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5 Things a Cost Manager brings to the Table

May 5, 20230

Modern businesses always look for new ways to become more efficient and save money. For many companies, that is where a cost manager comes in. A cost manager is essential in project management, including planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the wider team can complete their work within the approved budgeted cost.

Project cost management is crucial to forecast and manage costs effectively to keep projects within the approved budget. Without cost control, projects can exceed their budgets and become a loss. Cost management determines the project’s baseline and ensures the project runs within the budget and planned scope. Time, scope, and resource management are equally important in project management, but cost management ultimately affects a project’s outcome. The project manager’s proficiency in cost estimation lies in organizing tasks while keeping an eye on the costs to stay within the estimates.

Here is just a few of the benefits effective cost management brings to the table:

 Identifying Opportunities

A cost engineer or cost manager can assist project managers in identifying the potential benefits that their project will bring to the organization, including cost-saving opportunities and opportunities to reduce expenses and maximize potential returns across the entire project.

The project cost manager can also identify vendors that offer the best pricing, considerably reducing material or labor costs. As most of the overall project budget is used for procurement, cost estimating and cost analysis are essential to ensuring that the project runs effectively within budget restrictions.

The cost manager will ensure that the project delivers its intended benefits by closely monitoring the progress and objectives, keeping the tasks on track, and identifying any potential pitfalls that could prevent successful project delivery.

 Potential Cost Savings

A cost manager analyzes all the costs associated with the project and looks for opportunities to save money without compromising the quality of the project. The cost manager can identify opportunities to streamline processes, improve resource planning, reduce waste, or negotiate better prices with suppliers by evaluating project costs.

Many companies, for example, overinvest in technology that doesn’t necessarily contribute to the project’s success. Cost budgeting ensures that there are constraints that force project management teams to think twice about project expenses.

Money saved is money earned, and the funds that would have been spent on less useful tasks can be redirected to future projects and activities. Cost management closes the plug on leaking money and ensures that the company is better able to reach its overall fiscal goals.

The cost manager will keep a close eye on the actual vs. expected cost of every project by monitoring spending and implementing cost-saving measures wherever required, eliminating budget overruns that can negatively impact the project schedule or lead to cancellations.

 Clarity Over Finances

Managing project costs is about more than tracking expenses. Effective cost control requires a disciplined approach to financial planning and accounting practices. A cost management professional can dramatically improve budget planning and transparency so that the right resources are allocated at the right time and place. They will also set upper limits for spending in the project’s budget so that teams are equipped and clear regarding spending boundaries. Cost managers can also provide regular financial reports to the project team and stakeholders to keep everyone informed of the project’s financial status.

A cost manager can help ensure that the project’s financial data are accurate and up-to-date, establish financial controls to prevent fraud or other financial irregularities, and ensure that all financial transactions are properly documented.

 Peace of Mind

One of the most significant benefits of having a cost manager on the project team is the peace of mind that they can provide. By ensuring that the project stays within its approved budget and delivers its intended benefits, a cost manager can help to reduce stress and anxiety for the project team and stakeholders. They can also provide a buffer that eases the pressure on payments by managing costs carefully throughout the project life cycle.

A cost manager can manage expectations by communicating realistic timelines and budgets that reduce the risk of disappointment or frustration when the project does not meet unrealistic expectations.

The project manager will be provided with a breakdown of all cost estimates and activities that lead to overspending so that they can take necessary remedial action in time.

Less Financial Risks

Having a cost manager on the project team is an important part of risk management in your projects. By identifying potential cost savings opportunities and ensuring that the project stays within its approved budget, a cost manager can help to minimize the risk of financial losses. Cost management also leads to greater accountability among team members. Because the team is assigned definite tasks with clear deadlines and budgets, they are far more likely to avoid slippage and stay within the defined parameters.

In addition, a cost manager can help to ensure that the project’s financial records are accurate and up-to-date. Doing so can help control costs, prevent financial irregularities and reduce the risk of legal or regulatory issues.

In Conclusion

A cost manager plays a crucial role in project management and can bring significant benefits. From identifying cost-saving opportunities and providing clarity over finances to reducing financial risks and providing peace of mind, cost managers are essential to modern businesses. By managing costs effectively, cost managers can ensure that projects are completed within budget and deliver their intended benefits.

Get in touch with Churchill Cost Consultants if you would like to know more.

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The Benefits of Cost Management in Data Centers

April 27, 20230

Data centers are essential to the smooth operation of many businesses, from small startups to large corporations. Data centers provide organizations with cloud based services the opportunity to compete in the market, with disaster recovery and storage capabilities to ensure business continuity.

However, a traditional data center is extremely costly to build, use and maintain. Some estimates say it can cost between $600 to $1,1000 per square foot to build a data center and that global data center spending will reach $222 billion in 2023.

