Project costs are perhaps the biggest concern for construction firms and project managers alike. Whether a project is big or small, you can expect it to demand a huge investment. Also, there are bound to be cost deviations, so you will probably find your budgets exceeding the original expectations pretty quickly. While this could happen due to known or unexpected reasons, you are still answerable and accountable to the client. Managing, specifically reducing the cost of construction, should, therefore, be the mainstay of construction project management. Fortunately, there are measures you can adopt to control construction costs significantly but taking the right approach is essential. Here are some strategies that you can implement for effective cost control management for your project.
Develop a realistic cost plan
First things first, you need to have a cost plan in place even before you get started with the project. Essentially, it should include the entire construction costs mapped phase-wise, while also taking into consideration all the dynamic factors. The objective is to provide the requisite information needed to control project costs and deliver it within the budget. Here are some things to bear in mind while developing and implementing the plan.
- Collaborate with subcontractors, architects and trade specialists for creating a reliable cost plan.
- Communicate clearly and regularly with the team and subcontractors to ensure all information is understood in a timely way. There is nothing great about going back to deconstruct and modify as it wastes time and money.
- Make decisions on the basis of forecasts of all the available alternatives.
- Ensure that the project team adheres to the cost plan at each stage of development and build. Also, work on controlling and minimizing changes.
Build solid relationships and negotiate contracts
When it comes to construction project management, contracts with suppliers and subcontractors are important. Apart from contributing to project progress, these contracts can have a far-reaching impact on its cost as well. If you want to cut down the project costs effectively, consider strengthening your relationship with suppliers and subcontractors. This will enable you to re-negotiate agreements and pricing for bringing down the cost. Creating long-term relationships with them can even open up the opportunity for stability on their supplies or services. Focus on fortifying relationships with the parties that prioritize long-term collaborations rather than the ones who want to maximize only the current margins.
Invest in innovation
Construction tech is evolving and there are many opportunities for businesses that want to modernize their processes and operations as a whole. Investment in innovation may seem expensive initially, but it can give you a winning advantage in the long run. Embracing a project management software solution is a wise move as it can boost efficiency, streamline communication and ensure completion within timelines. And cost control management comes as a bonus with these solutions. Look for a solution that is easy to implement and simple to use. Go through the feature list to ensure that it covers every aspect of construction project management. This is a one-time investment that can unlock massive potential for your business, today and in the future.
Have a tightly controlled change order process
Change orders during the project progress are common in the industry but their impact on cost can be immense. Therefore, businesses need to have a well-controlled change order process in place. Make sure that every single thing you do as a part of the change order is documented so that there is a trail for everything. Apart from keeping track of the process of work, it also ensures that there are records of all the expenses incurred for the work. Furthermore, it gives the project manager a fair idea about any additional costs which may have to be spent to get the work completed efficiently. It is also important to seek the client’s approval for incurring additional costs on the project, no matter how small it may be.
Hire multi-purpose resources
Another measure that you can rely on for controlling project costs is by hiring multi-purpose workers. This approach enables you to do more with less by securing maximum productivity from each employee you have on board. Hiring workers who can serve multiple roles is a smart way to eliminate downtime as well. You can engage them to do some other task while they wait on their core responsibilities due to a glitch in the path of construction (such as broken down equipment) or for some other reason (such as shortage of supplies). While this can save time and speed up the completion of the project, it can also reduce the cost to a significant extent.
Optimize your fleet
Construction project costs include the cost of vehicles and heavy equipment, including trucks, backhoes and excavators. If you are able to optimize the fleet costs, it is possible to bring a significant reduction in the project cost as a while. Assess the size and quantity of your fleet to get a fair estimate on your spending on it every month for them. Consider scrapping the old and unused vehicles and replacing them with new ones, or even renting to fulfill your needs. Maintaining old vehicles is often more expensive than buying new ones. Additionally, new vehicles are more fuel-efficient, which can save you cash in the long run.
Prioritize working safely
Implementing safe working practices can go a long way in cost control management for construction projects. Obviously, projects suffer when safety protocols are not followed properly. There could be a drop in production and an increase in worker dissatisfaction, not to mention the increase in insurance costs for the business. Moreover, you are required to comply with safety regulations and not doing so can bring legal hassles. Implementing conclusive safety practices is imperative because you end up saving money and preventing headaches in the long run.
Considering the range of cost reduction strategies that construction project managers can rely on, the opportunities to save are immense. It is just about being able to balance them all together and driving extensive savings for your projects can be a lot easier than you may believe. Apart from cutting down costs, these smart strategies are capable of delivering efficiency and driving success for projects as well.