Activity Sequence

1

Plan Cost Management

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Gretel Seymour

Plan Cost Management

Project Management

10/31/2021

Construction Cost Management is a term that refers to the management of a construction project's costs. Expenses incurred by a contractor for work, services, materials, utilities, and other items, as well as the contractor's overhead and earnings, are referred to as the cost of the project. In the construction industry, management of expenses is the process by which formal project costs and expenditures are calculated, approved by clients, and paid for (also known as cost control). When it comes to project performance, one of the most important factors to consider is cost control.

If the project's objectives are met while staying within the financial limits, the project is considered a success, and the project manager is formally recognized and recognized. Liao (2021) asserts that the assurance that the project will achieve the financial performance goals that have been set forth for it. Project managers, contractors, and designers are all held accountable for the overall performance of the project in order to guarantee that it does not exceed the budgetary restrictions. In accordance with Figure(1), When it comes to managing project costs, it's important to know how to estimate, budget, and keep costs under control in order to execute a project on time and on the budget set forth in the contract according to Fagbenle et al. (2018). There are a number of procedures involved in cost management, which are further subdivided into the following categories: It is the description of the approximate amount of financial resources required to execute the project activities that are called for in an estimate of costs.

In order to establish an estimated cost baseline for work packages and individuals, the process of accumulating estimated costs for individual activities or work packages is known as budgeting.

3) Processes for controlling costs, such as monitoring the project's progress and adjusting the budget if necessary are all included.

Calculate the Project's Budget during the initial phases of a project's execution, while documents are still in the design phase, estimating costs can be a complex and tedious task. Be familiar with construction-related costs. Hyun & Jeon (2021) assert that using completed residential and commercial buildings as a reference is a critical part of estimating and controlling future project costs, which is critical for achieving the overall goal of estimating costs. In the words of Chitkara, cost estimation is "a continuous process. It calls financial commitments at different levels and by various entities participating in the project." Preliminary cost estimation is a scientific way for figuring out the general scope of a construction project and Construction process knowledge, labor and material costs, and foresight and sound judgment are all required for accurate cost estimates. This is very different from calculating the final project cost after completion (Ji & Chen, 2020). Estimated construction costs are derived from specifications and plans and represent the most likely final cost of the project. As long as there are no uncommon or unforeseen conditions, an accurate estimate of the real cost of the suggested work should not differ by more than 5 to 10 percent from the approximate cost estimate (Yang, 2021). In order to accomplish a project in accordance with the requirements and contract plans, the goal of estimating is to establish the required predicted costs (Song, 2019). The estimator is able to make a reasonable estimate of the project's cost with reasonable accuracy.

Collecting data is what this task is all about. Since the data collecting instrument is a closed questionnaire, this section discusses the data collection method employed. Only 37 of the 40 surveys issued to experienced engineers working on various projects have been recovered and are still usable. Following is an explanation of the study's demographic factors, sample, and data. Figure 2 depicts the labor market, with 56.75 percent of the sample employed in the mixed sector, 24.32 percent in the government sector, and just 18.91 percent in the private sector. The sector of the economy is shown in Figure 2. Figure (3) depicts the respondents and their years of service in a hierarchical format. (43.24 percent) have served between five and ten years, followed by (29.72 percent) with a service of 10-15 years, and by (10.81 percent) with service years between 15 and twenty (8.10 percent ).

Conclusions

Construction projects vary in size, nature, quality, and intended use due to the always-changing environment in which they are carried out. Construction projects.

Aside from that, the locations and soil characteristics of the various sites make even similar projects unique. A different working method or changes in the price of supplies or labor could also occur as an unanticipated situation. Depending on all of these variables, the ultimate cost may be higher than what was originally predicted.

Consequently, the project incurs monetary losses as a result of this. When estimating expenses, it's important to look at the correct principles of cost estimation according to Gao (2020). For the purpose of avoiding or reducing this discrepancy, According to the results of the questionnaire analysis, the most frequently used paragraph in construction projects was the creation of a document that contained all relevant components of the project information and calculations, among other things. A few of the most commonly used strategies include getting expert guidance and receiving a cost estimate that is as accurate as possible. Contrary to this, construction projects used the fewest paragraphs and spent the least time using bottom-up estimation methods in which the costs of individual work programs or activities were estimated with as much custom detail as possible by laying the groundwork for their process, estimation policies, and historical information, among other things. In addition, the findings showed that the risk profile utilized in the research did not detect project documents.

Recommendation

As a result, we urge that construction project managers raise their knowledge and comprehension of the significance to use all concepts and actions in cost management in general, and managing the cost estimate in particular, in order to finish their projects. The questionnaire has shown that certain paragraphs are underutilized, such as a reassessment of the risk profile for similar projects, which will help with cost estimation in the future.

Our recommendation is to make sure historical data and other variables are taken into account when estimating costs. Along those lines as well as those that have already been stated: in addition to all of the already stated Bottom-up estimating should be utilized to get the most accurate cost estimates for specific work programs or activities. In order to account for cost uncertainty, expenses should be incorporated in contingency reserves. Be sure to keep project documents up to date with the risk record as well. For this reason, we also suggest hosting seminars and workshops to educate the public on the importance of cost management in construction projects and the steps that must be done to ensure success.

References

Fagbenle, O. I., Joshua, O., Afolabi, A. O., Ojelabi, R. A., Fagbenle, O., Fagbenle, A. O., & Akomolafe, M. (2018). Cost management practice of construction firms and its influencing factors: Lessons from southwestern Nigeria.

Gao, W. (2020). Research on Construction Engineering Cost Management. Academic Journal of Architecture and Geotechnical Engineering, 2(1).

Hyun, D. M., & Jeon, S. (2021). Consideration on the Creation of Construction Cost by Calculating the Quantity at the Planning Design Stage-Focusing on Construction Cost Management Vases and Work Methods. In Proceedings of the Korean Institute of Building Construction Conference (pp. 329-330). The Korean Institute of Building Construction.

Ji, Q., & Chen, W. (2020, October). The application of BIM technology in the cost management of the whole process of construction projects. In Journal of Physics: Conference Series (Vol. 1648, No. 3, p. 032016). IOP Publishing.

Liao, L. (2021, May). Research on the Application of BIM Technology in the Cost Management of Construction Projects. In IOP Conference Series: Earth and Environmental Science (Vol. 783, No. 1, p. 012098). IOP Publishing.

Song, D. (2019, October). Analysis on Dynamic Management and Control of Construction Project Cost. In 2019 International Conference on Advanced Education, Service and Management (Vol. 3, pp. 586-589). The Academy of Engineering and Education.

Yang, J. (2021, September). Application of BIM Technology in Construction Cost Management of Building Engineering. In Journal of Physics: Conference Series (Vol. 2037, No. 1, p. 012046). IOP Publishing.