One of the most worrying points in the construction sector is having a good financial plan, since many things depend on it for the project to be successful.
To be successful, a global budget must be contemplated, which will be used for preliminary studies, legal and administrative costs, up to the equipment and delivery of the finished and operating construction.
The budget will be adjusted as the construction planning stages develop, so it is important to note that without proper planning, a reliable budget cannot be made.
One of the most relevant stages is the precision of the scope, understood as the determination of both the quantity and the quality of the components of the product that is intended to be built and in what period of time.
The clearer the Client’s objectives are from the beginning of the project, the better the definition of these scopes will be and, therefore, the greater the control exercised over the budget.
Another way in which budgets can suffer significant impacts is when they depend heavily on inputs quoted in other currencies.
Despite the above, there are defense mechanisms against this disadvantage that can be implemented.
Now, there are many ways to manage a work: it can be done at “A Fixed Price”, “By Administration”, “At Unit Prices”, etc.; or the combination of one or more of these modalities, each one with its characteristics, its advantages and disadvantages.
And although any of them can be used with good results, the one that in our experience confers a more adequate control of the cost, is the modality “At Unit Prices”, since it allows strict control of the expenses and the items to which money outflows must be applied, maintaining control of the overall budget through detailed accounting of each of the concepts that make up the individual budget of each of the works contracts.
A good Project Management, whether internal or external, knows precisely the amounts spent and to be spent for each of the concepts of the work at a given time, since it has a precise accounting system with which it can report to the Client. the financial statement of the construction, at the time and with the detail that is required.
In addition, it monitors that the physical progress corresponds to the financial progress or, where appropriate, knows precisely and opportunely the size of the deviation, and not only immediately warns the Client about the possible consequences, but is also ready to advise him on the Actions to take to ensure the success of your project.
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As we mentioned before, one of the most important phases of the construction is to budget the work, and it should be considered that, depending on the objective to be achieved, the budget will mean more or less expense.
For the desired success in the project budget, you must consider the following elements: