The massive investment in construction projects makes cost control a priority for project managers, regardless of the size and scale of the project. Things get even more challenging for the industry, as labour and material costs show ever-increasing trends. For example, the industry witnessed a significant 10% increase in construction material costs in 2019 alone. With such daunting statistics, investing in a cost control plan indeed makes sense.
The purpose of the plan goes beyond ensuring that the project is delivered on budget and without overruns. It also aims to get things done on time and within scope. But cost control can get complicated, considering a large number of processes and aspects involved in a typical project. However, there’s much you can do to simplify it, from implementing construction cost control software to following best practices defined by industry experts. Here are some proven strategies to get the initiative on track.
Leverage construction management software
The simplest measure to manage and control costs is by leveraging technology. A software solution that includes the cost control feature is an ideal pick for any construction business. It enables the managers to keep close track of expenses throughout the project and take the right measures to control them if they seem to exceed the estimates. Apart from facilitating cost control, this platform also enables seamless communication between the on-site and back-office teams. As everyone is on the same page, there are fewer chances of errors and rework, which also curbs wastage and unnecessary expenses.
Assess your strategic costs
The implementation of construction cost control software takes projects in the right direction, but there is more that needs to be done. Managers need to be proactive about the assessment of strategic costs as well. Ideally, you should segregate the elements that generate the most revenues from the ones that eat up the money. Once things are sorted out on this front, it will get easier to curb the non-essential overheads. You will be able to save funds and assign them to strategic objectives such as product quality enhancement and better customer servicing.
Stick to budget
When it comes to effective cost control, budgeting is vital. You need to have a well-defined budget right from day one and stick to it as well. For successful budgeting, you have to start with monthly figures and have yearly budgets as well. Further, it is also important to make sure that projects operate within that budget every month. Monitoring project costs and cash flow can help managers to curb overspending and get the expenses back on track when there are deviations.
Update cost plans regularly
Consistent analysis and evaluation of cost plans can help with the identification of anomalies so that you can make alterations when needed. If you notice expenses running higher than expected in a specific area, reducing it elsewhere is a good idea. Apart from the internal factors, a close track of external elements such as inflation and labour fluctuations also enables timely action for cost control. Fortunately, your construction cost control software will have you covered with analytics. You can use it to crunch the numbers for actionable insights to cut down the costs with timely updates in your plan.
Prepare contingency plans
No matter how efficient you are and how well things seem to be going today, unforeseen problems are bound to come up with projects time and again. Project managers need reliable risk management procedures, which include ones that plan for unexpected delays and budget overruns. Contingency plans help handle such situations and save the business from paying premiums to complete the project on time. Even if you have to bear the burden of additional costs at any point, the plan will cover the excess from another area.
Design within cost plans
Cost control greatly depends on project design, apart from the running expenses of projects. As a general norm in the industry, design determines 80% of the cost while construction decides the remaining 20%. So it makes sense to go the extra mile with controlling the design costs, which is best done by following stringent design development control procedures. All team members should be aware that they do not have the authority to increase costs in work elements unless they can balance it out in another area. They must be educated about construction budgeting and also understand the implications of making changes that could result in unplanned costs.
Despite the challenges that construction cost control entails, technology has made it simpler. It would be hard to record, manage and analyse the numbers manually, but smart construction cost control software has the potential to simplify the entire process. Not only does it help project managers keep track of expenses, but it also enables them to capitalise on profits in the long run. Eventually, it serves as the smartest investment that any construction company can make.
Summary
Cost control is imperative to the success of construction projects because profitability depends on keeping them within budget. Fortunately, a combination of construction cost control software and industry best practices can help project managers to keep expenses on track and prevent overruns.
