- Sometimes, contractors bid unrealistically low to win the project, which gets them into trouble at later stages.
- It is imperative to understand that time is money in the construction industry.
- There is no denying that contractors' reputation and workers’ earning is on stake if the project budget is not estimated justly.
Construction projects require massive investments. It is owing to the reason that materials, machinery, and labor cost are the major expenses when it comes to constructing a building. However, if the contractors don’t keep an eye on the costs, it can get out of control leading to disputes and claims. For this reason, the contractors should plan the projects wisely to optimize the utilization of resources.
There is no denying that construction is the backbone of the economy in many countries, including the UAE. The success of construction projects depends on a smooth starting and ending without becoming the prey of inflation or soaring costs of men and materials.
In case, you are dealing with the giant of ever-increasing prices in construction, go through the article to get some easy tips to deal with it. Keep reading!
Top Techniques of Controlling Costs in Construction Projects
Nevertheless, every project is regulated under certain conditions to be completed within the estimated time and budget. It is the responsibility of the contractors to keep the team working in the right direction while distributing the resources optimally.
Sometimes, they have to face the issues of cost increments, which may disrupt the whole project. Here are given the essential techniques to keep the costs in check:
Plan the budget wisely
It all starts with the planning of the budget for a project. It is owing to the reason that project owners have an estimated amount to be invested in constructing buildings.
Primarily, the budget should be determined wisely. Sometimes, contractors bid unrealistically low to win the project, which gets them into trouble at later stages. You shouldn’t make such a mistake. It is imperative to understand that budget allocation and distribution should be according to the needs of building modules.
Track project costs regularly
The best way to ensure the optimization of costs is to track the expenses. Sometimes, contractors face a disparity between the allocated budget for specific construction activity and work accomplished. It can lead to a severe problem at later stages.
So, the contractors should acquire the services of a quantum expert for estimating the gap at the right time to avoid claims later. It will help you identify the lacking of productivity in terms of money to mitigate the risks of disruptions.
Optimal management of time
It is imperative to understand that time is money in the construction industry. If you have wasted time and could not accomplish the process as per the estimated duration, it will have some cost. Therefore, the best way is to keep the costs as per estimations by paying greater attention to the management of time.
Many people get confused when time is determined in terms of cost. They actually overlook the factors influenced by the time. For example, if a project takes longer, the contractors have to buy materials at a higher price than the initial cost. It is owing to the effect of inflation. Therefore, the optimization of time is the effective control of costs in construction.
Control change order in projects
Change in the project order is one of the most important causes of the cost increase in construction. It is imperative to control the unnecessary changes smartly to avoid spending more money in building. The primary responsibility of the contractors to negotiate the changes to the project owners for avoiding disputes.
A delay in managing the change in construction can result in increasing the costs. A slight modification in only one module can derail the whole project, so beware of it.
Deploy the rule of earned value
Last but not least, the contractors can avoid the adverse impact of increasing project costs by deploying the rule of earned value in the estimation of projects. In this regard, take assistance from a quantum expert for keeping the analysis and evaluation according to transparent and unbiased.
It is imperative to understand that the concept of earned value is from the discipline of accountancy. Therefore, financial appraisers can better help you get through the process using standardized principles. In this way, you can avoid disputes with additional budget requirements wisely.
Cost controls are essential for claims-free project delivery!
Summing up, the ultimate goal of every construction project is to be completed within the estimated budget. For this purpose, the contracting parties are required to control various costs for keeping the construction process as per their desired expenditures and estimated time frame. All this ends up eliminating the risks of disputes and claims, leaving a positive mark on contractors’ reputation.
There is no denying that contractors’ reputation and workers’ earning is on stake if the project budget is not estimated justly. Therefore, the whole of the project team should ensure watchful supervision of the project to ensure cost escalation.
Don’t forget to comply with the quality standards of materials to avoid defect claims after project completion.