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October 14, 2021

3 Tips to help avoid cost overruns on your next project

Construction projects often take months, or even years. With the initial bid being submitted months before the project even starts, it can be hard to anticipate changes in cost over the duration of a project. In fact, according to KPMG, only 31% of all construction projects came within 10% of the expected budget over the last 3 years.

There are a lot of unpredictable events that happen during a project. Owners might want to make changes to the design mid-build,affecting project scope. Or material delivery can be slow and prices can increase (especially today) seemingly at random. And there’s only so much a contractor can do to prevent bad weather from delaying a build. Whatever the reason, cost overruns on projects seem to be a common bond that general contractors share. 

This common bond, however, also creates an opportunity for contractors to distance themselves from their competitors. Even with a high level of unpredictability, there are steps that general contractors can take to minimize the chance of cost overruns on their projects, especially when it comes to their team’s communication and productivity.

1. FOCUS ON COMMUNICATION WITH PROJECT OWNERS

The most common reason for disputes always boils down to poor communication with project owners. One of the best ways to minimize cost overruns is to make sure lines of communication with the project owner are open and frequently used. Construction projects have hundreds, sometimes thousands of moving parts, and a single miscommunication between the owner and contractor can have a costly ripple effect by the time it reaches the workers on site. 

It doesn’t even need to be a miscommunication. The length of time it takes for a change in design or scope to make its way to the team doing the work on site leaves plenty of opportunities for mistakes along the way, which leads to disputes and inevitable schedule delays. 

While collaboration and communication has improved significantly with new technologies, that improvement has mostly been within an organization, and not necessarily with key stakeholders. According to KPMG, 82% of project owners feel they need more collaboration with their contractors. This disconnect has resulted in 69% of owners blaming underperforming projects on poor contractor performance.

As the contractor, it’s in your best interest to maintain strong communication with clients through the entire project lifecycle. This can include:

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