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    Ways to Effectively Control Construction Project Costs to Maximize Profits

    Construction projects come with a certain amount of inherent risk that is very difficult to control.  Weather conditions and fluctuating material costs can wreak havoc on a project budget. That’s why it’s important that you effectively control the costs that can be managed to the best of your ability. Maximizing profits requires best practices in:

    1. Scoping and estimating
    2. Monitoring project progress
    3. Effective communication with the client, the project team in the field, and the corporate office

    Scoping and Estimating

    There are many reasons a project can go over budget, but one of the most common reasons happens before the project ever starts. Errors in scoping and estimating, including unclear or incomplete specifications, omissions in estimating and bad assumptions or bad data are all common problems. It is essential that a system be in place to assist in:

    • Clearly identifying tasks
    • Capturing and validating relevant historical project and cost data
    • Developing standard processes and work break down structures to ensure that no portion of the scope/estimated is omitted and to make it easier to make comparisons to other projects
    • Identifying uncertainties and risks
    • Conducting an independent review of the estimate to verify, modify, and correct estimates to ensure realism, completeness, and consistency.

    Monitoring Project Progress

    It is difficult to right a wayward project once it is well under way. Proactive management results in better focus and increases the chance that a project will achieve its goals on time and within the expected budget. While it is, of course, important to monitor costs, there are also other risk areas that need to be closely monitored including management processes, resources, and schedules. An integrated project plan that provides a holistic view of the project is a valuable asset when it comes to keeping projects on track. Being able to analyze the interplay of resources, schedules, costs and potential project changes in advance can help to keep the project on the right path. It is also vitally important to keep your scope and estimating documents up-to-date with actual costs and to take note of any major project change orders in the historical records so you have clarity on the reason for any cost overruns for future reference.

    Effective Communications

    Most engineers and project managers spend a great deal of time in the field during construction season. The ability to access and interact with your business information systems in a meaningful way while in remote locations is critical to keeping projects on track. Real-time input and the information needed to make decisions in the field go a long way in maximizing project profitability.

    The risk associated with construction projects can never be completely eliminated, but effectively managing the things you can control will result in maximized project profits.