Paul Leongas | How Paul Leongas Handles Construction Projects That Go Over Budget

Paul Leongas

Every construction project costs more than the original estimate. Paul Leongas understood this before he built his first commercial property, because he spent more than 25 years managing restaurants, where cost overruns on kitchen equipment, renovation projects, and facility work were a recurring feature of the business. The question was never whether the budget would get tested. The question was how to respond when it did. Paul Leongas developed a set of practices through his restaurant years that transferred directly to commercial development. They center on a few things: early identification of problems, direct communication with subcontractors, and a built-in contingency that is real, not theoretical.

He Builds Contingency Into Every Estimate Before the Project Starts

Paul Leongas does not present a construction budget without a contingency line. The size of that contingency depends on the scope and condition of the property, but it is always present and always sized to reflect actual risk. On a gut renovation of a building with deferred maintenance, the contingency will be larger. On a simpler project with known conditions, it will be smaller. But it exists in every budget.

This practice came directly from running restaurants. Mechanical failures, permit delays, and supply issues are not anomalies. They are features of any construction or renovation project. A budget without contingency is not a real budget. It is a projection that assumes everything goes correctly, and nothing ever goes completely correctly. When the contingency gets used, it is not a failure. When a project burns through the contingency and needs more money, that is when Paul Leongas sits down and figures out why.

The Self-Performing Model Gives Him Real-Time Cost Visibility

Paul Leongas performs much of his construction work through his own team rather than hiring a general contractor to manage the process. This model has cost advantages, but the more important advantage for budget control is information. When he is managing subcontractors directly, he knows what things actually cost. He knows what the mechanical subcontractor charged for a specific repair. He knows what materials were ordered and at what price. He does not learn about overruns through a monthly summary. He sees them in real time.

That visibility changes how quickly he can respond. If a scope is expanding in week two because the walls opened up and revealed unexpected conditions, he knows about it in week two, not week six. He can decide immediately whether to proceed, adjust scope elsewhere to absorb the cost, or reconsider the overall project economics. The self-performing model requires more direct management time. Paul Leongas thinks that trade-off is worth it, because the alternative is finding out about problems after it is too late to make good decisions.

What He Does When the Budget Cannot Be Fixed

There is a point in certain projects when the original economics no longer make sense. Paul Leongas has stopped a project mid-stream. He has also pushed through projects that cost more than anticipated because the long-term hold made the additional investment rational.

The decision comes down to one question: does the final product pencil at the revised number? If the property will support the rent needed to make the investment work, the additional cost is a problem that has a solution. If the property cannot support higher rents, then spending more money on a building that will never return it is not a decision he can make work. Sunk cost is not a reason to continue. Forward-looking economics are.