
Here is the trap. You need the cost to be less so there’s a temptation to only look at the items that seem too high and just be releived by the low numbers. After all, you’re here to bring the cost down. Don’t do that. Look carefully at everything, even if the estimate goes up. But be strategic, spend the most time with big line items.
You may still be over budget but your understanding of the estimate and the project scope will be much better. The next step is to carefully evaluate your scope hoping to bring it comfortably within budget. Or sometimes you just have to find more money. Either way this takes time.
Follow link to:
Under Promise, Over Deliver – Expectation Management
And remember that the construction budget may only be 70% of the total budget. You should be engaged in a parallel exercise with every portion of the budget