Importance of Managing Construction Costs
Is managing construction costs the only important factor for your construction project? Not at all. Construction costs are invlove labor, schedue, scope, and quality. This also includes function, and the appearance of any structure. Construction costs are critical. But, building owners should not necessary expect budgeting problems to arise just because construction cost is a construction management objective.
In today’s world of cut-throat competition, one needs to look for new ways of doing things in order to achieve success. Cost management is a key factor that can result in cost savings and higher profits. Construction managers need to have a good understanding of the techniques that can help them control construction costs and boost their profitability. They should also know where they are losing money and how to gain it back again. Construction companies use different strategies. These strategies help control your project costs.
1. Estimating and Budgeting
One of the best chances of saving money on any project is not going over budget during the estimating stage itself. Threrefore, a construction manager makes a construction budget in line with the estimate. And so, creating additional cost savings is key. The construction manager has to maintain funding from his side too, for putting extra pressure on project team members to keep construction costs under control. The construction manager can also keep track of construction costs at every stage of construction. In addition to this, the construction team sets goals to increase profits even further. The next four topics will address those areas in which the team controls costs.
2. Change Order Control
Making a construction change is always difficult and time-consuming. It can lead to construction delays, increase in construction costs as well as problems with project quality control. A construction manager should keep track of all kinds of planned changes that the contractor’s team demands for during construction phase itself.
Construction managers may find some construction contractors trying to take advantage of them through Change Orders. But they need to maintain their professional position while resolving such problems. They should try and make negotiations between the two parties regarding accurate cost estimation without compromising on quality or schedule.
3. Controlling Labor Cost
Labor truly is a construction project biggest risk. So why wouldn’t we put maximum efforts in controlling the cost of labor? One way to control construction costs is to compare the construction cost estimates with similar projects in your area. Knowing labor rates and allowances for certain trades will help you make decisions regarding labor management.
Planning labor through construction budgets is a highly effective, known way to control costs. Massaging the budget even after you’ve agreed to a contract price can only help increase your profit margins. Construction managers are constantly looking for ways to reduce construction costs. The best way to do this is to integrate cost with support areas including labor and materials.
Direct Labor is one of the most important factors construction managers should consider when working construction costs. This includes construction workers, supervisors and construction site owners. Many construction projects have a fixed amount of time spent on construction activities. Activities are estimated using construction scheduling software. The use of this software produces a schedule using the Critical Path Method. Construction estimation and and CPM Scheduling are powerful tools to aid in the construction process.
4. Planning and Analyzing
Construction managers have to plan their projects well in order to build them under controlled conditions. Planning is an essential step which helps planning better outcomes for construction projects. Non-planning of projects leads to unnecessary expenditure on extra material, manpower or time, etc. This may force the team to compromise on quality, leading to dissatisfaction among clients, causing loss of repeat business. Never put your reputation on the line. Planning in construction is everyting.
Analyzing the project is another level of controlling the project cost. At this point, integrating project costs, labor and scope are imperative to controlling costs. Through this process of analysis, the construction manager can use Key Performing Indicators and Performance Metrics to make proactive decisions on the project.
5. Use of Technology In Construction
The construction industry is highly technical. Requiring construction companies to have experienced construction project amanagers. And so, construction manager need to maintain their education. This helps in managing staff, material and equipment effectively. These requirements help them accomplish construction tasks that lead to better utilization of all construction resources. A construction manager should utilize technology effectively for controlling the construction costs. This enables maximum productivity.
Utilizing technology further, construction companies implement construction cost control systems. The construction budgets are implemented at this time. This helps in preparing project activity schedules during planning phase. The budget must be followed by construction managers, focusing on cost of material, manpower or time. And also throughout the course of construction work so that planned results meet with clients’ expectation. So, it is important for construction managers to understand financial reporting and control systems related to their particular construction projects.
Construction projects then have a better chanceto be completed within expected time frames. Under controlled financial outputs for construction managers as well as their clients helps maintain quality standards.