Cost control in construction is important to make sure that projects don’t take up more costs than originally intended. After the initial plan stage of a project, some things may not go as planned. But with cost control process in place, you can minimize the amount of extra expenses on the project. The following are the procedures of cost control in construction.
Process of cost control
Cost control forecasting
Financial accounting practice is quite different from how it is used in construction. Here, emphasis is not only on what has happened but also what is going to happen. A good cost control method is to forecast future cost and create room for adjustments to meet the required budget. That’s why it’s vital to create intermediate milestones that will properly monitor completion schedules. This process will help the project manager determine areas where the actual cost may supersede the estimated cost. With the prior knowledge, adjustments can be made, which will surely minimize time wasted on the project.
Initial cost estimation
Before any executable plan is developed for the project, there is need for cost estimate to determine how much is required to conclude the project. Unfortunately, not all engineers and architects are good in this area. You can’t blame most of them because they don’t have a financial background. This is why it’s vital to hire a cost control manager or an engineering consultant with this special type of skill. Doing this earlier before the project commences can save you a lot of avoidable expenses in the future. Here, you need to look at the qualification, skills, and experience of the consultant. A little enquiry on the professional’s expertise is needed to make sure you are hiring the right person. The project manager needs to review the preface plan of the project and find out if there are discrepancies between his cost estimate and the initial estimate for the project.
Detailed Estimate
After the final plan for the project has been submitted, the accountant and construction manager need to review the plan. They need to ensure that the estimates for construction overhead, materials, and labor are calculated correctly. The estimated time for completion of project should be made since time and cost move in parallel ways.
Construction cost roadmap
The construction cost should be detailed enough for better understanding of the entire phase of the project. Each construction phase should be properly outlined with the cost estimate. It allows the project manager plan effectively and find out which area the cost estimate has come overboard or below expectation. As long as the timeliness and cost of the project are correctly matched, the project is under good financial control. When there are deviations or overrun in project schedule, it implies that there may be potential issues. But proper and eelier detection of the discrepancies can help solve the problem on time.
Overall, proper financial planning before the executable phase of a construction project is important. It helps the project manager save a lot of time and cost. With the right approach, the project will be completed on time and a lot of cost will be saved in the process.