How to manage costs involved in construction projects

Published: November 30, 2021
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Cost management is an important part of planning any construction project and ensuring that it is delivered on budget, on time and without hassle.

A well-structured and accurate cost control plan can help avoid added costs that eat into your budget and have the potential to cause delays. So how can you manage the costs of your construction project?

Ensure quotes are thorough and accurate

Your cost control efforts won’t be worth much if your project’s quotes are inaccurate or have gaps. Ensuring quotes are as detailed as possible and including accurate information when your project is still in the planning stages is vital and will ensure cost certainty. Mistakes will lead to higher costs later on.

Quotes shouldn’t only be based on past projects. Every project is different and industry trends – in terms of equipment, labour and materials – are constantly changing. Cost planning needs to take into account predictions of costs down the line, in the year when the project will be delivered

It is also best not to be optimistic with your estimates. Instead, you should err on the side of caution as it is better to make savings rather than go over budget.

For accurate quotes based on up-to-date assessments and predictions, it may be best to employ a professional consultant. Cost consultants can help create estimates based on advanced industry knowledge and use the best software for the job.

Plan for potential risks

There are many risks that can impact the costs associated with a construction project, which is why these need to be planned for. Spotting potential risks in the planning stages can save you time and money down the line.

Ensuring you have plans in place for every eventuality can help prevent cost increases and project delays. Again, this is where communication with your consultants can help, as they will be able to highlight any other potential risks and the best ways to plan for them.

This will allow you to create an accurate project timeline and budget that safeguards you in the case of any issues. While planning for risks is important, it isn’t possible to foresee every potential complication. You’ll also be able to plan time and cost implications for each of your risks to reduce the chance of any surprise costs.

Limit changes

Instructing change is one of the biggest factors in increasing the costs of construction projects. While some changes may be necessary as the project progresses, others can be avoided with accurate planning.

If changes are limited to emergencies or planning errors, this could dramatically help to reduce added costs and improve your ROI. This can have a dramatic effect in reducing costs for projects, which is why thorough and clear statements of work are important. Coordinating with your contractor at the start of the project will also help manage expectations when it comes to instructing change.

Of course, if you want to stay within budget completely, the best thing to do is design your project, price it up and not make changes after this.

Post-project review

Every project provides a chance to learn and refine your processes to reduce costs on future projects. Even if you come in on or under budget, a post-project evaluation will help you better understand how well costs were controlled once a project has been completed.

Review your initial budget compared to your final expenditures to see what went well and what went wrong. This will enable you to assess any adjustments that could be made to your future projects.

The more detailed this review the better, so it’s a good idea to ensure you have data from across the project as a whole. Looking at every part of the project will provide you with better insights that could help improve operations on future projects.

Hire a construction cost consultant

In addition to these tips, a construction cost consultant can help you manage all project costs, as well as provide insights into the feasibility of your project.

Whatever the size of your project, you want to be sure that your costs won’t skyrocket and affect your bottom line. Construction cost consulting services help with this, providing you with budget appraisal, estimating, quantity surveying and contract administration.