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So that’s how you budget!

March 28, 2010

My grocery budget is $200.  I’ve made a shopping list using the grocery store ads and the total that I’m going to spend to get every thing on my list is $150.

I’m $50 under budget and I haven’t even gone shopping!  Yeah!  Now I have $50 to spend on something else.

That’s how the city seems to think that budgeting works.  The south bridge is “under budget” because the contractor says that they can build it for less than the original estimate.

One problem.  The bridge isn’t done yet.

2 Comments leave one →
  1. March 29, 2010 10:17 am

    The bridge is a design-build project in which the winning bid sets the price for construction. If the construction company (presumably Graham) goes under budget for the duration of the project, they can keep the difference under the bid price. However, if the company goes over budget, they have to make up the cost themselves.

    Ergo, no extra cost to the municipality.

    Incidently, projects like these drive public section unions crazy, as there is an incentive to get projects done ahead of schedule.

  2. Michele permalink*
    March 29, 2010 10:25 am

    So, if labor or supply costs dramatically increase, the company just has to absorb that loss? No matter how large it is? Are there any limits to that?

    I can see how some unions wouldn’t like this. Too bad. If the bridge can be done quickly, safely, and on budget, that’s good for the residents of Saskatoon.

    Thanks for the explanation!

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