Construction Cost Management - Revision history

Tkokotas at 19:30, 20 November 2018

2018-11-20T19:30:40Z

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			''Developed by Apostolos Bougas''


	'''Construction Cost Management''' is one of the most important aspects of a construction project planning process, as cost and money are strictly related to the project and have a major influence on it during its whole lifecycle. This wiki article provides a general overview of all the cost aspects during a construction project lifetime. The article is divided into sections according to the Danish ISO Standard DS/ISO: 21500:2013 Guidance on Project Management. These sections cover the entire lifecycle of a project in general, and so, of a construction project. Each section was related with the costs aspects of a construction project which are relevant for it. The article starts with presenting the financial appraisal of a construction company, then continues into describing the cost estimation, then delves into aspects on tendering and contracting. The cost control of the project is later mentioned, finally followed by the cost aspects on closing and after that of a construction project. In each section, the most important cost aspects and techniques, which are performed by cost managers, are briefly presented. The article stands out as a guide for cost construction management.		'''Construction Cost Management''' is one of the most important aspects of a construction project planning process, as cost and money are strictly related to the project and have a major influence on it during its whole lifecycle. This wiki article provides a general overview of all the cost aspects during a construction project lifetime. The article is divided into sections according to the Danish ISO Standard DS/ISO: 21500:2013 Guidance on Project Management. These sections cover the entire lifecycle of a project in general, and so, of a construction project. Each section was related with the costs aspects of a construction project which are relevant for it. The article starts with presenting the financial appraisal of a construction company, then continues into describing the cost estimation, then delves into aspects on tendering and contracting. The cost control of the project is later mentioned, finally followed by the cost aspects on closing and after that of a construction project. In each section, the most important cost aspects and techniques, which are performed by cost managers, are briefly presented. The article stands out as a guide for cost construction management.

S162469 at 19:56, 29 December 2017

2017-12-29T19:56:35Z

← Older revision		Revision as of 19:56, 29 December 2017
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	'''Construction Cost Management''' is one of the most important aspects of a construction project planning process, as cost and money are strictly related to the project and have a major influence on it during its whole lifecycle. This wiki article provides a general overview of all the cost aspects during a construction project lifetime. The article is divided into sections according to the Danish ISO Standard DS/ISO: 21500:2013 Guidance on Project Management. These sections cover the entire lifecycle of a project in general, and so, of a construction project. Each section was related with the costs aspects of a construction project which are relevant for it. The article starts with presenting the financial appraisal of a construction company, then continues into describing the cost estimation, then delves into aspects on tendering and contracting. The cost control of the project is later mentioned, finally followed by the cost aspects on closing and after that of a construction project. In each section, the most important cost aspects and techniques, which are performed by cost managers, are briefly presented. The article stands out as a guide for cost construction management.		'''Construction Cost Management''' is one of the most important aspects of a construction project planning process, as cost and money are strictly related to the project and have a major influence on it during its whole lifecycle. This wiki article provides a general overview of all the cost aspects during a construction project lifetime. The article is divided into sections according to the Danish ISO Standard DS/ISO: 21500:2013 Guidance on Project Management. These sections cover the entire lifecycle of a project in general, and so, of a construction project. Each section was related with the costs aspects of a construction project which are relevant for it. The article starts with presenting the financial appraisal of a construction company, then continues into describing the cost estimation, then delves into aspects on tendering and contracting. The cost control of the project is later mentioned, finally followed by the cost aspects on closing and after that of a construction project. In each section, the most important cost aspects and techniques, which are performed by cost managers, are briefly presented. The article stands out as a guide for cost construction management.

	[[File:Cost_management.PNG‎ \|thumb\|right\|~~600px~~\|Figure 1: Construction Cost Management Processes]]		[[File:Cost_management.PNG‎ \|thumb\|right\|700px\|Figure 1: Construction Cost Management Processes]]
	=Introduction=		=Introduction=

S162469 at 19:56, 29 December 2017

2017-12-29T19:56:18Z

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	'''Construction Cost Management''' is one of the most important aspects of a construction project planning process, as cost and money are strictly related to the project and have a major influence on it during its whole lifecycle. This wiki article provides a general overview of all the cost aspects during a construction project lifetime. The article is divided into sections according to the Danish ISO Standard DS/ISO: 21500:2013 Guidance on Project Management. These sections cover the entire lifecycle of a project in general, and so, of a construction project. Each section was related with the costs aspects of a construction project which are relevant for it. The article starts with presenting the financial appraisal of a construction company, then continues into describing the cost estimation, then delves into aspects on tendering and contracting. The cost control of the project is later mentioned, finally followed by the cost aspects on closing and after that of a construction project. In each section, the most important cost aspects and techniques, which are performed by cost managers, are briefly presented. The article stands out as a guide for cost construction management.		'''Construction Cost Management''' is one of the most important aspects of a construction project planning process, as cost and money are strictly related to the project and have a major influence on it during its whole lifecycle. This wiki article provides a general overview of all the cost aspects during a construction project lifetime. The article is divided into sections according to the Danish ISO Standard DS/ISO: 21500:2013 Guidance on Project Management. These sections cover the entire lifecycle of a project in general, and so, of a construction project. Each section was related with the costs aspects of a construction project which are relevant for it. The article starts with presenting the financial appraisal of a construction company, then continues into describing the cost estimation, then delves into aspects on tendering and contracting. The cost control of the project is later mentioned, finally followed by the cost aspects on closing and after that of a construction project. In each section, the most important cost aspects and techniques, which are performed by cost managers, are briefly presented. The article stands out as a guide for cost construction management.

