COST CONTROL IN PROJECT CONTROL, A QUANTITY SURVEYOR TASK (PART 1) – ODUNMBAKU IDOWU OLUYEMI

During the execution of a project, procedures for project control and record keeping become indispensable tools to construction managers and other participants in the construction process. These tools serve the dual purpose of recording the financial transactions that occur as well as giving managers an indication of the progress and problems associated with a project. The problems of project control are aptly summed up in an old definition of a project as "any collection of vaguely related activities that are ninety percent complete, over budget and late." The task of project control systems is to give a fair indication of the existence and the extent of such problems

Cost control aims at ensuring that resources are used to the best advantage. In these days of ever-increasing costs the majority of promoters in construction industry are insisting on projects being designed and executed to give maximum value for money. Hence, quantity surveyors are engaged to an increasing extent during the design stage to advice the stakeholders on the probable cost implications of their decisions or requirement. As construction technology becomes more complex and logical, the employers become clever in their requirements, so it becomes necessary to improve and refine the cost control tools. Rising prices, restrictions on the use of capital and high interest rates have caused employers to demand that their professional advisers should accept cost as an element in design, and that they should ensure suitably balanced costs throughout all parts of the construction project, as well as an accurately forecast overall cost. Therefore quantity surveyor is needed to ensure value for money. Construction management techniques now adopt cost limits for projects and are instrumental in spreading an awareness of efficiency and value for money in construction industry; and this presages greater use of the quantity surveyor in establishing cost targets, in the appraisal of alternative solutions, and in cost control as a continuous process.

The limited objective of project control deserves emphasis. Project control procedures are primarily intended to identify deviations from the project plan rather than to suggest possible areas for cost savings. This characteristic reflects the advanced stage at which project control becomes important. The time at which major cost savings can be achieved is during planning and design for the project. During the actual construction, changes are likely to delay the project and lead to inordinate cost increases. As a result, the focus of project control is on fulfilling the original design plans or indicating deviations from these plans, rather than on searching for significant improvements and cost savings. It is only when a rescue operation is required that major changes will normally occur in the construction plan

For cost control on a project, the construction plan and the associated cash flow estimates can provide the baseline reference for subsequent project monitoring and control. For schedules, progress on individual activities and the achievement of milestone completions can be compared with the project schedule to monitor the progress of activities. Contract and job specifications provide the criteria by which to assess and assure the required quality of construction. The final or detailed cost estimate provides a baseline for the assessment of financial performance during the project. To the extent that costs are within the detailed cost estimate, then the project is thought to be under financial control. Overruns in particular cost categories signal the possibility of problems and give an indication of exactly what problems are being encountered. Expense oriented construction planning and control focuses upon the categories included in the final cost estimation.

For control and monitoring purposes, the original detailed cost estimate is typically converted to a traditional project budget in form of bill of quantities, and this project budget which is normally prepared by cost professional known as quantity surveyor is used subsequently as a guide for management. Specific items in the detailed cost estimate become job cost elements. Expenses incurred during the course of a project are recorded in specific job cost accounts to be compared with the original cost estimates in each category. Thus, individual job cost accounts generally represent the basic unit for cost control. Alternatively, job cost accounts may be disaggregated or divided into work elements which are related both to particular scheduled activities and to particular cost accounts.