Construction Budget
IE in its assessment. Construction contracts typically include contingencies of 10% to 20%, including
profit margin, to account for cost overruns, materials inflation and wage escalation. Firm quotes from key
subtrades are expected to have been used to develop the budget, with a plan for managing input prices
and lock in key subtrades by financial close. Origin attributes significant importance to the IE report and
its opinion with respect to the complexity of construction and the reasonableness of cost and timing
estimates.
the IE. This ensures geotechnical conditions are well understood, that there is a sound basis for the exca-
vation and foundation work plan and that a proper mitigation strategy has been developed for potential
archaeological or environmental issues. Site access and the proximity of the site to other operating struc-
tures are also considered carefully as they have the potential to increase the complexity of the project.
common practice, enabling quick response to delays. Another discipline for construction performance is
to require completion milestones to be certified by the IE at key stages. The language employed in the
certification is important. A general opinion from the IE, at each milestone, that the project can still be
completed on time and on budget is less effective than a specific opinion that each milestone has been
achieved and the project is actually on time and on budget. Linking IE milestone certificates to approval
of phased lender advances and funding to the project focuses contractors and owners on solving construc-
tion period problems and reduces risk.