Results that work in your Construction Project’s Cost Control
Construction Project Cost Control is a wide Topic to explore so lets start with a story. Vastu Builder has been in the construction industry From the Last 14 years and he has earned a decent name in Real Estate Industry! This was good as far as he launched the First 2 project in 2004 & 2007 he earned a handsome amount from that projects and then he launched projects in 2009 and 2012 in which he earned some amount but not as his past projects. Then he launched a project in 2014 which is a bigger project from his past projects and from here real problem started he invested all this Liquidity and booking amount in construction projects and still suffering from cash flow crunch and still struggling to eliminate that.
Now he is not able to understand what exactly is happening with him he is doing the same which he did in his past projects but still struggling to meet the required cash flows
Now he has a question in his mind how much money I am earning through this project he doesn’t have any system to find out that cost. So he discussed with one of his friend that what should he do then his friend suggested that he should appoint Suvarna Consultancy to find out problems in his project that’s why we get involved in that project we Found that they have done Basic planning mistakes on their Design through our value engineering suggestions we achieved saving of 5 crore rupees in that project which is 200 rupees sqft of saleable area
The single most reason is – Project Cost Overrun!
Client Don’t Have clear understanding of construction design and cost
When You are Planning New Real Estate Project how are You Taking Decision on Design?
Maybe you are clear on your Ticket Size But did you know the perfect way to Implement on your Ticket size like how many flats should be on per floor to increase my profit.
how many floors are profitable to me (HEIGHT AND DESIGN ECONOMICS)
What is my floor plan efficiency and how can I convert that into Maximum Profit.
What type of Parking Arrangement is Profitable?
Which Layout option Is Profitable to my Project?
We can solve your problem and Provide you the Maximum Profit from your Plan through our Real Estate Cost Feasibility Report. This Report is Block Estimate which is Prepared from Our Historical data also we have Hundred’s of Floor plans Cost Data
When brainstormed with his key employees, they listed out the following possibilities:
- Our Company is absolutely depending on the Architect for the design and Cost
- our architect Do not give us Drawing before we start the construction so we do not know what they are designing
- we are suggesting Specification alternatives to reduce cost but management not listening to us as they have a commitment to the customers
Lately, as he launched himself into large size residential and commercial constructions, he is finding it difficult to Create a Control on Construction Cost!
Other reasons brought out were:
- Projects are complex, involving a large number of different parties, components, requirements and so on
- Poor communication between project team members
- Addition of scope during later stages of project planning and even during construction, changed conditions, etc.
- Inaccurate cost information that leads to incorrect Costing.
- Unforeseen costs that only become apparent as the work progressed
It is observed that, in the construction industry, cost Control is relatively common, occurring when the costs being incurred are in the excess of the amounts that have been budgeted for.
But this cost control method is a standard set by company heads as [per their knowledge and expertise to create a control but they don’t have taken any formal education into the cost-control management so whatever they are doing they considered they are creating a cost control.
We Suvarna consultancy have expertise in cost control to know about the standard process of cost Control click here
What is Cost Estimation & Its Control?
Cost estimating is one of the most important processes in construction project management. The estimation process is usually performed during different phases of the construction project and with various levels of detail and accuracy, depending on the objective of the estimation task.
Costs are estimated, on average, seven times during a project for each building component. As the project evolves, different types of estimates are usually required. In the early stages of project development (i.e., assessing project feasibility and evaluating budgetary requirements), conceptual and preliminary estimates are made based on historical data and cost forecasting models prior to the completion of the plans and specifications for the project. Once the project has advanced to the procurement stage, after completion of the detailed project design, detailed estimates are usually made.
The objectives of conceptual cost estimating for Real Estate projects are usually the following:
- to enable investment decision making at the conceptual stage (i.e., a go/no go decision);
- to establish a construction budget.
- to forecast the probable actual cost.
The total cost of a construction project includes unit Cost, development Cost, legal Charges, admin Expenses, Water, electricity, and security Including finance charges, plus the assumption of land cost Considering Contingency and escalation then only it reflects the cost to the company and feasibility report Shows the profitability of that project.
we have Variety of Cost Data if you are interested in Cost dynamics click here
The objective of cost control is to manage the delivery of the project within the approved budget. Regular cost reporting will facilitate, at all times, the best possible estimate of:
- Established project cost to date.
- Anticipated final cost of the project. · Future cash flow.
In addition cost reporting may include assessments of:
- Ongoing risks to costs.
- Costs in the use of the completed facility.
- Potential savings
Monitoring expenditure to any particular date does not exert any control over future expenditure and, therefore, the final cost of the project. Effective cost control is achieved when the whole of the project team adopts the correct attitude to cost.
How to control the project and minimize the cost overruns?
It’s Suvarna Consultancy Services.