Estimation of Construction Cost Control through spreadsheets in Project ManagementTweet
Large Construction Projects are inherently complex and dynamic. It is quite challenging to forecast projects cost-effectively. Most of the time there is a possibility of over budget in Construction Projects, however, it can be easily avoided.
According to McKinsey's research (Imagining construction's digital future), the construction industry, however, has yet to adopt an integrated platform that spans project planning, design, construction, operation, and maintenance. Employers and contractors often use different platforms that are out of sync with each other.
Inaccurate estimates of Construction Cost at the beginning will act like wedges continuously expanding a project's budget through its life cycle. This article will give a brief understanding of the importance of Construction Cost control and the different templates and spreadsheets used in framing the cost control
What is Construction Cost Control
Cost Control is the process of tracking and controlling the actual cost by various methods of any construction project. The steps include
- Monitoring Cost Performance
- Ensuring all changes are correctly submitted
- Announcing any changes and impact to cost to project stakeholders.
- These are the three simple steps wherein the process of managing the project cost can be carried out.
The project cost estimate mainly refers to the cost of resources needed to complete the planned activities of the project and it is the most important aspect of the construction management process.
Mainly two types of Cost are incurred in Construction Project. They are direct cost and indirect cost
Direct Costs are those costs that are incurred directly to finish the project. Indirect cost is the amount of money spent to support the indirect completion of the project.
Role of Spreadsheets in Construction Cost Estimates
In Project Management the most essential duty is to create a plan and the next step is to track the ongoing processes. The best way to track the progress of each task is to use proper and efficient spreadsheets.
Building projects are normally executed from different locations, which requires coordination from head offices and local sites. To create an active communication platform between the employees and the stakeholders, one can always use spreadsheets that portray the financial budgets which are connected to web-based software that can be accessible to mobile devices anywhere at any point of time.
This kind of spreadsheet acts as a financial tool for identifying, listing, costing of all of the workable resources, needs to run operations described in the project plan.
Many software companies introduced different varieties of spreadsheets which is very much userfriendly and can be operated at any point of time. These spreadsheets consist of formulas to track cost estimates, actual cost variances, payments, and balances due.
Integration with Procure Management System
In Construction Projects, the data flow comes from Project accounting systems. The main disadvantage of this type of method is, it is unable to track actual cost instantly. In the construction site or the company's head office the purchase order and invoices are not entered instantly, the accounting supervisor does it later. As a result, it becomes impossible to think about cost control and the procurement process independently.
Thus to make a synchronization with the finance department and the procurement department, we have to create a successful cost management system, and for doing that we need it to integrate with the procure management system. With procurement integrated cost control systems that provide real-time budget control, budget exceeding within the tolerances or defining revises budget should be possible.
Formulate business strategy with spreadsheets
Before you need to start the project you must have the right tools to collect and to formulate the data you need to formulate a strategy. Thus spreadsheets gives a wide variety of choices to schedule and plan the resources. It also helps in creating an excellent Project status report, and with this tool, you can greatly improve your project communication both with the stakeholders and with teammates.
Spreadsheets create hierarchical visual
With spreadsheets you can also craft the work break down structure. While working on projects the deliverables are the most important criteria, and these deliverables are created by tasks. Thus work breakdown helps to visualize the tasks, sub-tasks, small task,s and so on to create a hierarchical visual that allows you to see the entire scope of the project work.
Large Construction conglomerates and global companies have multiple projects in hand and thus requires consolidated reports and separate task report for each different project. Thus software companies are researching as per the trend and creating unique spreadsheets which consist of multi-currency, multi-company, and multi-project structure. These spreadsheets are of real help to the organization, stakeholders, Project Managers as well as contractors. It is not an easy task to control cost in construction and sticking to project budget is the most challenging job, However project Managers with the help of various types of spreadsheets available in the market diligently creates the construction Cost control which helps the financial leaders and the stakeholders visualize the actual scenario happening in the projects and take necessary precautions if any deviations may happen, and successfully accomplish the project.