A common error in project budgeting is failing to consider how grant timelines might impact project cost. For a construction project, the time from submitting a grant application, to receiving an award, to construction commencement and substantial completion can take 2-4 years (or longer!); 2-4 years for a planning study. In the past, including a 10% cost contingency in a project budget might have been sufficient, but the costs of wages, materials and associated project needs continue to increase due to economic forces and 10% is not even close to enough anymore.
The New England Employment Cost Index shows that wages and salaries increased by 5.9% from December 2021 to December 2022. If increases continue at that same rate annually, it would equate to an 18.7% increase in wages over three years and 41% over six years. When creating your project budgets, keep these increases in mind for both municipal staff that will be paid through a grant and for consultant and contractor costs.
Disclaimer: This resource was created by Municipal Operations Support (MOS) staff of non-legal professionals with expertise of the subject matter. It is only intended to provide information and does NOT constitute legal advice. Readers with legal questions are encouraged to contact an attorney. The use or downloading of this resource does NOT create an attorney-client relationship and will not be treated in a confidential manner. Non-legal questions about this resource can be directed to MOS staff at mos@vlct.org.