Construction cost management

Construction cost management is the process by which managers keep expenses under control. To ensure that the project is completed on budget, managers deal with labor, material, and overhead costs.

Cost control is based on reliable estimates and constant monitoring throughout the whole project.

How to best handle this important aspect? You definitely need a 5D BIM software.

What is Construction Cost Management?

Managing construction costs means pursuing the goal of keeping all activities related to a job on budget, protecting designers, contractors and clients.

In other words, effective cost management sets a limit for all project costs and ensures that expenses remain in line with projections.

Cost management affects all project phases. From planning to design, from estimation to the construction site phase, up to change orders and, of course, the finished product.

Keeping the project on budget is essential to demonstrate that the entire work team has been proactive, efficient and accurate in both the estimates and the correct execution of the works.

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What is the importance of cost control in construction management?

Cost control in construction projects is a very important aspect. It guarantees the client that the work is carried out according to the timeline and the financial resources put in place during the planning phase.

The purpose of a cost control plan, in fact, is to ensure that the project is delivered on time and within the set budget.

To do this, it is necessary to follow a cost management process that is divided into the following phases:

• resource planning;
• bill of quantity;
• overall estimate of the expenditures;
• control and monitoring of expenditures.

Cost management processes

What are the methods for construction cost control?

In order to have full control of the construction costs and avoid unpleasant and unexpected problems during and at the end of the works, it is advisable to follow some fundamental steps. Here are some tips to master construction cost management.

Accurate estimates

All cost control techniques are doomed to fail without proper project planning.

In order to make accurate estimates, labour, materials and equipment costs should be examined. Moreover, project quantities but also professional fees and costs related to expenditures, permits, etc. need to be evaluated as well. The more accurate this analysis, the higher the probability of having accurate estimates.

To do so, it is essential to use a 5D BIM software, with which to obtan the bill of quantity jobs automatically from the BIM model in IFC format. This allows you to minimize miscalculations because quantities are calculated automatically by the software, directly from the 3D model of the project.

We can currently find on the market online tools to get the bill of quantity, to make estimates, quotes and price lists in a collaborative way on the web, from any place and with any device.

In addition, it may also be helpful to look through total expenditures of previous projects and to conduct market analyses on works of the same type and in geographical areas comparable to the intervention.

It is always better to avoid over-optimistic estimates: it is much better to have unexpected savings than to have to deal with budget overruns.

Communicate with the team

Communication among all the team members is essential to stay on budget. An informed work process, in which everyone knows what to do and the timeframes to be respected and the resources available, helps to avoid overspending.

In addition, an open line of communication helps to tackle any crises or changes of plan as soon as they arise. A BIM management system would help to better manage the communication, collaboration and coordination of the work team in the construction process.

Making Periodic Reports

Daily reports on what is happening on site and periodic updates of the project plan, allows to spot any costs not in line with estimates or potential interruptions/variations in the construction program. That way, prompt intervention would be possible.

Thanks to constant monitoring, you will reduce the chance of unforeseen events. You will also be able to manage problems and interference if they arise.

To make sure that your construction projects run smoothly, on schedule and on budget, I recommend using a construction management software, maybe one that is completely online and available from any device (smartphone, tablet, PC).

Have backup plans

If something happens that jeopardizes the estimated project budget, it is always advisable to have a backup plan.

During the planning phase of a project, it is good to identify the potential risks and draw up a plan that indicates exactly what to do to avoid any further cost increases. In any case, it is always best to keep the changes to a minimum.

Carrying out post-project evaluations

Whether you have stayed on budget or not, post-project evaluations are the right thing to do once the project is over.

Meet the main stakeholders and get the analysis of the events that occurred during the work (evaluating both what went well and what did not go well) helps to be more prepared in the coming projects.

Construction management software

Managing a construction process and its costs requires the use of specific software.

With a BIM management platform you can obtain cost estimates, manage the coordination and collaboration of the entire work team on a daily basis, manage 3D BIM models, organize work in the studio and on site, etc.

In this way, even large projects and multidisciplinary work teams become easier to manage, without ever losing control of every single phase and activity that is taking place.