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Keep Your Church Building Project on Time, On Track, and On Budget

Church Finance Basics
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As one who often travels by air, I’ve learned to accept the frustration of delays and be thankful someone is addressing critical issues before the plane takes off. The same is true with church building projects.

The most important factor in keeping a church building project on time, on track, and on budget is to make sure you are completely ready before starting — even if that means delaying the start date. It is extremely difficult to realign a project that starts poorly. Take the following into consideration before you begin:

Design

Insist your project be designed within the parameters of what you can afford. A good design-build firm will make this much easier than the traditional method of starting with an architect and then taking their design to a contractor to price.

Plans

Ensure the plans fully match the church’s needs and desires before they are submitted to the city or a contractor. This will minimize change orders during construction. In addition, ensure your design contract puts the burden of compliance with building code and jurisdictional review changes on the designer, not the church.

Contract

A contract and project price should be based on the final set of drawings as approved and permitted by the local building authority and all final design decisions of the church. Avoid “allowance” items and insist on a contract with a maximum or “not-to-exceed” price. Make sure the contract does not allow final payment until a certificate of occupancy is in place — the official document declaring the building is complete, safe, and ready to be used for its intended purpose.

Schedule of Values/Project Budget

A full schedule of values (SOV) or detailed budget with the breakdown of each line item should accompany the contract. Require the contractor to show you actual bids. Be sure to include items such as seating, sound system, and other equipment.

Contingency

This is a financial safety net built into the budget. The recommended amount is equal to 10% of hard construction costs to cover unforeseen costs outside the church’s or contractor’s control. A contingency ensures some funds are available beyond the line-item budget, if needed.

Critical Path Schedule

The contract should include a timeline of completion with pre-determined milestone dates for completion of major scopes of work or inspections. The contract should bind the contractor to complete these milestones throughout the project.

Disbursing Payment

Compliance with the critical path schedule is easily achieved when the contractor’s payment is tied to meeting milestones. The contractor’s billing should comply with the cost of each line item on the SOV or project budget. If there is a potential cost overrun or change order, this should first be priced and considered for source of payment. Payment should follow work and not exceed the percentage of completion for each line item.

Project Management/Owner’s Representative

It is frustrating for contractors and subcontractors to deal with multiple points of contact and can slow progress. Appoint a single representative who is responsible for the following:

  • monitoring the project
  • reviewing pay applications
  • holding the contractor accountable
  • representing the interests of the church, board and pastor
  • acting as liaison between contractor/church

Construction projects are challenging to manage and control, but following these guidelines will prepare your church for a smooth process.

For more information about church building projects, call 866.621.1787 to speak with one of our consultants.

Shawn Fink consults with churches across the country as they expand their ministries and facilities. He is part of the Construction and Facilities Solutions team of AGFinancial.

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