Did you know that cost management is the first step in project success? When building a new house, the first thing that comes to mind is cost and how to manage it to ensure you complete construction as budgeted.
Organizing your finances when building a house will not only save you more money but will reduce unnecessary costs. It would help if you were time-conscious as delays lead to overspending. That said, below are various ways you can effectively track spending when constructing a new house.
1. Create a Budget
Once the idea of constructing a new house gets established in your mind, the next step is to evaluate your finances to help you set a budget. The budget acts as an umbrella that holds your spending. Figure out your income, monthly expenses, and savings.
Your budget should be within reasonable limits to avoid stalling your new house project. You can consult a contractor to guide you on the materials you need. Then book an appointment with your bank where you’ll discuss your idea regarding the amount you want to borrow and how much you can afford to pay per month.
Creating a concrete budget will reduce your financial stress and help track your spending when constructing your new house. Once your budget is approved, you can now set up tracking parameters with the help of a home construction estimating software to help you manage your spending.
2. Create an Automated System
Automated systems are the current trends in the construction industry because they help you know how to track project expenses, manage work progress, material handling, and overall spending with a click of a button. The system gives you the freedom to track your construction project from any location, provided you have an internet connection.
So after consulting your contractor and the bank, your project gets approved; you can now consult a construction software expert to help you design a perfect system for tracking your spending. You may opt for project management software or a simple excel sheet to help you key in and manage data on who is spending what and when.
Without an established project management system in place, it can be challenging to track your spending even when supervising daily. Thus it’s essential to create tracking software and assign someone to manage it.
3. Delegate Someone to Track
Creating a project management system is one thing, and managing it is another task that requires consistency and close monitoring. As the project owner, the chances of you spending your time tracking the costs are almost nil.
Thus it’s essential to delegate the management task to ensure that somebody from the construction team is continuously keying in the necessary information and monitoring project progress.
Since the system manager will be aware of your operating budget, they will raise a red flag in case of increased costs beyond the approved budget. That’s why you need a reliable and honest individual. Again, your work will be following up with the person to get updates.
4. Create a Project Worksheet
Before you start, create a budget worksheet to help you divide your new house project into phases and ascertain how much you need to complete each stage. You can further change these costs into percentages to help you track them with ease.
When your budget is high, you’re likely to overspend on some phases, unlike when you have a low budget. A project worksheet will help you identify the items in your budget that require more money than others.
Since the worksheet may vary from one project to another, do not copy for an already finished project. Instead, create a new and detailed one depending on the size of your new house project. When creating a budget, remember you only used estimates which can decrease or slightly go up depending on the effectiveness of your spending track system.
This project worksheet will work best before commencing constructing your new house. Identify and list all the resources and equipment your team will need to help track their costs.
5. Organize your Purchasing Receipts
In some countries, you get a tax rebate after constructing your new house. This means you need to file your receipts to help you claim a tax percentage on the materials and labor costs you underwent. You can put the receipts in manual files or create a spreadsheet in your system to support tax claims.
Since you can miss keeping these receipts sometimes, ensure your delegated spending tracker is the one handling this. They will ensure all receipts are captured and retrieved when needed. Filing the receipts according to their categories will make it easier to fill in tax request forms.
Conclusion
Mastering how to effectively track spending when constructing a new house is an excellent achievement in the construction industry.
However, using the proper methods and systems will ensure you enjoy your construction journey since you will work within the approved budget. A construction management software and the right person to track progress will help you achieve your new house dream.
