I believe that the concept of budget in construction projects should be considered under three sub titles according to the stages of the project.

  • The PreBudget: The prebudget is completely calculated due to the values of the CPM solution according to the prices and costs in the proposal. The future productions determined in the work schedule are the budget income. The resource costs which are also determined in the work schedule are the budget expenses and can be retrieved and reported periodically. Therefore, in order to calculate the prebudget, the resource costs of the activities and the selling prices of the productions related to those activities at a certain period is needed. These are found in the project unit price & current value and analysis databases of that job. Using the data in those databases, the prebudgetcan be easily formed.
  • The Planned Budget: We know that the time distribution of the material requirement have to be calculated by the CPM software. These data coming from the CPM software are based on the assumption that all the resources will be on time at the construction site. However, the reality is a bit different. In the actual case, the material requirement is purchased part by part avoiding any delay at work and the payment is distributed over some fixed terms. Therefore, the material purchase decisions should be taken in a separate database. In order to take these decisions we need to see the quantitative and time distributions of the material requirement calculated by the CPM software. Similarly, in order to make a payment plan, we need both a separate database and a table building software to see the resultant cash flow when budget income and the data in the purchase decision database are compared.

In the planned budget then, the resource costs consist of stock movements and real accounting movements. In the calculation of material and labor costs, we can't use the estimated unit prices anymore. The material and labor costs should be calculated in the real cost accounting database of the construction site and the stocks should be kept under control at any stage of the project. Since the sales prices of the productions and the unit prices of the progress payment are fixed, the budget income can be calculated using the unit prices in the planned budget.

  • The Real Budget: The most suitable budget for the construction site is determined in the construction site. That’s what a “Required Budget” is. But the headquarters is responsible for the costs in many construction sites and its own costs. All projects should be considered as a whole and the payment plan should be arranged depending upon the degree of importance. At that point, the “Real Budget” is formed.

How can you ensure that the central management takes the right decisions? If you can’t compare the planned budget, the required budget and the real budget in a brief table and inform the management about the ratio of the realized portion of the work to the planned, how can you affect the management decisions in a right way?

In short, you can gather and evaluate this data using a data evaluation software conforming this aim.