
When I started my company the first thing I did was prepare a budget. My idea was a concept at best but the analytical spirit in me needed to know if my plan was financially doable.
During the design phase of your construction project, there is an opportunity to prepare a concept budget. A concept budget is a quantitative analysis of the components in a building broken down by specific categories or elements. This breakdown shows where the dollar value of a project is being spent. This analysis can happen at any time throughout the design process - but should be done as early as possible. A concept budget is usually prepared by a quantity surveyor or costing professional.
There are inherent benefits in preparing one before the design stage is over and before you go to a contractor.
Make decisions early. Avoid redesign in the final hour if the costs from your contractor come in higher than budgeted. This will cost you time for the redesign. It may also cost you money depending on the contract you have with your architect/designer. On the flip side, your design may prove to be below your budget (it happens sometimes). You may want to include a luxury item that you didn't think you could afford.
Have something for comparison. You can use the cost plan as a basis point in deciding which contractor bid to choose. The cost plan gives you an idea of where the costs of construction should land.
The second set of eyes. Getting the right combination of perspectives on a construction project leads to success from the start. A costing professional can work with your design team to identify cost alternatives and risks associated with material, labour or equipment availability.
Funding and Loans. Having a cost plan prepared will help back up a financing application. You may also need to apply for financing or funding before the design is complete. Having a concept budget will ensure that you are applying for enough financing/funding and keep you moving forward on your project.
The beginning of a construction project is like starting your own business. It starts with an idea and the plan grows over time until you are ready to launch or break ground. Consider including a concept budget as part of your planning process. Your bottom line and timeline will thank you for it.
You are so right about this process being similar to starting a business - or really, any sizable business projects we might take on. I like this term 'concept budget' and I'm going to use it when I talk to clients about new projects.
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