The term "as-built" refers to the documentation and measurement of a finished project. It often includes equipment installation and changes made in the field that differ from the original project documents. An as-built project cost is the final cost of creating a finished building. This would includes everything from company overhead, project overhead, labor, materials and permits to any and all costs that were not covered or expected in the estimate budget.
Estimated costs are used to build the budget for a project and are created based on quantity takeoffs, educated guesses or based on previous experience. Every project team's challenge is to meet or beat the estimate, or budget.
"There's a reason certain operations do better than others; find out why and use it!"
A case study reported by academia.edu focused on the effects and causes of cost overrun on building construction projects. The case study indicated that nine out of 10 public building construction projects suffer from cost overruns. If you can markedly reduce that statistic on your own projects, it could easily result in a better relationship with repeat clients, increase your client list and make more projects available to your construction company.
3 Ways to Use As-Built Costs to Your Advantage
By investing the time to study your as-built costs, you can use your findings to your advantage. Let's look at a few ways we can do just that:
1. Prepare Better Estimates in the Future
Estimating errors can happen for a variety of reasons, including omissions, wrong assumptions, inadequate allowances, price changes, custom or unique materials, unclear plans or specifications, hidden conditions on a job site, construction or design errors, and owner changes. Some of these situations are simply unforeseen circumstances, but in many cases, you can use the as-built costs of a previous project to inform the estimates of the next one. You probably refer to these as 'lessons learned'. The trick is THIS: you have to actually capture these lessons learned somewhere. Don't just count on remembering them for the next estimate. Start a simple spreadsheet and just start listing the lessons learned. Don't over think it. Even just a word document will start saving you headaches and start saving you money.
2. Adapt Changes During a Project
In nearly every project, you will encounter change. It's the only thing that's constant, right (as the saying goes!)? Change orders will come down the line or modifications will need to be made in the field due to a variety of reasons. If you're capturing as-built costs as you build the project, you'll be in a MUCH better spot to forward price change orders on the job. The trip wire here is that you need to be tracking costs based on operation. That's the only way you'll be able to forward price similar operations, or, for that matter, estimate those operations more accurately on new projects.
3. Discover Where You Are Under Budget and Improve Other Operations
While lots of operations will end with a cost overrun, there are times where things are vastly under budget. When individual operations are beating budget, you can use that to your advantage. How?
Study those budget-beating operations and see why they're beating budget. Then see what can be done with similar operations so that those, too, can beat budget. So often we run to the problem operations. We seldom look at what's going really well. There's a reason some operations do better than others; find out why and use it!
In the end, tracking and paying attention to the as-built project costs will increase your accuracy in providing future project estimates and will often result in better relationships with your clients, financially sound estimates, and a healthier bottom line!