When it comes to construction projects, visibility into the project performance is of prime importance for businesses of all scale. With budgets getting tighter and expenses being on the rise, stakeholders seek solutions and measures that ensure that their funds are being utilised wisely. They also want the projects to run according to plan, in terms of cost, quality and timelines. As a result, accurate cost and revenue forecasts, along with tight control over deviations, become imperative for project managers. However, there are significant hindrances that stand in the way of effective cost control. These challenges emerge from diverse sources, which make it all the more important to be aware of them right from the start. Knowing them better can help you implement effective control and best practices to ensure that you have a grip over unnecessary cost deviations in the long run. Let us highlight the common cost control challenges that every construction project manager needs to know about:
Challenge #1: Inefficiencies in systems and processes
The biggest impediment for construction project cost control management lies in the inefficient systems and processes run by firms and project owners. And this can be attributed to the fact that a majority of businesses fail to embrace modern cost management tools and technologies. In contrast to the legacy systems, these smart software solutions can make them more competitive, profitable and successful. Modernising your technology is a wise approach as it can save you from drowning in spreadsheets that are inefficient, time-consuming and inaccurate. The best way to start is by understanding the benefits of an integrated software solution and finding the one that covers all your needs.
Challenge #2: Inaccuracies in reporting
No doubt, sticking with outdated processes and systems can damage your cost control management initiatives, but inaccurate reporting can be an even bigger challenge. There’s a lot of effort that goes into gathering data for reporting purposes, let alone creating ones that are timely and accurate. To make things worse, a manual solution has a high risk of inaccuracies and errors. Even the smallest of inaccuracies can have significant implications such as wrong business decisions, which is the last thing you would want to happen because, after all, you are responsible for the project resources. Once again, a project cost control management solution with smart reporting capabilities can help you overcome this challenge.
Challenge #3: Errors in budgeting and forecasting
Not knowing where your project is going is as good as trying to feel your way around in the dark. You need to have clear a budget and forecasts which are also time-phased across the project duration. At the same time, you must be able to view the budget against the actual picture at any point in time during the project’s lifespan. However, mapping your budget over a timeline gets challenging with legacy tools like spreadsheets, paper forms and so on. Resolving this challenge requires you to establish stringent project controls standards for time-phasing the budgets, along with processes to have regular, incremental project forecasts in place.
Challenge #4: Management and control of changes
As a project manager, you will realise that changes are inescapable for construction projects, and you are bound to encounter them more often than expected. Controlling and managing these is one of the trickiest aspects of cost management. Change orders not only disrupt the project, but they can also introduce a host of complexities in forecasting, budgeting and reporting. While you would have set an initial budget for a project, a variation or scope change will inevitably come into play. Addressing this challenge is possible by having a reliable cost management solution with built-in logic for managing the complexities of change orders and their impact on budget and timelines.
Challenge #5: Poor communication between the stakeholders
Another challenge that can hinder cost control is the absence of proper communication between the stakeholders. Outdated information, where data cannot be seen in real-time, can present a distorted picture of the cost reports and bring inaccuracies in forecasting as well. A standardised reporting system is also a must because different report formats may result in confusion and risk data integrity too. At the same time, vital information may end up getting lost if the team fails to communicate the data consistently. It is essential to have all the costs and changes tracked and updated in one place that acts as a single source of truth, preferably a project cost management software. One that has intuitive dashboards which allow the teams to make accurate and well-informed decisions is a great pick.
Challenge #6: Inability to manage progress data from multiple subcontractors
Construction projects typically involve multiple subcontractors, and keeping track of their costs and progress is another challenge for project managers. You will probably understand how problematic pulling together an integrated master schedule from several subcontractors is. While managing progress data elements such as the completion percentage is complex, it gets even tougher to create meaningful reports or analysis of the project from these inputs. The cumbersome nature of the process itself often leads to delayed or inaccurate reports. Larger projects which include a greater number of subcontractors are tougher to manage though a reliable software tool can steer you in the right direction.
Dealing with the challenges of cost control
Addressing the fundamental cost control challenges is never easy, but that does not make them impossible. With the right approach and tools in place, they can be handled with relative ease. Here are the mainstays of an effective strategy that you can implement for this purpose:
- Moving towards the standardisation of cost control processes while being flexible enough to accommodate changes if needed.
- Supporting and enforcing these processes through an integrated cost control software solution. Through integration with such a solution, reporting becomes automated and eliminates multiple cost control challenges effectively.
- Having a well-planned cost control strategy for achieving the process described above is equally vital.
In a nutshell, a tech upgrade with a smart project management software solution is one of the best measures you can implement to have better control over the cost of your construction projects. An innovative and feature-rich solution like Zepth can serve as a wise investment for your business, in the long run, steering it on the path of efficiency, productivity and growth.
The author is a project manager with a renowned construction firm based in India. Apart from being adept in his job role, the author has a flair for writing. He often shares industry insights and personal experiences on popular blogs and websites in the construction domain.