Written by 爆料入口
Last updated October 18, 2023
During the implementation of a project, procedures and record keeping become essentials tools for the manager and the rest of the participants in the process. These tools achieve the dual purpose of recording the financial transactions that appear in every project, as well as providing an indication of the progress and problems that affect the project.
What is cost control?
The cost control is a process that should be continued through the construction period to ensure that the cost of the building is kept within the agreed cost limits. The cost control can be divided into two major areas:
- The control of cost during design stages;
- The control of cost by the contractors, once the construction of the project has started.
Cost management is viewed as a managerial process, which generates information to support decision-making, to stimulate cost reduction, value improvement and continuous improvement in the organization. The systems of this process are composed of:
- Cost estimating processes
- Cost planning and control processes
Cost estimating processes
The aim of this process is to estimate the cost of products and processes involved in the production. This means, a complete understanding of the design, contacts and production in order to properly model the utilization of materials by transformation and flow activities.
When the cost estimating process is implemented in the construction industry, usually begins by creating a budget in the early stages of the project. This budget producing phase is highly important due to its part in the main project as well as a reference for production planning and control.
Project cost estimating is a very complex task due to the inherent uncertainty and variability in construction. This is why feedback from the cost control is of crucial importance, so the cost estimating process can increase the quality of the information available in the cost plan, which will be in further use by the cost estimating process.
Cost planning and control processes
Cost planning means refining the initial cost estimate and providing a project cash flow, build on extra information that is generated along the project (like the deadlines of payments for the main material supplier) which is formed on the production plan.
These additional processes should support the decision-making in a dynamic way, in order to raise the possibility to accomplish the business goals. The cost control involves monitoring actual cost performance and identifies business opportunities. The aim of this control is not just comparing the current and estimated performance, but also concentrates on value generation.
Having all this in mind, would deliver greater quality in the cost management by becoming proactive and enabling the company to face the dynamic, uncertain and complex construction environment that exists in many projects. Finally, you will agree that, cost management must be seen as a process and its implementation requires innovation, automation, learning, involvement and commitment from people.
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