The Importance of Line Items in a Budget
Not Just Numbers on a Piece of Paper
Project managers, whether they are construction managers, general contractors, or architects, regularly supervise multiple projects concurrently. Each of these projects must be managed independently, particularly with regard to cost accounting. For this example let us consider the following scenario; a general contractor’s project manager is responsible for two projects that were each awarded on a negotiated basis with guaranteed maximum price (GMP) contracts. All savings under these GMP agreements will be returned to the owner. Project #1 is progressing well and expected to finish well under budget. Project #2 is not going well, has incurred many problems and is expected to finish substantially over budget. The general contractor’s president and vice president are placing tremendous pressure on the project manager to minimize their losses from project #2.