If services or equipment are overallocated or underutilized, expensive overheads and wastage can cost a business its competitive edge.

In this article, we’ll explore the pros of leveraging cost management in your data center assets and why having a cost manager on each data center construction project is essential.

 Why Cost Management Is Key

Cost management in data centers can be highly complex. The cost of owning a data center includes facilities, server technology, networking and bandwidth fees, and hiring technical staff. It’s important to size things properly upfront to avoid wasting investment. Predicting and designing for ultimate utilization is crucial in determining the total cost of ownership. Other relevant factors include electricity, engineering and installation staffing, power and server equipment, facility space, service and maintenance, HVAC equipment, servers, energy costs, project management, rack hardware, and system monitoring. All of these factors need to be taken into account while budgeting.

Engineering staffing, facilities, and utility-related costs make up most of the capital required to run and operate a data center. Sizing the data center design correctly can save nearly 60% in total cost, and leveraging modularity, scalability, and virtualization is crucial for significant savings and profits.

A procurement and cost manager can help the organization acquire the proper infrastructure at the right price to increase efficiency and optimize existing physical infrastructure and resources to reduce costs. Here are just a few of the benefits of involving a cost manager when building or running a data center facility for your organization:

1.      Reduced Risk of Cost Overruns

Cost overruns are a common problem in construction projects, and data centers are no exception. There are many reasons why cost overruns occur, including poor planning, inadequate budgeting, unforeseen complications, and changes in project scope. A cost manager can help to reduce the risk of cost overruns through careful planning and budgeting.

In assessing the total cost of a data center, there are five main factors to consider.

  • The first is the cost of constructing the physical data center facility, which accounts for around 45% of total data center costs on average.
  • The second is the cost of acquiring IT infrastructure, such as servers and networking equipment, which can vary widely depending on the specific equipment needed.
  • The third factor is the energy and utility cost required to power and cool the data center, which depends on the energy consumption of the IT equipment and the cost of electricity.
  • The fourth is data center utilization, which can affect costs positively (by increasing efficiency) and negatively (by requiring more infrastructure and energy).
  • Finally, staffing costs are a significant factor to consider, with smaller data centers requiring fewer employees and more automation leading to lower staffing costs.

Cost managers can work with the project team to develop a detailed cost estimate, considering all potential costs, including equipment, materials, labor, and operational costs. This estimate is regularly updated throughout the project to ensure actual costs are tracked to the forecast.

Risk management is another critical component of cost management. By identifying potential risks, such as unforeseen complications, changes in project scope, or unexpected delays, cost managers can develop contingency plans to mitigate the impact of these risks on the project’s budget.

2.      Reduced Risk of Delays

Cost management and cost allocation are critical factors in ensuring that data center projects are completed on time and within budget. A cost manager can identify and manage potential risks that may delay the project, create contingency plans, and ensure that the project stays on track.

A cost manager can also implement cost-saving measures that can reduce the likelihood of delays and cost overruns. For example, they can identify opportunities to use prefabricated or pre-engineered components, significantly reducing construction time and costs, or suggest potential uses of existing resources or legacy infrastructure. They can also work with suppliers to negotiate favorable pricing for materials and equipment, reducing costs and delays.

By managing costs effectively, a cost manager can ensure that data center projects are completed on time and within budget, minimizing the risk of delays and cost overruns. This helps to ensure that the data center network can be up and running as quickly as possible, providing the necessary infrastructure to support the organization’s operations.

A cost manager can provide regular financial reports to the project team and stakeholders, keeping everyone informed of the project’s financial status. This transparency allows for early identification of any potential budgetary issues and allows for swift action to be taken to keep the project on track.

3.      Improved Resource Allocation

Data centers require a significant amount of resources, including equipment, materials, and personnel. Effective cost management ensures that resources are allocated efficiently and effectively so the right resources are used at the right time and in the right place. A cost manager can help to ensure that resources are used effectively, leading to lower costs and improved performance.

By involving a cost manager early in the design process, potential cost savings can be identified and integrated into the design. The cost manager can work with the design team to find the most cost-effective solutions, such as using more efficient equipment, optimizing the layout of the facility, and selecting appropriate materials. This may lead to the teams uncovering additional capacity or additional efficiencies, saving money in the long run.

4.      Increased ROI

Data centers have ongoing operational costs, such as electricity, cooling, and maintenance. Effective cost management can help to minimize these costs by identifying opportunities for energy efficiency, optimizing cooling systems, and reducing maintenance costs.

Implementing cost-saving measures, such as server consolidation, virtualization, and energy-efficient practices, can significantly reduce operating costs, while effective ongoing cost management techniques can increase the efficiency of data center operations, leading to improved performance and productivity. This, in turn, can translate to faster service delivery and higher customer satisfaction, which can improve the data center’s reputation and attract more business.

