Avoiding Cost Overruns

I’ve been in the business of home improvement for over 35 years. That's long enough to know that there are cost overruns that could have been avoided in almost every project. Not all issues can be predicted, but I’ve learned to avoid the most common issues, and I thought I’d share some tips that might help you when you’re planning your next project.

The four most common causes of cost overrun are:
•    Project design errors; 
•    Inaccurate project estimates; 
•    Poor project management; and
•    Not planning for change orders.

A contractor’s experience and expertise are your best defense against all four of these issues. Inexperience leads to a host of issues that all end up costing much more than you budgeted. And by experience, I mean the experience of the professionals doing the work, not the length of time the company has been around.

An experienced contractor knows when to bring in an architect to avoid project design errors. The incremental cost in getting a solid design can ensure a better result and help you avoid overruns in the long run. Less experienced contractors may attempt these projects without an architect’s design, leading to costly mistakes.

Inaccurate project estimates can be the result of a contractor who does not have the experience to anticipate some of the issues that may be less obvious or “hidden” inside the walls. An experienced contractor is going to be more familiar with potential issues hidden inside a wall, even before any walls are opened up. Of course, there can be issues that won’t be discovered until the walls are opened, but anticipating as many costs as possible will increase the accuracy of the estimate and reduce the likelihood of an overrun. 

Poor project management and not planning for change orders are also hallmarks of inexperienced contractors. Experience enables a contractor to know that things can (and do) change as the project progresses, and they know how to manage the project to the specified budget. Again, the contractor’s experience is the key here.

A great way to assess the contractor’s experience and capabilities is to ask a couple of non-standard questions. Ask the contractor about their personal experience and background as opposed to how long the company has been around. Get and verify references.

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