1. TOTAL COST CONTROL ON CONSTRUCTION PROJECTS
A presentation at
2019 ENGINEERING CONFERENCE
A presentation by
QS Fred Chiweza (MRICS, MSIM, MSc, BSc QS)
September, 2019

2. OVERVIEW
Construction projects incur cost overruns which impact on project success.
This presentation is a discussion on how these overruns can be prevented.
Initially we are looking at why we need cost control and later we look at cost control techniques.
In conclusion we advocate for a great commitment to cost control issues as a way to project success.

3. WHY COST CONTROL Project objectives Project failure or success
Time requirements
Early /late completion, short construction period, firm completion date set by client etc
Cost requirements
Low total cost, cash flow timing, best combination of capital and maintenance costs, tight budgeting control etc
Quality requirements
Workmanship, materials, servicing and so on
Specific Client
Business
Objectives

4. CAUSES OF COST OVERRUNS
Project management and contract administration related factors 1
Poor project management 2
Change in scope of work 3
Delays in decision making 4
Inaccurate quantity take off

5. Design and documentation related factorsB
Design and documentation related factors 5
Frequent design changes 6
Mistakes and error in design 7
Incomplete design at the time tender 8
Poor design and delays in design 9
Delay in preparation and approval of drawings

6. Contractor site management related factors10
Poor site management and supervision 11
Incompetent subcontractors 12
Schedule delay 13
Lack of experience 14
Inaccurate time and cost estimate 15
Mistakes during construction 16
Inadequate monitoring and control 17

7. Finance management related factor18
Cash flow 19
Poor financial control on site 20
Financial difficulties of the owner 21
Delay in progress payment by the owner 22
Delay in payment to suppliers/subcontractors

8. E
Information and communication related factors 24
Lack of coordination between parties 25
Slow information flow between parties 26
Lack of communication between parties

9. Human resources( workforce) related factor27
Labour productivity 28
shortage of site workers 29
Shortage of technical personnel 30
High cost of labour 31
Labour absenteeism

10. Human resource control factorsG
Human resource control factors 32
Fluctuations of materials 33
Shortage of materials 34
Equipment availability and failure 35
Late delivery of materials and equipments

11. Environmental related factorsH
Environmental related factors 36
Level and number of competitors 37
Economic instability 38
Effects of weather 39
Government policies 40
Inadequate production of raw materials by the country 41
Monopoly by suppliers 42
Number of projects going on at same time 43
Political situation 44
Project location 45
social and cultural impacts

12. EFFECTS OF COST OVERRUNS
To the Client
To the end user
To project consultants
To contractors
To the construction industry
To the country

13. TOOLS AND TECHNIQUES FOR COST CONTROL
Developer’s budget
Cost planning
Cash flow
Cost reporting
Cost Control

14. DEVELOPER’S BUDGET Cost of land Fittings and furnishings
Legal costs
Land preparation
Building costs
Consultants fees
Fittings and furnishings
Disposal costs
Value added tax
Financing costs
Operational costs

15. COST PLANNING
 “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, This person began to build and wasn’t able to finish.”
Luke 14:28-30

16. PROJECT STAGE
COST PLAN
METHODOLOGY 1
Feasibility study
Initial cost appraisal
Based on past records and assumption 2
Project brief to sketch design
Elemental cost plan
Cost per square meter of space/ functional element 3
Sketch to detailed design
Approximate quantities plan
Available design details 4
Tender documentation stage
Pre tender estimate
Based on complete tender documents 5
On signing the contract or beginning of the project
Contract sum
Based on contractors price 6
Project implementation period
Cost report projected sum
Incorporating variation and all authorized changes to the contract 7
Project closure
Find account
Agreed during/ after defects liability period

17. CASH FLOW
Cash flow is the movement of income into and expenditure out of a business over time.
Cash flow is important in order to ensure that an appropriate level of funding is in the place and that suitable draw-down facilities are available.

18. COST REPORTING
Cost reporting is a process used to inform a client about the magnitude of a construction project predicted or actual cost.
Cost reporting must include ;
Established project cost to date
Anticipated final cost
Future cash flow
Ongoing risks to costs
Potential savings

19. TOTAL COST CONTROL
Total cost control will require the following actions to be taken;
Design decisions
Project Team
Updating cost plan
Updating cash flow plan
Reviewing contingency
Change management process
Updating cost reports
Information management
Actual expenditure versus projected expenditure

20. CONCLUSIONS AND RECOMMENDATION
To eliminate cost overruns the following should be adhered to all time;
The consultants should apply project management tools in their project delivery.
The client, the consultants and the contractors should strictly work within the scope originally planned for the project

21. Projects should be planned properly before execution starts
Only contractors with adequate experience and financial ability to handle construction projects should be awarded contracts.
Communication gaps should not exist between the stake holders of the building construction projects
A commitment should be made to cost control followed by clear actions.

22. THANK YOU