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Cost-Control-Course-Introduction-lesson-1-Introduction

The document discusses cost control in construction projects. It defines cost control and explains that the main purpose is to prevent cost overruns by monitoring project progress and budget. It also compares cost control and accounting, explaining that cost control is proactive by calculating actual costs at any stage, while accounting is reactive after completion. Finally, it discusses how cost control can calculate cash flow to prevent companies from failing projects due to lack of funds.

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mohammed.irfan
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33 views

Cost-Control-Course-Introduction-lesson-1-Introduction

The document discusses cost control in construction projects. It defines cost control and explains that the main purpose is to prevent cost overruns by monitoring project progress and budget. It also compares cost control and accounting, explaining that cost control is proactive by calculating actual costs at any stage, while accounting is reactive after completion. Finally, it discusses how cost control can calculate cash flow to prevent companies from failing projects due to lack of funds.

Uploaded by

mohammed.irfan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Cost control in construction Projects

Introduction

I-what is cost control in construction projects?

Because Construction Projects are complicated by their natural, companies are


very interested not to lose control. Therefore, for time there is a time schedule,
for Quality there is QA/QC plan, and for cost there is cost control process.

Accordingly, Cost control process should monitor the Project progress and
report any deviation to the budget cost. Budget cost is the cost each item in
your project should be completed within it. In other words, the budget cost is
the amount of money allocated to each Activity, and we will talk about it in
detail later in this course.

The main purpose of cost control is to prevent the problems at the First place, For example if you have 20
story building, and there is a problem in the concrete costs, you should be able to define this problem (which in
our case here is the cost overrun, or additional costs spent on concrete activity) From the beginning of the
project. In my opinion, you should be able to find and define the cost-over run From the first weeks.

2. Differences bet ween cost control and Accounting?

Accounting is a Reactive approach Cost control is a proactive approach

where the accountant or the accounting department in any construction company can accurately calculate the
total costs of the project and the achieved profits, it can only do this after the project completion or in the best
cases, after completing a whole division of work such as concrete works. in the other hand, cost control
Engineer can calculate the actual costs and profits at any certain stage of the project. Furthermore, cost
control can define the Area where the losses happen before it became a disaster.

Course link: https://planningengineer.net/lp-courses/cost-control-for-construction-projects


3- Cost control can also calculate the company/project cash Flow:
cost control does not start after the protect commencement,
it starts even before that. with a proper cost control plan,
you can calculate the maximum negative cash flow of the Profit x
project. This piece of information could save lot of
x
companies from failing in their projects or even might impact
the project Decisions. x

x x x x
This figure will tell the company how much money they x x x x
x x x
should have to Execute this project considering the contract
conditions of payments and project time schedule. Max -ve cash flow
Furthermore, companies all the projects togethers in one
portfolio will create the company overall cash flow to prevent
lack of cash which is a very common reason why projects
or even companies fail.

4- Cost control is easy or difficult to implement?

To be honest, it depends on you, if you are planning


to implement the cost control processes using the
hard way or the smart way. 10’s of years ago there
was only one way, the hard way, but with today's
technology, the smart way is feasible and can be
implemented with easy steps.

5- Cost control conclusion:

The demand of cost control increased a lot in the past few years. Construction companies are welling to pay
very well to cost control Engineers who could effectively prevent or Report at the early stage of the project
the cost overrun. Accordingly, many IT companies developed software / web based solutions for cost
control.

However, these solutions still have some limitations to fit all kinds of projects and/or companies' budgets.
Therefore, this Course will handle all these challenges to teach you how to perform cost control effectively
without any expensive software / tools.

Course link: https://planningengineer.net/lp-courses/cost-control-for-construction-projects


Cost Control V.S EVM
Cost control Earned Value Management (EVM)

Budget costs: the amount of money that should be Planned Value: the value of the amount of work
Budget
spent costs
on the executed works. The costallocated planned to be done as per the project time schedule.

for item in
eachthe actual coststhe
Actual costs: project
spent on the project. Earned Value: the value of the amount of work
done as per the project selling price.
130Q
Cost variance: the variances between the budget Cost variance: the variances between the earned
cost and actual costs. values and planned values.

Cost variance is +ve what does it mean? Cost variance is +ve what does it mean?
This means the actual costs are less than budget This means the earned value is more than planned
costs which means the project is making more profit. value which means that more progress was done
than planned.

This means EVM does not = Cost Control.

Course link: https://planningengineer.net/lp-courses/cost-control-for-construction-projects

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