How to Plan a Project Budget

Electrical projects require a multitude of planning. New projects need to have timelines, materials, labor, legality, certifications, and of course, costs, figured out. It's not easy, and that's why it often takes a team of property managers, facility engineers, and operational leadership just to get a project planned, let alone implemented. In addition, contractors need to work closely with developers and suppliers to ensure that any project stays on time and within budget.

Keeping a project on track requires hard work and careful planning—one of the most important parts of planning: setting a budget. The budget helps determine the project's scope and the amount of time it should take to finish.

Figure Out the Basics

The first step of any electrical project is determining the basics for the project itself. These details include:

What is the scope of the project? A re-wiring of an office space will have a completely different scope than a design-build and installation for a manufacturing plant. Being very clear on the exact scope is critical for planning and helps to avoid scope creep.

What does the timeline look like? Can we give the project the time it needs based on operational demand? Will the project need to be rushed? Timing can hurt your project's bottom line when materials need to be expedited and/or labor requires overtime. Due to COVID, obtaining materials could take longer than usual.

Do you have a full-time commercial contractor, or is it a part-time team? Will internal resources need to be leveraged, and, if so, what does that mean for internal staffing?

Will it affect your existing business model? Have we prepared for contingencies? Keep in mind that renovation projects might slow down or halt business.

The answers to these questions go into figuring out a general estimate of your project's costs.

Hard Costs/Soft Costs

Next, determine the hard costs and soft costs. Hard costs are the tangibles (i.e., materials, supplies, equipment, labor), while soft costs are the intangible costs unrelated to the physical materials. and building.

Soft or indirect costs usually account for one-third of the budget and include:

Design and drafting costs.

Land or real estate. Obtaining staging or storage areas for supplies and materials is part of this expense.

Inspection fees. These costs can be high for a large-scale manufacturing facility as the building and electrical plans must meet legal codes to ensure the safety of the workers and products being made.

Equipment and tool rental. A contractor may not have specialized equipment on hand and thus may need a rental to complete your project.

Insurance. Accidents can happen, and you'll want liability and building protection - just in case.

Project management costs. The contractors aren't the only staff on your project. You'll need to compensate the team handling all design-related drawings and documents and the periphery staff.

Loan interest and financial fees. If you are paying for your project with a loan, you'll need to factor in principal and interest costs during the implementation of your project.

While they may be the remaining two-thirds of the budget, hard costs are easier to calculate. These are the physical, tangible things needed to complete your project, including:

Site costs. This includes the utilities at the worksite - electrical, HVAC, fire, water & sewage, paving, etc. In addition, expenses for the materials within these utilities are included in site costs.

Structure. Any materials required to go into the project are a part of these costs—for example, UPS’s, generators, switchgear and distribution panelboards. Feeders, branch circuitry and control wiring need to be line items in the budget as well.

Overhead. These are costs associated with doing business. For example, some may use overhead to cover the costs of insurance or building inspections.

Contingency. This number is estimated from the total costs. Plan to reserve 5-10% of your budget for unforeseen circumstances that are outside of your control. For example, material delays, or in this market, a rapid increase in material costs. You will be glad you did, as it is always better to come in under budget.

Last but not least, labor. This includes contractor costs and the labor costs for any internal team members that are project managing or contributing. Overall wages increases for 2022 are expected to be 4%, but that could be higher for in-demand skill sets that may be needed for your project.

Now that you have a breakdown of the different costs associated with an electrical project, you can start planning! It is crucial to have your key stakeholders included in the discussion and on board with the final numbers. Each of the experts involved will bring value to the discussion and help ensure the budget is accurate for the project's scope.

At Unity Power Services, we maximize the efficiency of your investment dollars. We partner with our clients to ensure we understand your priorities and objectives, then match those objectives with best in breed technologies to create the highest value of return on your investment. When you partner with Unity Power for design-build services, you save time and maximize financial investments without sacrificing your infrastructure's safety, scalability, and reliability.

With over 60 years of combined experience in electrical installation and maintenance, we are committed to delivering top-tier electrical services. To learn more about how Unity Power Services can serve you, call 571-577-0688 or visit our website.

Sources

https://www.countfire.com/blog/tips-for-effective-management-of-electrical-projects/

https://www.thebluecollarsuccessgroup.com/electrical-contracting-business-plan-how-to-plan-for-success/