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Trying to Create a Flawless Construction Budget


A good annual budget should be able to keep a construction company from running the risk of spending more money than it earns throughout the year. If you don’t have a clear budget, even if you’ve been running smoothly for years, future expenses could be more challenging than you anticipated. For example, you may have to expand or replace old machinery. If enough money is coming in, that won’t be a problem. But if you don’t have a grasp on expenses versus income, you could find yourself in the red.

There are several important reasons to create an accurate annual budget. For example, you may need to apply for a bank loan. In that case, your bank will need to see a formal budget as a part of your business plan.

Budgeting Techniques

You can use a variety of techniques to establish your annual budget. Depending on your work and the people involved, you can devise your own budgeting strategy. Several universal parameters within a budget plan, however, serve as a foundation. For instance, a fixed expense might be your mortgage or rental payments on your office property.

You also should consider basic overhead expenses, such as utilities, payroll and raw materials. Less-tangible items include interest, insurance and taxes. All of these are fairly clear expenses, but you also have to consider such expenses as website development, signs, business cards and advertising.

Standard Expenses

Anticipated expenses are good places to start when developing your construction firm’s annual budget. Even more specific expenses may be unique to your company. Consider some of these other standard expenses:

  • Business permits and licensing requirements
  • Salaries, wages, and benefits for you and your employees
  • Tools, supplies and inventory
  • Loan and credit card payments
  • Services such as accounting, maintenance and marketing
  • Heavy machinery and vehicle or equipment payments, fuel and insurance

Your budget planning will change dramatically depending on where you are in your business process. If you’re an established firm with a need to formalize existing plans, your experience will be quite different from that of a brand-new firm looking to establish its name in the industry.

Budgeting can be a time-consuming process. Before you get too deep into the accounting function, contact us so that we can help set up a budget that’s right for your company.