The rate at which golf courses are investing in improvement projects is unlike anything we have seen for some time. This is due in large part to growth the golf industry has experienced in recent years, which has put many courses in a stronger financial position. These types of investments can come with a high price tag and there are many uncertainties with golf course renovations, so it is important to have a contingency fund in place while developing the budget for a project.
Even with the most detailed plan and an experienced team to carry it out, there are going to be unforeseen circumstances that develop during a construction project. The cost of changes and delays can add up quickly depending on how they impact the project. For example, if bad weather causes you to miss a seeding window you may need to purchase large amounts of sod to complete the work. If a contingency fund is not properly set, reserves can diminish quickly.
So, how much should be allocated for a contingency fund? A simple answer is ideally 15 percent of the total budget, and it should not be lower than 10 percent. For a large-scale construction project, this is a large sum of money. However, not setting aside enough funds can result in being over budget. It can also mean making decisions during the project around what elements to cut to offset increased costs. This is not a good position to be in because once a project is underway, the options for making cuts may be limited.
Provided a project moves along relatively smoothly, having money left over as the end approaches makes it possible to complete additional work or come in under budget. This is much better than having to justify being over budget or making undesirable cuts to materials or the scope of work. For assistance with navigating the planning process for an upcoming project, reach out to your regional USGA agronomist.
Central Region Agronomists:
Zach Nicoludis, regional director, Central Region – znicoludis@usga.org
Tom Gould, agronomist – tgould@usga.org