In construction, a budget is the amount of money and time a project owner allots to a specific project. One project can often have several budget numbers. Everyone's got one. The client, architect/engineer, GC, subcontractors and vendors might have different budgets for the same components or scopes on a single job. All budgets are not created equal though. Client and A/E budgets are often more conceptual in nature because of when they are developed in the project life cycle. Contractors come in later in the process and have more information that is used to provide detailed and guaranteed pricing. The variety of construction supply chain position and timing of budget development create situations where different supply chain members have different perspectives and expectations. With budgets and wallets being squeezed by everyone in the supply chain, different expectations quickly lead to friction and conflict. When cost and schedule overruns occur, contractual disputes often follow. Interestingly, cost and schedule underruns can also lead to contractual disputes.
So what does this mean for you? It boils down to management of expectations. Manage expectations of your project while managing the budget. Everyone on the same page means there are no surprises, that most everyone is happy and that projects are successful upon completion.
If you want to learn more about the status of budgeting in construction, especially on mega projects, check out Bent Flyvbjerg - https://www.sbs.ox.ac.uk/about-us/people/bent-flyvbjerg.
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