How to control costs on a construction project

Good cost planning and control is the difference between building your project on or over budget. Cost planning and control is the function of the construction manager or project manager.

Cost control is the process of managing labour, material and plant costs to ensure the project is completed on budget.

Cost control relies on a fully priced and detailed bill of quantities. Without continually monitoring the detailed cost estimate, the project will quickly eat through the budget.

Building the cost plan

Step 1 is to produce a bill of quantities by taking off the construction quantities using the drawings and specifications provided by the architects.

Step 2 is to create a shopping list from the bill of quantities for all the material costs. Send enquiries out to the suppliers to obtain competitive prices for all materials.

Step 3 Is to develop built-up rates for each work item using the material prices you have obtained, with labour and plant constants.

Step 4 Once the fully priced bill of quantities is completed, you can plan your project and have control of all the costs.

The image below is an example of a fully priced section from a bill of quantities.

Cost planning

Cost Analysis

Earthworks

Costs
20 ton Hymac with driver £1750 per week
10 ton dumper with driver £1300
Labour £150 per day

Productivity
20 ton Hymac 8m3 per hour
10 ton dumper 30m3 per hour

Time
500m3 earth to excavate / 8m3 per hour = 63hrs
500m3 earth to move / 30m3 per hour = 17hrs

Plant costs
Hymac £1,750 per week x 2 weeks = £3,500
Dumper £1,300 per week x 1 week = £1,300
Transport to and from site 4 x £200 = £800
Total cost of plant = £5,600
Budget £6,250

Labour costs
10 days @ £150hr = £1,500
Budget £2,000

Earthworks project duration
10 days

Conclusion

We can see the rates in the earthworks estimate are higher than the cost of the earthworks. Earthworks is a risk item of work as work can overrun due to bad weather, finding underground obstacles or poor ground conditions. It is wise to cover these costs in the estimate. If the work goes to plan, you have a saving that can be used in another area that may overrun the budget.

We now have the plan to place an order for the plant, and we know how long this element of the work will take to incorporate into the project timeline or Gantt chart.

You can go through all the work elements and begin to develop your cost plan.

Cost control is to have a cost plan and buy your labour, plant and materials to or under the budget. Working to your plan will keep you on budget.

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