Building a Successful Project Budget
With the new year quickly approaching, we’re well into budget season, and your team has most likely started planning your yearly budget. While financial institutions are pros at assisting their customers and members with budgeting, it becomes more complex when creating a budget from scratch for a project involving architecture, construction, and more.
Configuring the precise amount you need to budget for your project reasonably can be challenging. If you underestimate what’s required, you’ll end up over budget. On the other side, if you overestimate, there’s a possibility the project will get rejected by your stakeholders. The unknown can also pose a challenge — you don’t want to be caught off guard by any surprises during the project, especially if it means asking for more money.
Why do you need a construction and project budget?
Creating a budget is a critical step in achieving your project goals. It helps control costs, guides decision-making, highlights risk, and provides clear documentation for stakeholders and board members.
Controls cost and helps avoid overspending. Much like a personal budget, construction budgeting aims to help you understand each expense in your build project. It also saves hidden costs and avoids surprises with expenses that may fall through the cracks.
Guides strategic decision-making. Construction budgets are a valuable tool to use when making decisions for building projects. It can be overwhelming, from the level of finishes to how much technology and everything in between. With a detailed budget, you can better manage and limit your expenses to ensure the cost of each line item doesn’t put you over budget.
Identifies potential risks and roadblocks. With everything outlined, your project budget will help identify and manage risks or roadblocks before they become a big issue or expense. Everything from weather and ground conditions, delays with permits and zoning, or changes to a design can lead to change orders. Having your budget as your guide, project managers can watch out for anything that may put you over budget.
Provides transparent documentation for stakeholders.
There are many moving parts with a construction budget, and chances are, you have stakeholders and board members who need to provide approval. A detailed budget with a full scope of work can help eliminate confusion and establish clarity from the beginning. Proper construction budgets will also include a timeline based on resources and any contingencies so all parties involved are on the same page.
Laying the Groundwork
At NES Group, we build realistic budgets by looking at data and scopes from past projects and comparing them to today’s cost averages. Additionally, we take into consideration the current market conditions for accuracy.
There are a lot of variables to consider before compiling your budget. The goal is to be as realistic and detailed as possible with estimating, so having certain aspects in place beforehand is crucial.
Type of Build
Aside from square footage and location, the build type will have the biggest influence on the overall cost. Generally, there are three different types of build options for a transformation.
– New Build / Ground-up Branch
– Branch Renovation/Refresh
– Headquarters/Operations Transformation
Size Matters
Of course, the size of your project will directly impact your budget. Determining how much space you need is crucial, but it’s even more important to use it effectively. Your desired branch experience and expected outcomes for branch visitors and staff should be a significant factor in configuring how much square footage is needed.
Grade of Finishes
Depending on the condition of the interior and your scope of work, we’ll factor in the quality of your desired finishes and textiles. We’ll consider everything from the color palette, flooring, lighting, ceiling, office fronts, exterior materials, and design enhancements.
Technology and Equipment Upgrades
Technology has undoubtedly helped banks and credit unions level up and provide an improved branch experience. These days, upgrading technology cannot be overlooked as a part of a branch transformation. Paired with an open floor plan, state-of-the-art technology allows branch staff to be mobile, allowing them to interact fluidly with customers—providing more personalized service.
Building Your Budget
Once your project details are in place, you can develop your ‘Scope of Work’ from top to bottom. Here is where you lay it all out and how much it will cost. The more detailed you are, the less likely you are to have additions down the road.
Here are the 7 elements of a project budget:
With our extensive history in budgeting projects of all types and sizes, we’ve learned that project cost control isn’t achieved through one singular process. It starts with creating a proper budget, detailed architectural plans, and diligent construction management throughout the entire project.
As you finalize your project budget, you’re already setting the stage for a successful construction project. But budgeting is just the beginning. In the next part of our series, we’ll explore the different levels of renovation projects—from a simple refresh to a complete branch transformation—so you can strategically plan your next steps and make informed decisions that align with your financial goals. Stay tuned!
