I need a Construction Budget – Is there really a way to avoid the Apples and Oranges when assembling a budget?

avoid apples and oranges when assembling a budget

One of my concerns when clients seek budgets, is that it is often presumed that between otherwise equal companies, the firm that submits the lowest “best guess” may be an indicator of actual expectations of how competitive that company will be in fact.

Comparing budgets between contractors is an intuitive yet flawed means to predict expectation of who may deliver the best value, in that until plans are produced, and sufficiently developed, an apples to apples comparison is impossible.

Building The Right Budget For Your Project

Our speculative budget submittals are void of any “competition bias” in that we see our fiduciary good faith responsibility is to provide our clients with a fiscal budgeting tool based on the best information we have at any given time, regardless of who may do the work.

When our clients are building a budget, the worst thing is to see our clients land above the established budget expectations.

Because of this good faith approach, the vast majority of the time, our preliminary budgets tend to compare higher against the field a majority of the time.

Remember that our approach has no incentive to see costs come in higher in that our profit, supervision, and management fees, are fixed.

Even legitimate change orders are not marked up. We have more to gain by delivering low costs, faster production, and avoidance of change orders.

We have far more to gain earning modest profits produced over a long term and stable, relationship.

Our approach delivers self-evident, uncomplicated, transparency. The truth is uncomplicated.

A low-ball best guess is a complication we are unwilling to impose upon our clients, even if it costs us a job.

Therefore, in good faith, our preliminary budgets build in contingencies for the unknown, not as an estimate, rather as a tool for management to make better decisions, particularly at the conceptual “back of napkin” stage.

Written By:

Carl Frommer, President & CEO
Email: cfrommer@callsierra.com

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