If you are a civil engineer, you know that the budgeting of construction projects in civil construction is one of the main challenges in the sector. 

When well-structured, it ensures greater reliability in the financial viability of the project, avoids waste, and optimizes resources. 

In this article, we will explore everything about this subject. Continue reading to check it out: 

• What is a construction project budget?

• Types of budgets for construction projects

• Step by step to prepare the budget for your projects today 

• Most common mistakes and how to avoid them

• Construct IN: Less chaos, more control of your projects!

What is a construction project budget?

The construction project budget is a document that outlines all the costs involved in executing the project.

To do this, it is necessary to detail all the needed quantities of materials, equipment, and labor histograms, as well as consider variables such as estimated project duration and additional costs for permits, job site, water and energy consumption, among others.

The person responsible for the budget must keep in mind that it is necessary to include all anticipated expenses for the project, to ensure adherence to the financial viability calculated for the project.

- Read also: Productivity in civil construction: what it is for and how to calculate

Types of budgets for construction projects

There are different approaches to creating construction project budgets in civil construction. The best option will mainly depend on the timing and the degree of maturity and detail of the available projects.

Here are the two main types:

1. Parametric Budget

The parametric budget is a good choice in the initial phases of a project, when not all project details are yet defined. 

It works as a general estimate, based on parameters such as built area, construction method, finishing standards, and project duration.

It may not be the most precise option, but it helps provide a general idea of the costs. To calculate them, estimators can use the  Basic Unit Cost of Construction (CUB/m²) or the SINAPI Table, for example. Remember that it is important to be aware of value changes that may occur from one state to another. It is also possible to use parameters calculated based on costs incurred in other projects with similar characteristics.

2. Executive Budget

When the project is more advanced, with specifications and details defined, the executive budget becomes the most precise option. 

It involves a meticulous analysis of all necessary services and materials for the project, taking into account the exact quantity of each item’s project, such as: labor, equipment, and materials.

This type of budget is based on cost compositions, which are formulas that combine quantities of inputs needed for each service with their unit prices, considering labor, materials, and equipment. 

Additionally, in this type of budget, it is essential to consider all other values necessary for the execution of the project, such as administrative labor costs, job site construction and maintenance, recurring consumptions, governmental fees, among others.

With this, the executive budget provides a more precise inventory of the project's costs, which is essential to ensure predictability regarding the total values required for the execution of the project.

Step by step to prepare the budget for your projects today 

Here are some tips for making an excellent construction project budget. 

1. Quantification of materials 

The first thing to do is to calculate the amount of materials needed for the projects, based on the project drawings and specified dimensions.

For example: for  masonry, you need to calculate the area of the walls, the number of blocks and mortar required. For the structure, it is necessary to account for the total volume of concrete and steel specified in the structural project.

2. Detail the project's costs 

The cost composition details the expenditures of a service, including labor, materials, equipment, and indirect costs such as administration and recurring consumptions. 

See what to include in each of them: 

• Labor: determining the cost of labor involves more than just the worker's base salary. It must also consider taxes, benefits, and social charges, such as INSS and FGTS. It is essential not to overlook this, as costs can exceed 50% of the total project. Additionally, it is necessary to calculate labor productivity rates for each service, to determine the period and/or the amount of labor required;

• Material cost: when getting quotes, it is essential to compare offers from different suppliers. One should not focus solely on prices, but also consider delivery conditions, finishes, and other details, such as transportation or product type;

• Equipment costs: represent a significant part. It includes purchase or rental, operation, maintenance, and other associated costs. To calculate the equipment cost, an hourly rate is used, as this is how it is incorporated into project costs.

3. Create the ABC Curve

The ABC curve should be applied during the budgeting process in civil construction. It is a tool for analysis that helps identify which items (materials, equipment, or services) represent the largest share of total costs, allowing for prioritization in controlling these items.

In other words, the ABC curve is not a separate step from the budget, but a methodology used within the planning and elaboration process. Its application occurs while costs are raised, allowing the budget to focus on items with the greatest financial impact.

To learn more about how to reduce costs in Civil Construction, watch our webinar: 

- Read also: Project manager: what they do, importance, and responsibilities

Most common mistakes and how to avoid them

Even with solid planning, some recurring mistakes can undermine the construction project budget. Here’s how to avoid them:

• Underestimating costs: Always conduct detailed market research and consider all variables that impact prices, such as the project's location and market fluctuations;

• Ignoring unforeseen events: It is essential to budget for a financial reserve for emergencies or changes in the project scope. Set a percentage of the budget to cover unforeseen events and minimize risks;

• Lack of integration with financial management: Use tools that integrate the budget with the financial management of the project, allowing for a global view of costs and cash flow.

• Ignoring the ABC Curve methodology: this can impair the analysis of which inputs have the greatest financial impact. Adopt this methodology to focus on the main elements of the budget and avoid unnecessary expenditures on less relevant items.

Less chaos, more control of your projects!

With the Construct IN project management software , you eliminate the chaos of scattered information and gain total control over the project execution in real-time.

Try it for free and see your project under control, without surprises! And, of course, reduce your costs by up to 50%. 

- Read also: Project management: how to do it and tips for good management