Cost Control Culture in Construction

Before the construction begins, it is time to evaluate options for almost every aspect of the project from site, material, labor and costs. This practice lays the foundation of a cost control over each aspect of the project. Once you have estimated costs it serves as a layout for the project as you know what costs are involved at each step of the project.

Cost control is not just a practice but a culture deep rooted in the existence of a business. Without keeping your expenses and costs checked a disaster is only delayed but inevitable.

Let us break down project phases where controlling cost is critical for the success of the project.

Preconstruction Estimates

A slight oversight in the planning phase of the project will throw every measure of cost control out of the window no matter how careful you have been in the project delivery.

This is where experience counts the most as you being a seasoned professional are aware of the bottlenecks faced in the previous projects and are aware of the hidden costs that do not show up until the final moment. Most of the soft costs involved in construction are a bit hard to predict and need expert guidance.

Besides the expertise, now a day’s technology has come to the aid of entrepreneurs who are just stepping into this business and have not decades of experience at disposal. One of the tools used to accurately estimating cost of the project is “Construction Estimating Software”.

Checkout how construction estimating software has become the necessity of every construction business.

Mutual Understanding of Stakeholders

If there is no central power the project will surely go zigzag where one stakeholder pushing it to one direction and the other one to the complete opposite. But even dangerous than this situation is when people are unaware of the project itself and are just working inside their perceived cubicles.

To develop this understanding complete transparency and effective communication is necessary. To achieve transparency, your team must need to know why they have to complete the task as they are asked and not the other way around.

For better communication, technology can again help with some app over the phone where necessary guidelines could be communicated as and when required.

By continuous communication, you know how the project is going and counter if there is any hindrance immediately instead of waiting for days to get the information from layers of communication channel.

Besides making things easy for the workers, you will have real time stats in front of you. Whenever a cost seems on the higher side or an expense keeps increasing, your intervention becomes imminent.

Project Cost Reporting

Though effective cost reporting should be implemented by every business but it is absolute necessary for big projects where too many transactions take place to keep track of them manually.

One of the effective tools to take care of this aspect is Enterprise Resource Planning (ERP) where you can buy a shelf product or get it customized.

This cost sheet will take care of everything going in or out of your inventory or bank. After the implementation of this cost reporting system there only remain the details where you have to set rules on when a vendor should be paid or when an item can leave inventory and assign controls.

For transparency and better understanding these cost sheets should be reviewed per month at least to avoid any surprises or single out any practice that should not be carried forward.

There are few more aspects on how effective use of cost sheets or ERP can help a company reduce construction costs.

  • Interlinking of departments and functions inside one system to help measure how one affects another
  • Handling customer queries and response through approved process
  • Inventory handling and accurate inventory information
  • Reduction in overhead costs that arise from production and manufacturing
  • Scheduling of activities or costs that are upcoming but not realized yet
  • Cutting down lead times and improved efficiency
  • Complete visibility of cost cycle
  • Work Must Go ON

One of the tricky aspects of project is when one task is subject to completion of another task. You cannot build a roof unless walls are built. The same way on bigger scales project has multiple dependent tasks which cannot be started unless prerequisites are met.

This is where most of the construction projects incur huge costs and even loses. When one task is taking longer than expected or stuck there is extra use of resources i.e. material, services, labor. And simultaneously, task B has not been started because task A is not complete.

It is a rookie mistake to already line up resource for task B when task A is yet not complete which results in incurring huge costs for both tasks.

In these situations, the vision of the project manager comes into play and he intervenes with his contingency plans. Ever task of a project must have a contingency or back up plan as the work must go on.

Subcontracting

Let’s face it, no matter the size of the company, no company is going to complete every task of a project by itself. You may be expert in construction but may be your team is not yet experience or qualified on installing elevators in the building. And for such tasks you need to subcontract the required tasks.

Controlling things or people that are under your supervision is one thing but control subcontractors and their resource is another thing and sometimes you fail miserably at controlling them.

In most of the projects, subcontractors do not feel the need to adhere to your instructions and are the cause of delays or huge costs. This is why the selecting, hiring, evaluating and keeping the trusted subcontractors for the projects is necessary.

Keeping up with the Changes

Changes to any project are not a welcome sign for any contractor as most of the times clients are not fully aware of the current construction stage. Nonetheless, you have to abide by those changes and have to control costs because of those changes.

Sometimes, these changes may require you to demolish a room or a stairway but this should be accounted for in the project cost and reflected on your bill.

Saying plan NO to a client is never a good thing so to achieve full satisfaction of a client you have to do what is desired.

Project Evaluations and Audit

If you do not look back on what you did right or wrong then there is never going to be any improvement. Project evaluations are an easy way to determine your mistakes to avoid them in the future.

Better yet most of the companies that keep cost control culture close to their heart, go for audit where every expense, cost, leverage, insurance, tax and fee is scrutinized to determine was it right and was it necessary.

Conclusion

By adapting all these measures you will surely keep your costs under control like big companies do and complete your projects within budget.

Secondly, you need to keep looking for improvements in the processes and new ways of completing a task that are not only more effective but less costly as well.

 

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