Cost Management in Construction Project Management

A construction project, however big or small, needs to be performed and delivered with care and planning. Cost is a major factor that needs to be effectively controlled through construction project management. Cost management includes a set of activities that ensures the project is completed within the approved budget.An effective cost management plan includes:

Resource Planning: During this phase a resource management plan is created which helps you identify all of the resources required to complete your construction project successfully.With this plan, the project manager establishes the amount of materials, labour, and equipment needed to complete your project. Alongside this, a schedule plan is created to know how and when resources will be utilized. This will help you know whether you have enough resources to complete the project. Once the resource types and quantities are known, the full cost of resources needed to complete a project is calculated.

·       Estimation of Cost:A cost estimate is the total cost involved in successfully finishing a project, from inception to completion. A variety of estimating tools, techniques and software are used to determine the total cost of completing a project.An accurate cost estimate helps to develop a cost management plan and creates the baseline for controlling the costs during the project’s execution phase.

·       Cost Budgeting: Once cost estimates are created, the project’s budget can be finalized and approved. Project managers typically release budgeted amounts in stages according to the level of a project’s progress. These allocations may include contingencies and reserves.

·       Cost Monitoring:Once the construction work has started, the project manager keeps a close eye on project costs. When the item costs more than the estimate, the project manager determines the reason for the variation and either accepts or mitigates it. This process is essential to ensuring that the estimated budget will be achieved.

·       Cost Control: Cost control is the practice of measuring variances from the cost baseline. All deviations to the cost baseline are noted andthe expected final total costs are continuously predicted taking effective corrective action to avoid cost overruns.

With costs in mind, hire one of the best Project Management Consultants in Los Angeles for applying thorough cost estimating processes and techniques to ensure that a project comes in at or under your budget.