5. How to (not) do your budget in five easy steps

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If you have reached to the point where you have to give the budget for your project after you have systematically made all the four mistakes listed previously, you are either plain lucky or a sitting duck. More likely the latter!
Here’s how to (not) do a budget. Imagine the scenario in the Post # 3. For that scenario, do the following:

1. Get the rates for a single house from a local contractor. Extrapolate the rates to 1500 houses. Simple
2. Cross check the rates against your home country rates. Rest in the comfort that they are much higher than your home country rates.
3. Ridicule all the advice by your own staff related to employing qualified Quantity surveyors by saying “That’s how we do it here.”
4. For the rates that are not available locally, use your home country rates, multiply them by some factor and build them up. Simple. Not rocket science is it?
5. Float your budget to the client

The fact that the project is the first of its kind in a less developed place, in a ridiculously impossible time frame, should not matter. Armed with this “budget” go ahead and float your tender to international contractors.
Obvious lessons from this post are

• Budgets prepared by such rudimentary methods can not be the basis to go to tender. This clearly misguides the client into believing a budget which will not stand the test when the bids come back.
• The Project Manager’s budget – if prepared at all, should not be shared as a Cost Plan document to the client.
• Do not hesitate to employ local professionals who will give you a correct picture of the rates and an accurate and reliable number.

Links to previous posts of this series
4. Read the contract you just signed
3. Don't promise the impossible in a ridiculous timeframe
2. How (not) to win a contract
1. New Business Areas