{"id":537,"date":"2020-01-29T18:12:06","date_gmt":"2020-01-30T01:12:06","guid":{"rendered":"https:\/\/contractorslicensingschools.com\/blog\/?p=537"},"modified":"2020-01-29T18:50:50","modified_gmt":"2020-01-30T01:50:50","slug":"are-your-contracting-business-projects-overspending-the-budget-heres-what-might-be-wrong","status":"publish","type":"post","link":"https:\/\/contractorslicensingschools.com\/blog\/are-your-contracting-business-projects-overspending-the-budget-heres-what-might-be-wrong\/","title":{"rendered":"Are Your Contracting Business Projects Overspending the Budget? Here\u2019s What Might Be Wrong"},"content":{"rendered":"

\"\"<\/a>Budget overrun is a frequent problem for contractors. You bid on a project, your bid is accepted, and then it\u2019s a race to try to keep your costs down. There are several things that can make you spend more than you expected, and some of them are easier to account for than others. By planning ahead, you can minimize the likelihood that you\u2019ll need to adjust totals over time. Here\u2019s a few areas to focus on.<\/span><\/p>\n

1. Don\u2019t Skip the Details
\n<\/strong>Like guessing how many candies are in a jar, rough estimates of your project costs are bound to be wrong. Sometimes, a quick back-of-the-napkin tally can be off by hundreds or even thousands of dollars. Instead, make sure that you\u2019re giving enough time to investigate the costs you predict for each stage and line item for the project. Confirm that prices on materials or equipment rentals haven\u2019t gone up. Double-check that you haven\u2019t missed a digit and made an $8,000 item look like it costs $800. The more investment you make in the original estimate, the less likely you are to make a mistake.<\/span><\/p>\n

2. Overestimate, Don\u2019t Underestimate
\n<\/strong>When you\u2019re trying to establish your contracting business (or get a leg up on the competition), it\u2019s tempting to say that you can get it done quicker and cheaper. But if this requires you to skip sleeping or force your employees to work much longer days, it\u2019s not a realistic goal. Whenever you can, overestimate how long you think the project will take. Give yourself a margin of 10-20% on materials, in case you need more or they\u2019re harder to get. It\u2019s always easier to show a client that it cost you less than to ask for more money.<\/span><\/p>\n

3. Budget for Non-Project Business Costs
\n<\/strong>There are a lot of expenses you have to pay to run your business that do not fall within the confines of the project. If you\u2019re not budgeting for them in your estimates, they will come out of your profit margins. You may have a variety of bills that are not related to the specific project, such as:<\/span><\/p>\n