Construction Project Budgeting - Essay Example

Comptroller will view project expenses as cash outflow since it withdraws cash from the firm's account. The accountant will view it as an expense once he receives the invoice of the asset and records it in the income statement as an expense.
Indirect cost is the cost is incurred during the execution of the project though it was not involved directly in the execution. Some of the cost is administrative, utility bills, etc. this cost is involved in the budget preparation using an agreed rate stating that indirect cost not to exceed a given percentage of the total cost, most projects use 15 percent.
No, because other costs e.g. taxes and interests that were not involved in the execution of the project either directly or indirectly were deducted from the revenue after selling the project. From my point of view, the project seems to generate revenue over time as compared to selling it at the completion which will fetch a low price.
The average cost of a concrete worker per hour (ACW/H) is $ 24.83 (“Average hourly and weekly earnings of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted”, n.d.).
Number of workers (NWKs) 8; Number of days/week (ND/W) 5
Number of weeks for completion (NW) 3; Hours/day (H/D) 10

Calculating the number of hours required to complete the project
=NWK * ND/W * NW * H/D
8 * 5 * 3 * 10 = 1200Hrs
Cost of labor = Total Hrs * ACW/H
1200 * 24.83= $ 29,796
Calculating the cost of reinforced concrete for the project
Cost of reinforced concrete per cubic yard= $ 94.50 (“Current Ready Mix Concrete Prices”, n.d.)
Estimated reinforced concrete required; 400 cubic yard
Total cost; 400 * 94.5= $ 37,800
These overhead charges are the costs that will be incurred as the pouring of the reinforced concrete is executed, also referred to as indirect cost. The total estimated cost is $ 67,596. According to (Parker & Isola, 1991) overhead charges charge should not exceed 15%
therefore cost of overhead charge; 0.15 * 67,596= $ 10, 139
The total cost of the laying reinforced concrete for the facility’s foundation
67,596 + 10,139 = $ 77, 753
Overhead charges increase the cost of the estimated cost of project by $ 10, 139.
Overhead charges increase the cost of the estimated cost of project by $ 10, 139.
It is very important when a construction project or any other project is being implemented the overhead cost ought to be considered and caution to be taken, so as to prevent the budget from being in crisis.
Impacts of the increased cost of steel to construction project budget
Steel is one of the vital components required in reinforcing concrete. When the price of steel increases this has a negative impact on the budget of the project. This normally happens due to inflation or other factors that affect prices in the market. An increase in price will force the project manager to reduce the fund allocated to other activities or to source other funds to overcome the deficit. In budget preparation, it is advisable that a 20 percent excess of the actual estimate should be added so as to take care of a scenario like this one(Parker & Isola, 1991).
Effects of hurricanes on the construction project time schedule
Whenever hurricanes occur they cause destruction or rather damages. These damages don’t exclude the construction industry. When construction is in its preparation stage, normally trenches are dug to lay the foundation. If hurricanes occur at this point in time the trenches will be submerged with water and no construction will take place. This is causing a loss to the project which will lead to the budget being in crisis.
With this occurrence nothing can be done as far as the progress of the project is concerned.