Estimating Sheets

 
 
 

Utility of Cost Management in Planning, Design and Development Process

To bring balance in a project's scope and expectations of quality and budget, it is very important to employ Construction Cost Management. It is crucial that construction cost estimators utilize cost management throughout the planning, design and development process.

 

Cost Management includes Risk Management which again deals with Risk Assessment and Management. Since risks on construction projects are basically financial in nature, hence Risk Assessment and Management are very vital for accurate construction cost estimation. To establish the budget parameters within which the project should be completed, an assessment of the probable risks is significant at the early stage of the project.


Site issues, availability of bidders, method of procurement, and the market conditions in the location of the project etc are the risks regarding the project. An assessment of all these factors should be considered while calculating the project contingencies. As the site investigation is done, market survey is complete, programs are finalized, designing started, and so on, the contingencies can be minimized along with the range of estimated final cost.


Construction cost estimators should be hired by owners much early in the project process and should not be influenced by the architect, engineer and the construction contractor. In the planning phase of the construction, building owners as well as designers should agree on an anticipated cost of the project at bid award as an inaccurate and inappropriate budget can lead to the failure of the entire construction project.


In the design phase, monitoring the estimated cost of the project is important. It can be monitored by incorporating a line of increasingly accurate cost estimating techniques. These techniques coincide with further improvement of design and construction details. Each team member of the project should analyze the construction documents to ensure its completeness, coordination between disciplines, general code compliance and design solutions that are cost-effective.


Another useful tool in cost management is Earned Value Analysis that helps in tracking each component of the project against the initial budget, and accordingly adjustments can be made to check whether the overall budget is on track or not.


During the construction phase various unforeseen conditions cause changes. These changes may include owner-generated changes, drawing errors, omissions and modifications, code issues or contractual claims. These changes should also be reviewed to check if the pricing is at par with the contract and industry norms.

Utility of Cost Management in Planning, Design and Development Process

 
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