Implementing a Cost Management Plan in Your Next Build

cost management plan for construction projectsWith so many moving parts involved in every construction project, you’re almost guaranteed to see scope creep and cost overruns if you don’t maintain strict control. An effective cost management plan for construction projects helps you stay on budget and on schedule.

What a CM Can Do for You

A Configuration Management (CM) system gives you a way to accurately anticipate, approve, execute, and track all changes to your project. All relevant paper and electronic documents are added to the CM system to ensure no information is lost. More advanced CM software automatically analyzes data and alerts you to developing problems. Potential benefits include:

  • Reduced administrative costs
  • Less repetitive data-analysis work for your managers
  • Faster responses to Requests for Information (RFIs)
  • Faster processing of Change Orders

Best Practices for Implementing Your Next CM

A cost management plan for construction projects works best when it’s fully prepared before the project begins. Establishing baselines for scope, cost, and schedules from the beginning makes it easier to spot and prevent scope creep.

Define a schedule for the release of status reports to managers. These reports should detail the project’s present state and any changes that have occurred. Develop a change management plan that establishes a set of procedures for the consideration and approval of changes. Include a way to audit the success of each project and document any valuable information gleaned that can be put toward improving future projects.

Look for a CM software that offers Sentiment Analysis (SA). SA technology mines documents for specific words and determines if they’re used in a good, bad or neutral manner. It picks up on words that require attention, such as “delay,” and notifies managers in real time.

Data and text visualization capabilities also add value to your CM software. These analytical tools process live performance data streams to create charts, text clouds, timelines, and other visuals that let you review the status of your project at a glance.

To learn more about choosing a cost management plan for construction projects, contact us at Construction Monitor.

Keeping Your Job Site Costs in Check

cost management plan for construction projectsManaging construction project costs is critical to ensuring that the project is completed on time, to the client’s satisfaction, and within budget. Cost overruns and other financial errors can lead to unhappy clients and a job that produces no profit or, worse, results in a loss. A cost management plan for construction projects should be developed early and followed closely throughout the lifespan of the project. As you develop your plan, keep the following in mind.

  • Plan for the unexpected: It would be impossible, of course, to plan for every contingency and head off each possible error. As you develop your cost management plan, however, recognize that there may be some surprises along the way. Do everything you can to allow some room in your plan for unexpected developments that could affect costs.
  • Strive to avoid omissions: Anything left out of a bid or contract could be a significant problem later. Make sure you understand the scope of work thoroughly and that you check your bids repeatedly to make sure all important points have been covered. Work in provisions that protect you in case the client leaves any elements out of the specifications, plans, or requests for proposals.
  • Do not make assumptions: Incorrect assumptions could be the source of lost profits on a job. For example, don’t assume that a certain procedure or type of equipment is allowed on a job just because it was allowed on another job. Incorrect assumptions can be particularly damaging when working in different geographic areas where rules, standards, and regulations could be different. Always check and recheck the details of a job before committing to a contract.
  • Inspect and prepare carefully: Inspect job sites, raw materials, supplies, equipment, and other elements carefully and thoroughly as you prepare to undertake a job. Surprises or missed problems at this point could delay the start or lead to unexpected costs.

Construction Monitor is the industry’s trusted source for news on trends, statistics, and housing starts in communities around the country. Contact us today for more information on developing and implementing a cost management plan for construction projects.