A Project and Budget Review (PBR) is a limited scope report, typically conducted prior to the closing of a construction loan, that reviews a subset of items that are reviewed in a Document and Cost Review. The items reviewed can include the Budget, Schedule, Drawings and Specifications, Construction Contract, and any other document(s) related to budget and scope. The PBR can be considered a streamlined review that looks for alignment of the three pillars of any construction project: the budget, the scope, and the schedule. The PBR is best used for small projects (ex: under $1 million), small scopes (ex: like a tenant fit-out), projects with limited documentation, and for other scenarios listed below.
Partner conducts a Project and Budget Review as a third party to a construction project and analyzes each line item of a proposed budget to confirm the values submitted are reasonable. We can also look at any approved or potential changes to a budget created by scope changes, design modifications, value engineering, or force majeure.
It ensures that the developer or General contractor submitting the budget are charging realistic rates considering the construction schedule and that the lender or investor are on the same financial page.
Unexplained cost overruns, lack of documentation for expenses, and deviations from the initial budget without proper approval.
Scope creep (adding features or functionalities beyond the initial plan).
Unforeseen circumstances (e.g., material price hikes, delays due to external factors).
Inaccurate initial estimates during project planning.
Project and budget reviews can be improved by establishing clear objectives and criteria for evaluation, fostering open communication among stakeholders, using appropriate tools and techniques for analysis, and continuously learning from past experiences to refine future reviews.
Key metrics include budget variance (the difference between actual and planned expenses), schedule performance (progress against the project timeline), cost performance index (CPI), schedule performance index (SPI), and earned value (the value of work completed compared to the budgeted cost).