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Commercial real estate projects often have gargantuan budgets, but unless you’re careful about managing expenses, the money will run out before you’ve crossed the finish line.
This is why it pays to be strategic about balancing the budget and avoiding wasteful spending, so how can you do this successfully?
Hammer out the details during the planning phase
The most common reason for overspending is as a result of a lack of planning before you break ground on a commercial construction project.
Even early on in the process it’s possible for delays to derail any progress you’ve made, so it’s your responsibility to think of every eventuality and factor this into your cost calculations.
From conducting market surveys to ensuring that you’ve filed all the right paperwork with the local authorities and followed relevant regulations, this is your opportunity to minimize risks and tick all the boxes.
Use software that proactively alerts you to budget challenges
Staying on top of every element of a construction project isn’t something you need to do manually these days. With platforms like northspyre.com, you can bring the power of cloud-based data analytics and automation to bear on even the most complex real estate endeavor.
The most relevant feature from a budgetary perspective is that this type of software is capable of pinpointing potential problems automatically and giving you the time to find a solution, instead of being sideswiped by unexpected expenses. That way your decision-making can be driven by data insights, not based on your best guess. Real Estate CRM Software can help keep your project on budget.
Factor in external market forces & trends
Being familiar with the benefits of data analytics when managing a commercial real estate project is only helpful if the information you’re relying on is up to date and adjusted according to the local market.
If you’re using older data sets, or you haven’t taken into account the differences between national or international averages and the unique scenario you face in your particular region, the insights you glean won’t be accurate, and could even lead you to make the wrong decisions.
Have a contingency allowance
It doesn’t take much to cause construction project costs to increase beyond what you originally calculated. That’s why building in a contingency at the start is a tactic that’s been used for decades to deal with this likelihood.
The scope of the contingency you allow for will vary depending on the scale of the project itself. However, in most cases it will equate to around a tenth of the total anticipated expense of the work.
This will let you breathe easier if things like material costs spike upwards without warning, or if you hit any other roadblocks that cause delays.
Hire the best people
Another balancing act you need to complete when managing a commercial real estate project is getting good contractors onboard without overpaying in the process, just as you would when remodeling a home.
Choosing the cheapest bid isn’t the best move, because if the team you get is inexperienced and not up to the tasks you require of them, then you’ll only fork out more in the long run.
You should check up on the track record of contractors and get testimonials from clients they’ve served in the past if you’re in any doubt about whether they’re the right choice.
Keeping a lid on the budget of any construction project is a challenge, but just because overspending and overrunning happens elsewhere, that doesn’t mean you will end up in the same boat. Planning, patience and solid software will see you through, regardless of the scale of the job.