3 Common Budgeting Mistakes Construction Software Helps Avoid

By: on April 22, 2021

As a construction project manager, overseeing the scope, schedule, and budget of projects is your chief responsibility. Of these three, budgeting, typically, requires the most attention. If you fumble with the construction budget, your project may overshoot its schedule or even remain incomplete.

To avoid such events, you must follow the best practices for construction budgeting. This includes carefully examining your project plan for risks, creating realistic estimates, and communicating clearly with all stakeholders, including your clients.

Besides following the best practices, you can also use different types of construction software solutions, such as construction management and construction estimation tools, to create accurate estimates and avoid cost overruns. A combination of software tools and best practices will not only offer notable savings throughout a project but also help avoid budgeting mistakes such as over- or underestimating project costs.

In this blog, we discuss some common budgeting mistakes construction managers are likely to make. We also explain the best practices for each mistake and highlight how construction software can help bring your finances back on track.


Mistake #1: Inaccurate estimation of project costs

Many budgeting slips happen during the cost estimation phase. Therefore, define the project budget and schedule right from the beginning so you don’t run into trouble mid-project. It could be too late if you find out midway that your project won’t meet its estimated costs.

Construction clients often choose contractors who make the lowest bids. Even so, resist the urge to lowball your bids or rush through an estimate. Low costs may make your clients happy initially, but as the project progresses, your firm’s reputation will be at stake when clients find out that the actual costs are far greater than your estimates.

What you should do

If you’ve been consistently failing to stay on budget, consider getting professional help. It’ll cost you money, but you’ll have experts ensuring you don’t exceed your project budget. But if you want to do it yourself, there are many software tools (discussed in the next section) to help cover your bases.

How construction software assists with budgeting

Construction estimating software is an essential tool for standardizing the process of creating project cost estimates. These tools offer capabilities such as automatic calculation of material and labor cost, creation of bid proposals using pre-built templates, and integration with cost databases to help you create accurate project estimates.

Some estimating solutions offer construction takeoff functionality that lets you measure construction plans (i.e., blueprints and drawings) electronically instead of using the conventional pencil-and-ruler method. It helps speed up the calculation of the amount of materials and number of labor resources needed for a project.

Construction estimating software also allows you to store historical data of your bids and estimates in a centralized project repository. You can analyze the historical data to understand your bid win or loss ratio and other trends to improve your estimating processes.

Details of a cost estimate in Clear Estimates construction estimating software

Details of a cost estimate in Clear Estimates construction estimating software (Source)

Mistake #2: Inadequate project planning

If you don’t spend enough time planning your project, there’s a good chance it’ll overrun its budget, even if you have an accurate construction estimate. That’s because you won’t know for sure if there are issues such as construction design flaws, inaccurate capacity planning, unidentified task interdependencies, scope creep, or permit delays until you’re well into the project.

Inadequate planning can not only cause project delays and blow up your construction budget but also result in client lawsuits over disagreements about the type of work expected. Therefore, planning is a task you need to tick off your list before you start any project work.

What you should do

Before starting any project, spend time mapping out risks that can derail the project. You can, for instance, actively collaborate with engineers to spot design flaws before construction begins. Similarly, you can create a response plan to address potential risks that could delay a project, such as government approval for permits or material shipments.

How construction software assists with project planning

Construction management software, also known as construction project management software, offers visibility into potential project risks during the planning stage. Its team scheduling feature lets you visualize the workload of project members to ensure no one is overburdened, thereby preventing delays and quality issues. It also provides Gantt charts to help analyze task interdependencies and create accurate project timelines.

Document management, another key feature of construction management software, allows you to create a risk register where you can document potential project risks. You can share the document with stakeholders to ensure everyone is aware of the risks. You can also create a centralized document library—which can be accessed only by authorized users—to store all types of paperwork, from building plans and cost estimates to permits and contracts.

Creating a project schedule using Gantt charts in construction management software Buildertrend

Creating a project schedule using Gantt charts in construction management software Buildertrend (Source)

Mistake #3: Poor stakeholder communication

As a construction manager, you have to communicate with many stakeholders, including your staff, subcontractors, and clients. It’s important to understand that communication errors can also lead to project delays and budget overruns. In fact, miscommunication with clients is at the heart of a lot of unexpected cost increases.

A common cause for miscommunication is having only a verbal agreement with your clients instead of signing a legally binding contract. In such a case, you may find out a month into the project that the client expects you to redo the foundation as part of a refurbishment job, which will increase your costs.

What you should do

Share a detailed statement of work document with your client to avoid miscommunication. In the statement of work, define the project’s goals, guidelines, deliverables, timelines, costs, etc. so that you and your client are on the same page in terms of expectations. Also, before starting work, sign a contract, which will serve as a record of commitment for you as well as your client.

How construction software assists with stakeholder communication

Construction management software creates a digital paper trail every time you communicate with your clients. For example, if a client wants to adjust the height of a deck by a foot, you can record the request as a change order that explains the cost of the modification and has to be agreed upon by the client. You can also capture your client’s digital signature, making the change order a legally binding agreement for both parties.

Team communication is another area where construction management software can help drive efficiency. Field workers can access the app on their mobile devices to view their daily schedule, share documents, upload site photos, communicate with team members, and get alerts of upcoming due dates and deadlines.

Creating a change order in RENOMii construction software

Creating a change order in RENOMii construction software (Source)

Tips to control your construction budget

If you’re tired of going over budget all the time and watching your profits disappear, try these simple yet effective steps:

  • Increase the amount of time you typically set aside for project planning by 50%.
  • Have your project team review the project plan to ensure there aren’t any oversights.
  • If you have the budget, hire the services of a legal professional with construction contract experience to become confident in your budgeting decisions.
  • Visit our construction software page to find a software tool that fits your management style. Read reviews from real users and take test drives to see which software best meets your needs.
Need in-person assistance? Speak to our software advisors who’ll help you find the right software for your needs and budget in 15 min or less, for free. Schedule a call or click here to chat now.

Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.

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