Cost Control in Construction | Elements and Systems
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A construction cost control system should enable a manager to observe current cost levels, compare them with a standard plan or norm, and institute corrective ... Skiptomaincontent ElementsofCostControl CostControlisanobviousobjectiveinConstructionManagementandConstructionScheduling.Itshouldberecognizedthatnoamountofpaperworkachievesthisconstructioncostcontrol.Theactualcontrolisachievedthroughtheultimatedecisionofthemanagerthatsomethingshouldbedonedifferently andthetranslationofthatdecisionintopractice.Thepaperworkprovidesguidanceonwhatcontrolactionsshouldbetakenandthereforeitisratheracostinformationsystem. Theelementsofacostcontrolsystemare: ObservationComparisonofobservationwithsomedesiredstandardCorrectiveactiontotakeifnecessary. Aconstructioncostcontrolsystemshouldenableamanagertoobservecurrentcostlevels,comparethemwithastandardplanor norm,andinstitutecorrectiveactiontotokeepcostwithinacceptablebounds. Thesystemshouldhelptoidentifywherecorrectionactionisnecessaryandtoprovidepointersastowhatactionsshouldbe. Mostconstructioncostcontrolsystemshaveaninordinatelylongresponsetime.Eventhebestcostcontrolsystemwouldprovideinformationonwhatwashappeninglastweekorlastmonth.Since,inconstructionprojectssomeactivitiesmightfinishinaweekoramonth,thennothingcouldbedoneiftheperformanceofsuchactivitieswasreportedtooverrunestimatesofrespectivecosts. CostControlSystems ThefollowingsystemsandvariantsofthemareinuseintheConstructionIndustry: OverallProfitorloss TheContractorswaitsuntiltheContractisfinishedthencomparesexpenditureandrevenue. Thesystemisonlysuitableforverysmallcontractsofshortdurations.Theinformationprovidedbythissystemcaninducecorrectiveactioninfuturecontracts,andsurelynotthefinishedonefromwhichdatawasextracted. ProfitorLossatvaluationdates Inthissystem,thetotalcoststodatearecomparedwithvaluationsgrossofretentions. Itisnotsuitableforcontractswhichinvolvesignificantsetupcostswhicharedistributedovertheunitrates. UnitCosting Inthissystem,costsofvarioustypesofwork,suchasconcretecasting,arerecordedseparately.Thecosts,bothcumulativelyandperiodicallyaredividedbythequantityofworkofeachtype.Thisprovidedunitcoststhatcanbecomparedwiththoseestimatedinthetender.Arecommendedplatformforthissystemise-STM8software,whichprovidesanestimatingplatformaswellasaninvoicingplatform.Ithasa15dayfreetrial,youcanfindmoreinformationinoursoftwaresection. DevelopmentsinCostControlSystems Therearethreedevelopmentsinconstructionmanagementwhichshowpromiseofimprovingcostcontrolsystemintheconstructionindustry Shorttermschedulingandcontrol ThissystemwasdevelopedatLoughboroughUniversityinassociationwithacontractor.Itaimstomergertheplanningandsupervisionandhencetoobtaina moreorlesszeroresponsetime. ProjectCostmodel. ThisasystemdevelopedbyDrMartinBarnesforsimulatingfutureactionsandthusguidingthemanagerinhischoicebetweenthem QuantitativeScheduling Oneoftheunique ConstructionSoftwarethatprovidesafuturisticconstructioncostcontrol toolforconstructionmanagementisthe InstantCashflowforecasting.Ithastakenintoconsiderationthepossibledeviationsfromestimatesofcostaswellascashinpatternsandprovidedameanstoreturnbacktotheoriginalestimatebydampingoutthesedeviationsthroughtheremainingperiodofconstruction.Updatedestimatesareprovidedeachtimeanactualfigureisaddedsuchthattheendcostremainsameaswasoriginallyestimated.Itprovidesanexcellentguideformanagersthroughtheconstructionprojecttocapturethebestpossibleactionsineachperiod activities.LaborrateandefficiencyconstitutethecoreofQuantitativeSchedulingwhichishighlyrecommendedifcostminimizationinrespectofproductivityratesissought. AlsoConstructionCostisdirectlyrelatedtoMaterialprice,Materialusageandwaste,Fixedandvariedoverheadexpenditure.Thesearetheareaswheremanagersshouldseekactionforfutureadjustmentsinordertogetbacktooriginalestimateorpracticallyas nearaspossible. Topofthepage
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