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In any construction project, cost is a critical factor that needs to be considered at every stage, from concept through to completion. A cost manager can act as the economist, estimator and accountant on every design and construction team, ensuring that realistic capital costs are established, planned and controlled within the pre-agreed framework, from start to finish.

Every successful construction project needs to have an independent, unbiased, professional Cost Manager onboard to protect the financial interests of the owner.

What Does a Cost Manager Do?

A Cost Manager or Quantity Surveyor uses their engineering judgment and experience to analyze and develop the best course of action regarding cost estimation, cost control, and profitability of the project. They ensure that the project is designed within budget objectives and meets performance and quality goals using cost management principles.

In simple terms, construction cost management is the process of managing and controlling construction costs to ensure that projects are completed within budget and meet the required standards.

Why Is it Important to Have a Cost Manager on Your Project?

According to a recent study, only 25% of projects stay within the budget limits that have been set. The only way to avoid this issue is to keep overheads at bay as far as possible. Depending on the client or the size of the project, your Cost Manager will provide input and advice either from the start of the project through to completion, or for specific tasks in the project.

As the design progresses through various stages, the Cost Manager will prepare basic cost estimates that can be used to report changes and variations in the anticipated cost, which enables the team to make additions or deletions in the design and stay within the initial budget.

Your cost manager will:

• Undertake feasibility studies into the construction project, analyzing construction costs, operating and maintenance costs, site servicing, and cash flows. They may also advise on commercial returns, profitability, financing arrangements, land acquisition, revenue forecasts, and market analysis.
• Provides construction cost advice to the client at the earliest stage of project deliberations to help determine the viability of the project before the design.
• Prepare analytical studies of design solutions based on schematic drawings, providing up to three alternative solutions for costing. The cost study at this stage allows a choice of building size, shape, possible construction materials, and service systems.
• Provide a final estimate when contract documents are close to completion to determine the economic viability of the project and make necessary changes.

What Are the Main Benefits of Having a Cost Manager on a Construction Project?

Needless to say, having a cost manager involved in a construction project has numerous benefits, including:

1.      Greater accountability and efficiency

Simply having a cost manager involved in the project, accounting for billable hours, can influence the accountability of the entire team. Team members are far more aware that any delays and slippage will lead to additional costs. Cost management will also assist in identifying the tasks that are exceeding the allocated budget, and help the project manager make a call about contingency plans to curb overspending. Having a cost manager on board helps identify potential cost risks and develop strategies to mitigate them. They analyze and review contract agreements and evaluate potential changes that may impact the project cost, keeping the entire project on track throughout.

2.      Lower expenses

Effective cost management ultimately lowers the overall expenses of the project by adopting a disciplined approach to financial planning and setting limits on spending. Cost savings can be applied to procure other resources and services, which contributes to the growth and overall financial health of the company.

3.      Reducing wastage

The cost manager will identify unproductive tasks that are wasting money through effective cost control procedures. Activities are broken down and funds fairly allocated, providing greater visibility and focus for all team members. This not only ensures that everyone is on the same page, but reduces the pressure the team feels about staying within budget. If there are multiple projects, cost management will help teams prioritize projects that most urgently require funds.

4.      Improved procurement value

Responsible cost management helps teams review the goods and services offered by their vendors, empowering the project manager to negotiate and arrive at a figure that better suits the project. It creates a value-for-money mindset that carries over to future projects and can be leveraged in future negotiations. Cost managers work to optimize the use of resources to reduce overall project costs. They explore alternative materials and construction methods, and work with the project team to identify cost-saving opportunities. They will also work with the project team to ensure that the project meets the required quality standards while remaining within the budget.

5.      Contractual compliance

In any construction project, there are several contractual agreements between the project owner, contractors, subcontractors, suppliers, and other stakeholders. These agreements outline the scope of work, payment terms, schedules, and other details related to the project. A cost manager plays a critical role in ensuring that all parties involved in the project comply with these contractual requirements. One of the key responsibilities of a cost manager is to ensure that payments are made in accordance with the agreed terms and conditions. They review invoices submitted by contractors and suppliers, verify that the work has been completed as per the agreed specifications, and ensure that payments are made on time. They also monitor the payment schedule and ensure that all payments are made in a timely and accurate manner.

Conclusion

A cost manager is an essential member of any construction project team, responsible for managing and controlling costs, ensuring compliance with contractual requirements, and maximizing profitability. By providing expertise in cost estimation, cost control, and profitability analysis, a cost manager can help minimize project expenses, reduce wastage, improve procurement value, and increase accountability and efficiency. Ultimately, having a cost manager involved in a construction project can lead to successful project completion within budget and timeline constraints. If you would like to know more about bringing a cost manager on board for your project, speak to Churchill Cost Consultants.