Construction management is an all-inclusive responsibility that entails meticulous organization in addition to knowledge of complex building procedures and relationship development. Successful construction practices begin with strong communication efforts between the client, contractor and designers.
Construction managers must set the tone for these relationships, maintaining the process from the beginning phase to post-construction. The following explores these essential steps, from budgeting to construction phases, as well as why construction managers are earning such a high degree of praise in today’s building industry.
Constructing a Successful Budget
A budget sets the stage for the project, allowing all parties to operate with the same baseline. An overall budget is maintained by the construction manager and includes all aspects of the project, from land acquisition to the completion of the contract warranty. In addition, the construction manager should generate a document that identifies cost implications, responsible parties for each step of the project, and bonding and insurance costs.
Another aspect to consider when budgeting for a project is an owner contingency. In the construction world, contingencies serve as protection against possible financial emergencies and any unknowns that may arise. Construction managers should have contingency funds available, since most financial institutions do not allow for additional expenses to the project. Weather conditions, fluctuations in material costs, code changes and shifts in administrative needs are all out of the construction manager’s control, but they can add significantly to the bottom line of a project.
In addition to the owner’s contingency, the contractor contingency should also be included in the initial budgeting phase. These funds would be allocated to handle excess costs not identified in the design process. The contingency percentage is based on the size of the project; generally a percentage of up to 10 percent would be allocated.
This value would be included in the guaranteed maximum price. The contractor contingency applies to the contractor’s costs only. Changes made by the owner will alter the contract cost, thus creating a “change order” to the guaranteed maximum price. Be sure to receive proper documentation and/or contracts for any use of this contingency.