Civil construction projects are typically long-term projects with an array of moving parts. Over the course of several months and sometimes years, these parts often change, impacting the project’s budget and leading to cost overruns. This happens as a result of design errors, unexpected site conditions, increases in project scope, weather conditions, engineering changes and more. Nationwide, construction cost overruns average 15% to 25%, and most lenders recommend including a 20% contingency for project budgets. At Cycle Construction, we challenge these statistics and do everything possible to minimize cost overruns for our clients.
The following are our tips to avoid escalating costs and cost overruns during a project:
- Hire a qualified general contractor from the beginning. One of the most effective ways to avoid construction cost overruns is to hire a qualified contractor that will be involved from the onset of the project. Don’t rely solely on the engineer in the initial planning and design phases. A qualified design-build or design-assist contractor who is on board from the start can help avoid any errors or omissions in the original project design, allowing for a realistic budget and reasonable timeline.
- Establish an airtight contract between all parties. A good contractor works with their client to develop a contract that will protect both parties in the event of a disaster. The contract will clearly define responsibilities and roles, timelines, milestones, project scope and a budget. It will also outline how potential problems will be handled. A contract ensures that all parties – the owner, the general contractor, and the subcontractors – know their role in the project and the expectations of each role. When all parties are on the same page from day one, the project can be expected to run much more smoothly.
- Be prepared for Murphy’s Law. A qualified contractor works work closely with their client to avoid obstacles and control additional costs. Both parties should have a shared interest in preventing or, at least, minimizing construction cost overruns to deliver the project on time and within budget.
- Inform all parties of potential change orders. Let’s face it, sometimes things change beyond our control, especially during a large-scale project. When change is necessary, communication is key. The general contractor should inform all parties of change orders in a written and timely manner, requiring signatures from everyone. When changes are made without documentation, legal battles could ensue. No owner wants to discover their project is way over budget without their knowledge.
- Oversee the project every day. A qualified general contractor will have skilled, on-site managers to oversee daily activity and ensure that the project is progressing according to the schedule. Project managers coordinate trades, material suppliers and subcontractors to ensure processes are executed with the highest safety measures and verify that all work will pass quality inspections. A good project manager communicates progress to all parties on a regular basis.
To avoid escalating construction costs, a project owner and general contractor must work closely together. Commitment to the project schedule and budget – along with unwavering involvement and awareness throughout the project – is vital for success.
Cycle Construction Company, LLC is a family-owned construction company in New Orleans, Louisiana with 30+ years of experience in managing complex projects of all sizes in a variety of markets, including heavy construction, marine construction, environmental infrastructure, underground utilities, industrial construction, emergency response, heavy haul trucking and waste and specialty trucking.
Since 1972, Cycle Construction has been delivering top quality heavy civil and marine construction projects in Louisiana and through-out the Gulf South. Our business is based on relationships. We build trusted partnerships with our clients, so that we might better understand their vision. This collaboration allows us to provide customized operations and turnkey solutions that exceed client expectations. You can read some of our client testimonials here.