How to Prevent Construction Cost Overruns
When taking on a new construction project, the goal is to ensure that the objective of the project is met and the project is completed on time and within budget. Unfortunately, this doesn’t always happen as planned. An issue that construction professionals may have to face is cost overruns. Our Jacksonville construction attorneys know that there are various factors that can increase the cost of a project’s original estimation or bid price and lead to legal disputes.
Why Cost Overruns Happen
With many moving parts, it doesn’t take much to throw off the budget of a project. Estimating errors are the cause of cost overruns. When preparing estimates, sometimes certain costs are not included in the estimate by mistake. Sometimes the cost of materials is estimated incorrectly and other times, the cost of labor may change over the course of the project. In addition to that, if the plans and specifications are not executed properly, this can cause an issue down the line if changes have to be made including the need for extra work. What’s more, contractors can be faced with owner changes or there can be design errors or defects to contend with.
Solutions for Avoiding Cost Overruns
There are ways you can mitigate the risk. A great way to avoid cost overruns is to meticulously draft up your plans and specifications. Drawings and written material must be clear and unambiguous, leaving no room for speculation. This is the perfect time to have a knowledgeable Jacksonville construction attorney review your legal documents so you can avoid extra costs and legal disputes. Another way to avoid overruns is to never assume anything. Get everything in writing. Contractors and subcontractors should know what their obligations are and are not. Others solutions for preventing overruns include:
- Thorough planning before the project begins
- Give some room for possible change orders
- Hire experienced and reputable contractors and subcontractors
- Determine who pays for errors
- Identify potential problems by conducting field measurements and discovering possible hidden conditions prior to starting work
- If necessary, use a cost-plus bid for projects that present uncertainty
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.