Importance of Budgeting & Cost Estimation for Construction Projects

 

 

Construction project Budget, by definition refers to a quantitative allocation of resources such as Man, Material, Machinery, Minutes, and Money – required for a task in a specified time to complete the project. Allocating and planning these resources at the beginning of a construction project is a must for project managers.

 

What makes construction cost estimating and budgeting an important task?

 

Every successful construction project is a combination of quality, time, and budget. While quality and time are essential to it, the project budget remains the key factor. Setting up cost estimation helps in planning, coordinating, and executing activities. It also helps a construction manager stay on top of each task while also being aware of the project’s limitations and progress.

 

What happens if there is no construction project budgeting done?

 

All construction projects can only be taken forward with a well-planned budget. The measure of the required amount of funds determines the time and nature of the activities involved. The absence of a construction project budget may lead to cost and time overruns.

 

When a project budget is inaccurately planned, one can expect a lot of situations to occur, and none of them yields a positive outcome. One of them is being unable to deliver the promised project within time and quality. It may significantly affect the contractors as well as the company’s credibility and that of the project site engineers involved in the project.

 

Most of the construction projects are of higher value, so being able to complete the construction without having to burn all the available resources is fundamental. Thorough research can help a contractor to meet the objectives and requirements of the project. Investing time, in the beginning, can cover all the unexpected losses that one could incur. Planning may seem to be a cost to some construction companies, but it has a lasting impact on the entire project.

 

This is where a good construction project budgeting and scheduling modules such as the one present in Tactive Construction ERP helps contractors.

 

What does a good construction project budget software do?

 

A large number of organizations utilize manual estimating and budgeting excel templates to determine, recognize, break down, and report the budget. These tools may help the project manager with financial reports, figures, and different analysis, but they also consume a lot of human and financial resources.

 

Today, with the help of a wide range of construction budgeting software, companies can manage their finances, and eliminate redundant processes. They can automate, analyze, and master their financial statements and accounts.

 

The major benefits of a construction budgeting software are:

 

●       Cost-Effective: Involving budget management software can help reduce a lot of time and energy. It also helps a project manager to control the expenses as and when required. With the right set of features, the software can help keep the project manager on track and alter schedules as well, if required.

 

●       Improves quality of time and money: Cost estimating and budgeting is ‘planning’ – it lets a company decide the amount it can spend on various activities without depleting its assets. To create a significant budget, they compare present and past financial reports. A budget management software for construction companies can make it simpler for the project manager to classify these reports and automate the entire planning process. Since the budgeting software is technically advanced, it spares time as well as resources.

 

●       Helps in building zero-based construction project budgeting: A construction budget should be as accurate as it could be, or it may cause limitations at the time of implementation. A fitting construction budgeting software device can viably help make zero-based budgeting during the beginning of a project, and monitor it as well. In other words, a suitable tool can help encourage construction workers. It can also lead to the proper execution of the project with complete awareness of material, machine, manpower, and cost requirements.

 

Tactive Software systems 

 

Tactive provides a custom-built ERP for the construction industry with modules for Budgeting & Cost Estimation management for infrastructure and contracting companies. With the right combination of knowledge, skills, and technology, Tactive, helps project managers and contractors achieve their goal of completing projects within time and budget. Tactive has the experience of serving over 35 construction and contracting EPC companies, offering them customized construction management software.

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