3 Causes of Hidden Losses on Construction Projects
What accounts for the growing increase of losses in construction projects?
Even more surprising is that 49% of all construction projects in the US tend to spend way above the total amount initially budgeted for.
This raises valid questions about why people fail to stick to their budget. Is it due to wrong projections or external forces?
Read further to gain insight into some of these hidden costs.
1. Estimating problems
Construction estimating anticipates the overall cost of putting up a building. Therefore, it is one of the most critical aspects of the construction process, and without it, it will be impossible to plan the building budget.
Fortunately, companies provide this essential service to ease the pressure of building construction. Therefore, if you’re wondering how to get this done, you may consider credible companies like the Multi-Family Lumber Takeoff Estimate services.
For your construction project to be successful, you shouldn’t ignore the importance of precision and exact costs. Moreover, this industry is notable for its razor-thin margins, and as such, the slightest change in plans or design can influence estimates and budgets.
Experts say the complexities in the construction sector are what make it possible for losses of this nature to remain hidden until later.
2. Poor productivity
Efficiency is a vital element in the construction process. Without it, projects are bound to delay, which subsequently impacts the budget. It explains why your team must observe their contractual commitments.
As expected, the construction project’s scope of work details every single activity that must be carried out to completion. However, due to internal or external factors, productivity might be affected. Examples of these factors are:
- A lack of skilled labor
- Inadequate project supervision/poor management
- Demotivated workforce.
That brings you to how productivity can be improved onsite. For instance, you can ensure communication is clear and compelling. Avoid creating room for ambiguity, especially because construction workers require an understanding of what is expected of them.
Furthermore, it is a technological age, and you will find it helpful to adopt modern tools to speed up work.
3. Poor material quality
It is indisputable that suitable building materials go a long way to ensure the quality of the structure. For instance, If you used low-quality lumber for a project, you would have no other choice but to correct the error that comes with it in the long run.
In other words, you would have spent more money than necessary for cutting corners. Problems with building materials can lead to the following:
- Project delays
- Increased storage costs
- Uncoordinated labor.
Improper storage, inferior building material quality, and poor application usage are a few factors that account for some hidden losses. Apart from these three, theft is also reported to be a contributing factor.
In conclusion, every construction project involves a great deal of finance, relevant expertise, accuracy, etc., before it can be completed. Therefore, always be mindful of each process and procedure which can impact the project negatively.
But, more importantly, stick to the right way of doing things to avoid hidden losses on your construction project.
