2CL602- Construction Project Management

Engineering

Term Paper :Budgeting project

By- Devansh Shah (21BCL122)

DEPARTMENT OF CIVIL ENGINEERING

INSTITUTE OF TECHNOLOGY
NIRMA UNIVERSITY
AHMEDABAD – 382481

April-2024
Construction project Budget, by definition refers to a quantitative allocation of resources such
as Man, Material, Machinery, Minutes, and Money – required for a task in a specified time to
complete the project. Allocating and planning these resources at the beginning of a
construction project is a must for project managers.

What makes construction cost estimating and budgeting an

important task?

Every successful construction project is a combination of quality, time, and budget. While
quality and time are essential to it, the project budget remains the key factor. Setting up cost
estimation helps in planning, coordinating, and executing activities. It also helps a construction
manager stay on top of each task while also being aware of the project’s limitations and
progress.

What happens if there is no construction project budgeting

done?

All construction projects can only be taken forward with a well-planned budget. The measure of
the required amount of funds determines the time and nature of the activities involved. The
absence of a construction project budget may lead to cost and time overruns.

When a project budget is inaccurately planned, one can expect a lot of situations to occur, and
none of them yields a positive outcome. One of them is being unable to deliver the promised
project within time and quality. It may significantly affect the contractors as well as the
company’s credibility and that of the project site engineers involved in the project.

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Most of the construction projects are of higher value, so being able to complete the
construction without having to burn all the available resources is fundamental. Thorough
research can help a contractor to meet the objectives and requirements of the project.
Investing time, in the beginning, can cover all the unexpected losses that one could incur.
Planning may seem to be a cost to some construction companies, but it has a lasting impact
on the entire project.

This is where a good construction project budgeting and scheduling modules such as the
one present in active Construction ERP helps contractors.

What does a good construction project budget software do?

A large number of organizations utilize manual estimating and budgeting excel templates
to determine, recognize, break down, and report the budget. These tools may help the
project manager with financial reports, figures, and different analysis, but they also
consume a lot of human and financial resources.

Today, with the help of a wide range of construction budgeting software, companies can manage
their finances, and eliminate redundant processes. They can automate, analyze, and master their
financial statements and accounts.

The major benefits of a construction budgeting software are:

Cost-Effective: Involving budget management software can help reduce a lot of time and
energy. It also helps a project manager to control the expenses as and when required. With
the right set of features, the software can help keep the project manager on track and alter
schedules as well, if required.

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Improves quality of time and money: Cost estimating and budgeting is ‘planning’ – it lets a
company decide the amount it can spend on various activities without depleting its assets. To
create a significant budget, they compare present and past financial reports. A budget
management software for construction companies can make it simpler for the project manager
to classify these reports and automate the entire planning process. Since the budgeting
software is technically advanced, it spares time as well as resources.

Helps in building zero-based construction project budgeting: A construction budget should be

as accurate as it could be, or it may cause limitations at the time of implementation. A fitting
construction budgeting software device can viably help make zero-based budgeting during the
beginning of a project, and monitor it as well. In other words, a suitable tool can help
encourage construction workers. It can also lead to the proper execution of the project with
complete awareness of material, machine, manpower, and cost requirements.

Active provides a custom-built ERP for the construction industry with modules for Budgeting &
Cost Estimation management for infrastructure and contracting companies. With the right
combination of knowledge, skills, and technology, Tactive, helps project managers and
contractors achieve their goal of completing projects within time and budget. Tactive has
the experience of serving over 35 construction and contracting EPC companies, offering
them customized construction management software.

Conclusion:
In conclusion, project budgeting is a critical aspect of project management that involves
estimating, allocating, and managing financial resources to ensure the successful completion of a
project within defined constraints. By following a structured approach, including identifying
project scope, creating a work breakdown structure, estimating costs, allocating resources, and
developing a comprehensive budget, project managers can effectively plan and control project
finances.

Throughout the project lifecycle, it's essential to monitor actual expenses against the budget,
implement cost control measures, and manage changes to keep the project on track
financially. Collaboration among stakeholders, clear communication, and regular review and
adjustment of the budget are key to mitigating risks and maximizing project success.

Ultimately, effective project budgeting contributes to project success by enabling informed

decision-making, identifying potential cost savings opportunities, and ensuring that resources
are utilized efficiently to deliver project objectives on time and within budget.
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