0%

Cost Management

Services

Cost Management

Cost management in the construction industry is the process of planning, estimating, budgeting, and controlling costs to ensure a project is completed on budget. It’s important to keep costs under control because poor cost management can lead to delays, quality issues, and financial losses.
Here are some elements of construction cost management:
Some other things to consider when managing construction costs include:

Pre – Contract

A process to ensure that a construction project’s costs remain within the client’s budget. It involves planning and controlling costs throughout the project’s duration. Some key aspects of pre-contract cost management include:

Key Highlights

Preparation of bill of quantities

To prepare a bill of quantities (BOQ) for a construction project, you can follow these steps:

A BOQ helps the owner and bidding contractors: Understand the price of completing the construction work, Know which bids are competitive, and Estimate their profit margins.
Architects and engineers usually create the BOQ, but more companies are using BIM software.

Cost Plan

Cost plans in the construction industry are a key part of pre-contract cost control, which is a systematic process that ensures a construction project stays within budget.

Cost plans help to:

Some other cost control strategies include:

Post – Contract

Post-contract cost management in the construction industry involves a number of methods and techniques to ensure that projects are completed on budget and within scope:

Key Highlights

Cost Monitoring

Cost monitoring and management are essential for the success of construction projects.

They involve:

Here are some other important aspects of cost management in construction:

Approval of Bills

Efficient invoice approval processes are crucial for construction projects to be completed on time and within budget. Streamlining invoice approval can lead to: improved cash flow, enhanced supplier relationships, and significant cost savings.

Here are some other cost management strategies for construction projects:

Variance Analysis

Variance analysis in construction is a technique that compares the actual costs, schedules, or resources of a construction project to what was planned or budgeted. It's a key tool for managing project costs and ensuring a project's financial health.

Variance analysis helps construction companies:

A cost variance report is a key output of variance analysis. It provides a detailed comparison of the project’s actual expenses to the planned budget at different stages of the project. This helps project managers and stakeholders understand the project’s financial health and take action to minimize cost overruns.

Change Order

In construction, a change order is a document that modifies a project's contract to adjust the cost, schedule, or other terms. Change orders are a common part of construction projects, affecting around 35% of them.

Here are some things to know about change orders in construction:

Change orders can be initiated when: