what to do when you’ve blown the budget!
Even with the best intentions, experience and a Masters in accounting, from time to time projects go over budget. In fact, Inside gets a few calls a year from new clients who’ve gone and blown the budget on a renovation and need some help. Happily, we can often step in and save the day (AKA their business). Here’s how we approach that work and what you can take away if you’re about to embark on a project.
If your renovation has or is about to blow the budget, take a breath. It happens, but all is not lost. Before you do anything review the reason why you started the renovation in the first place. Get back to the business rational for why you wanted to renovate – shifting markets, expansion, new approach to product offering. Whatever the reason may be, ask yourself if that rational is still valid.
Next, go back to the design concept. What were you trying to achieve with the renovation? If the plan was to modernize or bring more light into the space, you need to hold onto that before you open the books on what went wrong from a budget perspective.
Keeping in mind your business rational and design concept, review your specifications and look for cost savings in alternate or similar products – you might be able to get the same ‘look’ for box-store prices. Review your project in terms of what is absolutely necessary and what is nice to have – think about pieces that can be reused.
Budgeting is about balancing available funds and your design concept. As you’re going through the budget, review any additions that have happened along the way and ask if they are essential to the project.
With the design concept still intact and your expenditure in check, there’s a few more things to get lined-up… You may need to ask yourself, was the budget realistic in the first place? Spoiler, it’s a trick-question! Before you move forward with your new budget, take a moment to add a contingency.
As you move forward with renewed vigor, consider:
Your schedule -- try to eliminate air freight, extra delivery costs, or overtime hours for trades.
Not phasing your project, shutting down, starting up and storage costs add up!
Different forms of project management like General Contractor versus Project Management.