How Project Owners Can Use Technology To Manage Project Costs

Olga Zakharova Senior Product Manager
Last Updated

When it comes to managing construction projects, progress is usually measured by a few factors. First, there’s the scope of work. What is being built, and is the construction crew building and installing items as per a set of drawings or blueprints? Then there’s the schedule. How long does it take to complete the project in accordance with the contract? Is the job ahead of schedule, behind schedule, or right on track?

Other performance metrics include quality and construction site safety. Is the work performed to the standards set by the terms and conditions? Is the job site safe for field personnel and third parties? Finally, the other major factor for progress is the cost. What is the agreed-upon price for delivering the project? Is the job on track to come in over or under budget? What can be done to improve cost control in construction projects?

Understanding the Importance of Cost Control in Project Management

Some would argue that cost control in construction is the most important factor in project success. Owners or clients have to fund their projects according to their budgets, which are often tight and dependent on the availability of funds.

Construction companies also have to control costs, as overruns can turn profitable projects into ones that lose money. In 2016, only 31% of construction projects came within 10% of their planned budgets. It’s in everyone’s best interest to take advantage of a cost control system or processes before and during projects. Your company is not a non-profit organization. If you’re regularly losing money on projects due to poor cost control, it’s going to be hard to stay in business.

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Exploring Other Project Metrics in Relation to Cost

Experienced project managers also understand that failure to properly manage scope, schedule, quality, and safety can also negatively impact cost performance for a project. Consider these other scenarios impacting cost control:

  • Scope: In most situations, adding work to the project scope means an increase in the cost to do the work. While this might sound advantageous to a contractor, failure to control costs in estimating and completing additional work may result in a loss of profit. 
  • Schedule: The adage “time is money” proves its worth here. If a construction project misses its completion date, the contractor may have to pay liquidated damages, which could be thousands of dollars for each day that the job is overdue. Liquidated damages undercut your profit.
  • Quality: Sloppy or insufficient work usually has to be fixed on the contractor’s time and dollar. As a contractor, you have to eat the costs associated with rework. The additional time also threatens your ability to complete the job according to the agreed-upon schedule.
  • Safety: Poor safety management can have far-reaching cost consequences for a construction company. Repeated safety incidents can cause your insurance premiums to skyrocket. Unsafe projects also can reduce productivity and efficiency. If your company develops a reputation for being unsafe, it can impact your ability to secure new contracts. 

Cost performance doesn’t exist in a vacuum. All of these performance factors impact cost, so it’s incumbent on you to take advantage of technology and construction workflows for high-quality, safe, on time on budget construction.

Leveraging Technology To Control Costs and Save Money

Workflow Automation 

Construction projects involve several processes that are repeated regularly over their durations. Consider these common processes in building facilities:

These processes can be converted into automated workflows. Cloud-based construction management system like Fluix can be used to capture job site data, collect signatures, generate reports, distribute and store documents, and more. Automation helps minimize delays and inefficiencies in project management, helping save time and, therefore, money.

Building Information Modeling

Using 3D and virtual technology to model a planned facility helps project managers, planners, and estimators better plan the stages of an upcoming project. Everyone working on a project has access to a master model that can be used for generating material quantities, evaluating cost-saving measures, analyzing scenarios for contingencies, exploring value engineering initiatives, and planning for scenarios that could impact project performance.

Construction personnel can also use a building information model to plan work and staging, anticipating additional costs that may not be obvious from reviewing a set of flat, two-dimensional plans.

Drone Technology

Drones can help you control costs before and during construction. Project leadership can use drones for site reconnaissance. Photos and videos collected during pre-construction allow a user to examine the proposed site for differing conditions that could require additional work or days to be added to a contract.

Site condition information can also help a contractor put together a bid that accounts for costs that may have been missed based on construction plans and specifications. During the project, drones can be used to document project progress at high elevations or confined spaces, reducing the risk of safety incidents associated with site hazards.

Enterprise Resource Planning

Construction companies can benefit from enterprise resource planning that integrates various job functions with project management. A company principal or project manager can manage project performance while also tracking accounting, resource management, human resources, and more in one location.

Resource allocation, in particular, can be a critical component of job performance, especially for businesses that have equipment and labor allocated to multiple projects. If a project is behind schedule, one approach for cost control in construction is to allocate extra staff and equipment to recover. An ERP system helps analyze how changes to staffing impact other assignments in real-time and for forecasting purposes.

Being a flexible and scalable platform, Fluix can help you automate your business processes and manage project costs better. Its cloud-based technology is fully functional for project teams on smartphones, tablets, and laptops. Fluix offers a lightweight approach to optimizing various construction processes, including inspection, reporting, documentation, and filling forms. It’s also a tool that you can implement as part of an overall cost control system. It doesn’t require a special operating system or programming on your part.

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