During construction, capital expenses can represent a significant investment for data center operators. By implementing effective cost management practices, data center managers can optimize their capital expenses, reduce the costs associated with equipment acquisition, and ensure that capital investments provide a maximum return on investment.

Conclusion

Without effective cost management, data center projects can easily exceed their budgets, leading to delays and other issues that can impact the organization’s operations. By working with a cost manager, organizations can ensure that their data center projects are completed successfully, on time, and within budget, maximizing their investment in every way from start to finish.

Get in touch with Churchill Cost Consultants if you would like more information. 

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How to Select the Best Consultancy for Your Next Project

April 12, 20230

If your firm simply doesn’t have the resources to implement the best project controls or cost management processes, or if you simply want to identify better ways to manage expenses and resources, it’s time to call in external help.

A cost management consultant possesses knowledge about the various industries and the complex challenges they face. They can provide clients with assistance in the following:

  • cost-effective estimation and budgeting
  • change, resource, and risk management strategy
  • quality and schedule control, and more.

When it comes to selecting the best cost consultancy for your next project, there are a number of factors that you should consider in order to ensure that you are choosing the right partner for your needs.

The top construction consulting firms and cost consulting firms in the world share similar qualities that can meet your unique needs and help you in your quest for operational excellence, including: 

Location

The location of your cost consultancy can play a significant role in the success of your project. Utility rates, wages, logistics costs, and taxes vary from reason to reason, which is why it’s important to choose a consultancy that understands the local market and regulatory environment when it comes to cost management.

Churchill Cost Consultants has offices in several locations across the US and the UK, including Los Angeles, Dallas, Atlanta, San Francisco, and London. This means that no matter where your project is based, Churchill is likely to have a local presence that can provide the support you need. 

Previous Experience

It’s best to work with a consultancy that has a wealth of knowledge and prior experience in the areas that are relevant to your project, including experience in specific industries or types of projects, as well as experience working with specific types of clients.

When evaluating consulting firms, ask for information about their portfolio or past cases to see the caliber of projects they have worked on and whether their experience matches your needs. A versatile portfolio across small, mid-, and large-scale construction projects is a good indication of a firm’s competence and flexibility.

At Churchill cost consultants, the company only hires top consultants with a wealth of knowledge and prior experience. This means that clients can be assured that they are getting what they pay for. 

Consultancy Structure

When selecting a cost consultancy, it is important to consider the way in which the consultancy is structured. It’s preferable to engage a consultancy that has an accountability structure that ensures that all direct reports have management oversight for their specific project. This can help ensure that your project receives the attention and support it needs to succeed.

At Churchill cost consultants, the consultancy is structured in such a way that all direct reports have management oversight for their specific project. This means that clients are not only hiring one person but an entire team with the right knowledge and support. This team-based approach can help ensure that all aspects of the project are being managed effectively and efficiently and that the project stays on track and within budget.

Industry Expertise

A good cost consultant will always provide the best numbers – not the cheapest. They will find the momentum to balance costs with maintaining quality standards throughout the entire project.

Like any other profession, cost managers can’t know everything, but they need a solid understanding of critical factors, including the cost of labor and materials from various industries. They should be able to read and interpret technical, structural, and architectural plans while completing their analyses and demonstrate deep knowledge of different types of construction projects.

Churchill has experience in a variety of industries, including commercial, aviation, data center, and life sciences. This breadth of experience means that Churchill is well-equipped to handle a wide range of cost management challenges.

Communication and Reliability

Communication and reliability are far too underrated, but even if a consultant is juggling the cost control process of your firm with multiple other clients, they need to remain in touch, submit tenders on time and avoid delaying submissions. Good estimators must deliver and remain committed to the success of every client, keeping their best interests at heart.

Your cost engineers should be able to communicate effectively and professionally at all times. At Churchill Cost Consultants, we value honest and transparent communication and will gladly collaborate closely with each client to ensure that each project yields the best possible result.

 

Final Thoughts

Partnering with a cost consulting firm can provide your firm with the expertise needed to effectively manage costs, resources, and risks. When selecting a cost consultancy, it’s important to consider factors such as location, previous experience, consultancy structure, industry expertise, and communication and reliability. By choosing a consultancy like Churchill Cost Consultants , with a solid understanding of the local market, a wealth of knowledge and experience, a supportive team-based approach, expertise in various industries, and a commitment to transparent communication and reliability, you can ensure that your project is successful and stays within budget. Investing in the right cost consultancy can make all the difference in achieving operational excellence and reaching your project goals.

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The True Benefit of a Cost Manager On a Construction Project

April 3, 20230

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.