Construction Cost Optimization Techniques

Cost Optimization Techniques

Are Construction Cost Optimization Techniques necessary?

Builders Must-Have Understanding About the Optimizing Construction Cost in 80% Cases builders are dependent on their Architect and Architects thinks only on the design Aspect. Many Architects Don’t Have Cost Related Understandings. In Recent years I handled 5 Big builder’s Cost related Issues and the root cause is that the Architects Negligence towards the cost. It is necessary to decide which optimization is required. It is an expensive operation for large construction Companies to Carryout Detailed Cost Optimization System. The Cost itself is a major difficulty to work out a detailed cost Optimization system

From the Construction Cost Optimization Techniques following conclusions are made:

  1.  “The problem of cost optimization is actually the lack of knowledge and inadequate planning for the implementation coupled with the poor management of construction resources”.
  2. General methods that are used by Builders for cost optimization methods are as follows:
    a. Comparison with a cost standard.
    b. Subdivision by detail.
    c. Integration with other functions.
  1. Job Cost Method is Complicated and Expensive but it is more accurate than other methods.
  2. Implementation of Earn Value method is the latest technological Evolution Influencing Construction Sector.
  3. Each Builder has different Functions method so he has his own work culture so cost optimization is not a standard process but it is customized as per the project.
  4. Builders doing Cost Optimization only for Profit and loss Analysis or Billing process through the Unit rates,  progress payment based on quantities, the project budget, schedules,  inspection of works, monitoring, cost reports, site meetings of cost and work performance and quantity evaluation on site they did not have Standard Process to optimize cost even many engineers are not aware of the traditional cost optimization Methods.
  • The problem faced by Builders are optimizing the costs on site,  Difficulty in the collection of cost data, Ever-changing environment of construction work, Qualified expertise, Duration of the project, additional costs due to Changes.
  • The availability of qualified experts is the main problem faced by Builder in optimizing the costs of construction projects. Project managers/ civil engineers don’t have cost Reconcile approach they do not prepare Cost control documents for their Projects that’s why they don’t have expertise in Cost optimization.

Recommendations

  1.  The problem of cost control was actually not the techniques being used, but rather the poor management of the techniques and the lacking in supervision.
  2. It is therefore strongly recommended that Builders should appoint a Consultant in construction project management as the study identified a lack of knowledge of the cost control techniques and inadequate cost control methodology as the biggest problem. In almost all sites, Engineers were not aware of the performance targets implying there was a lack of knowledge and communication lapses between Engineer and Management. 
  3. Cost is a product of the use of project resources and the only better way of controlling the cost of construction is best handled by the Job Cost method.
  4. Deploying reliable ERP system which will maintain a well-kept Booking system and automated MIS process gives desirable deliveries of Cost Control
  5. Builders are encouraged to adapt use of latest ERP System and Modern cost Control techniques as it has the advantage of speeding up work saving money Producing better quality of work economically
  6. Recording work progress, daily work evolution, requirement of Engineers for the right skill of the Work and having Schedule and proper Record in place 

That’s the Construction Cost Optimization Techniques I Hope You Should Like it

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