Construction cost control.
Cost is among the major considerations throughout the project management life cycle and can be regarded as one of the most important parameters of a project and the driving force of project success. There are several factors that are responsible for these cost overruns. An uncertain budget and real cost overruns are always a big concern to the client during the construction.
It is generally accepted that around 80% of the cost is determined by the design stage, only 20% by construction. Therefore, an estimation is required during the plan drafting. A roughly estimation will help the client understand where the money will spend on, and assist the client determine the plan details based the client’s funding intent. It is important to help client firm the plans, as any potential project changing, may rise the cost, make the cost out of control in the future.
Realistic cost estimation
Once the plan firmed with details, a properly estimation will be provided. The final cost estimation is built on the project manager experience, current labor, materials, equipment and site feasibility. It will be close estimate to the actual cost of completion (+/-5% difference), It will be a good idea for clients to change plan if needed without any potential cost risks.
Inadequate planning are frequently cited causes for cost variances in construction materials management. Restocking fees, Materials damaged on site, Late delivery of materials (impacts schedule), Unreported material damage at delivery, Relocating materials, Incorrect material take-off. Changes of materials quantity required, Uneconomic order quantity. Material waste (over usage), Purchasing the wrong materials and Excess site storage cost
Labor/ Subcontract Cost Management
Construction labor cost is the most variable element of the project construction budget.Building construction is subcontractor intensive due to the number of specialty contractors needed, subcontracted items include excavation, masonry, steel erection, glazing, interior finishes, mechanical and electrical. Virtually all problems in subcontract cost control are caused by poor communications.
Update cost reports – Consistently
The cost report consists of details like vendor, description, budget at completion, paid to-date, committed to-date, estimate to-date, estimate at completion, variance at completion .The material cost report and subcontract cost report is a tool the contractor uses measure respective cost performance. Keep updating the cost reports weekly this helps client to visualize the cost.
Change orders are inevitable in any construction but good practise in construction will have few change orders only. For every change orders the budget is revised to reflect new project scope. The project scope creep should be measured and controlled efficiently because change orders impact the cost and schedule inherently.
An efficient project manager can provide an accurate budget (+/-5% difference), forecasting labor, material cost, manage cash flow schedules, anticipated final cost, Cost Variance analysis. A good cost control is essential for the project success. Contact us today for how can we help you with your next project?