Cost Planning Starts Early
Cost control needs to be initiated prior to construction.
A construction project management consultancy analyzes the scope, drawings, estimated quantities, project schedule and budget. This assists in setting up realistic cost targets, cash needs, procurement planning and budget exposure areas.
Early planning also provides a yardstick for future expenditures. If there is no baseline, it can be hard to determine if a project is truly under budget or simply deferring the identification of extra costs.
Monitor Construction Cost Leakage
Cost overruns do not usually come from one large mistake. They often develop through several small leakages across different stages of construction.
A practical cost-control system should monitor where money can escape from the approved budget.
| Cost Leakage Area | What Should Be Monitored |
|---|---|
| Design Changes | Quantity and cost impact |
| Procurement | Quotation and rate comparison |
| Contractor Billing | Executed quantity vs billed quantity |
| Material | Planned vs actual consumption |
| Rework | Cost of rectification |
| Delay | Time-related additional cost |
| Variations | Approved vs unapproved changes |
This framework allows the project team to identify cost increases at their source rather than discovering them only when the final account is prepared.
Better Procurement Controls Spending
A significant portion of the total cost of commercial construction is represented by materials, equipment and packages from contractors.
A construction project management consultancy can contrast quotes, look at rates, check quantities, and aid in the negotiations with vendors and contractors. The aim is not just to get the cheapest price. The rates should also be checked in accordance with specifications, quantities, delivery, quality and project conditions.
The owner can be more easily able to see why a specific vendor or rate was chosen, because the procurement is transparent.
Bill Audits Stop Overpayment of Bills
One of the most crucial aspects of construction cost control is the billing of contractors.
Prior to approving a bill, quantities claimed by the contractor need to be compared to quantities that have been executed at site.
For instance, if a contractor is charging for 1,000 square metres but 850 have been done and approved, then there is a difference in project cost.
Manomav bill-audit and quantity-surveying methodology assists in the review of quantities executed and billed to ensure that no over-payment or duplicate claims or unsupported claims are made.
This is particularly relevant in the context of commercial property project management, where several contractors might be managing civil, structural, electrical, plumbing, HVAC, interiors and other packages.
Track Material Consumption
The only way to control material cost is not by the purchase price.
The project team should also track the planned consumption against actual consumption. Excessive use of steel, cement, concrete, finishes or other materials may indicate wastage, execution issues, design variations, or quantity control issues.
If the purchase rates have not changed, but the owner is seeing costs going up, tracking consumption will help them get a better understanding of where the costs are coming from.
Control Variations and Design Changes
Construction changes can sometimes not be avoided, but must be controlled.
Each change in design can impact quantities, manpower, materials, and the scope of the contractor and timelines. Wherever possible, therefore, the financial effect should be estimated prior to the change.
Approved changes should also be distinct from unapproved changes. Otherwise small site instructions can slowly add up to become substantial extra claims.
Rework and Delays Also Have a Cost
The two costs of poor quality work are the cost of the work done and the cost of fixing it.
Likewise, delays can also lead to higher labor expenses, equipment hire, supervision fees, site overheads and claims by contractors.
In a construction project management consultancy, it is important to track the quality and time performance in addition to cost. Without all of these, controlling one of them provides a limited perspective of the project’s financial situation.
Real-Time Cost Monitoring Improves Decisions
It is best to review information during the construction process, not just at the end of the project, to control costs.
The owner can keep track of the budget by conducting regular quantity checks, reviewing bills, comparing procured materials, tracking materials and monitoring variations.
When a cost deviation is found early, then corrective action is more likely to be implemented than money will be recovered after the work has been performed.
Conclusion
It is not enough to simply create a budget at the start of a commercial construction project to manage costs.
Owners must keep an eye on design changes, procurement rates, executed versus billed quantities, material consumption, rework, delays, and variations during construction.
Manomav Engineers quantity surveying, bill auditing, commercial property project management, procurement support and cost monitoring services enable developers to gain insight into how their money is being spent and where it may be leaking.
Concerned about cost overruns or contractor billing?
Get your project quantities, bills, and cost position independently reviewed by Manomav’s QS & Cost Management team.
FAQs
How do consultants identify construction cost leakage?
They monitor areas such as design changes, procurement rates, contractor billing, material consumption, rework, delays, and project variations.
Why should executed and billed quantities be compared?
Comparing them helps confirm that contractors are being paid only for work that has actually been completed and verified.
Why is material consumption important in cost control?
Material usage above planned quantities can indicate wastage, rework, design changes, or execution inefficiencies that increase the final project cost.