	[[File:~~Cost_management_processes~~.PNG‎ \|thumb\|right\|600px\|Figure 1: Construction Cost Management Processes]]		[[File:Cost_management.PNG‎ \|thumb\|right\|600px\|Figure 1: Construction Cost Management Processes]]
	=Introduction=		=Introduction=

S162469: /* Detailed Estimate */

2017-12-29T19:49:16Z

Detailed Estimate

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	====Detailed Estimate====		====Detailed Estimate====
	This type of estimate is used in the late planning design phase of the project by the client and the ~~consultncy~~ team or by the contractor for submitting the tender.		This type of estimate is used in the late planning design phase of the project by the client and the consultancy team or by the contractor for submitting the tender.

	'''Methods'''		'''Methods'''

S162469: /* Contracting Hendrickson C., Au T., (2008) Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects and Builders, Version 2.2, [URL:http://http://pmbook.ce.cmu.edu/] Retrieved on 13 December 2017 */

2017-12-29T19:29:47Z

Contracting Hendrickson C., Au T., (2008) Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects and Builders, Version 2.2, [URL:http://http://pmbook.ce.cmu.edu/] Retrieved on 13 December 2017

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	*Guaranteed Maximum Cost Contract		*Guaranteed Maximum Cost Contract
	In lump sum contract, al the risk is assigned to the contractor. In a unit price contract, the risk of inaccurate estimation of uncertain quantities for some key tasks has been ~~transfered~~ from the contractor to the client. The fixed percentage or fixed fee is determined at the start of the project, while variable fee and target estimates are used as motivation to reduce costs by sharing any cost savings. A guaranteed maximum cost arrangement imposes a penalty on a contractor for cost overruns and failure to complete the project on time. With a guaranteed maximum price contract, cost overruns below the maximum are divided between the owner and the contractor, while the contractor is responsible for costs overruns over the maximum.		In lump sum contract, al the risk is assigned to the contractor. In a unit price contract, the risk of inaccurate estimation of uncertain quantities for some key tasks has been transferred from the contractor to the client. The fixed percentage or fixed fee is determined at the start of the project, while variable fee and target estimates are used as motivation to reduce costs by sharing any cost savings. A guaranteed maximum cost arrangement imposes a penalty on a contractor for cost overruns and failure to complete the project on time. With a guaranteed maximum price contract, cost overruns below the maximum are divided between the owner and the contractor, while the contractor is responsible for costs overruns over the maximum.

	=Controlling=		=Controlling=

S162469: /* Cost Control */

2017-12-29T19:29:16Z

Cost Control

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	==Cost Control==		==Cost Control==

	The primary objective of Construction Cost Control is the delivery of the project within the approved budget. Procedures and methods for construction cost control provide the project managers the tools to track the progress of the progress and to evaluate and correct possible problems which may occur. The main goal of this construction stage is to identify deviations from the project plan and project ~~bugdet~~ rather to suggest methods for cost savings, as deviations can result in delays and, consequently, lead to cost overruns.		The primary objective of Construction Cost Control is the delivery of the project within the approved budget. Procedures and methods for construction cost control provide the project managers the tools to track the progress of the progress and to evaluate and correct possible problems which may occur. The main goal of this construction stage is to identify deviations from the project plan and project budget rather to suggest methods for cost savings, as deviations can result in delays and, consequently, lead to cost overruns.
	===Cost Control Methods<ref name="Coursera"> Odeh I. (2017), Cost Estimating and Cost Control, Columbia University, [URL:https://www.coursera.org/learn/construction-cost-estimating] Retrieved on 29 December 2017</ref>===		===Cost Control Methods<ref name="Coursera"> Odeh I. (2017), Cost Estimating and Cost Control, Columbia University, [URL:https://www.coursera.org/learn/construction-cost-estimating] Retrieved on 29 December 2017</ref>===
	The abovementioned methods are used for controlling cost and progress and forecasting on a particular task, and not in the project as a whole.		The abovementioned methods are used for controlling cost and progress and forecasting on a particular task, and not in the project as a whole.

S162469: /* Improving Cash Flows */

2017-12-29T19:28:26Z

Improving Cash Flows

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	===Improving Cash Flows===		===Improving Cash Flows===
	From Figure X it can be observed that contractors are usually in debt during the most of construction lifetime, until the retainage is released by the client at the end of the project. This debt must be financed by the contractor, through company money or though establishment of a line of credit from a bank. However, there are other methods to minimize the maximum debt of the contractor every payment cycle. These methods are listed below as:		From Figure 4 it can be observed that contractors are usually in debt during the most of construction lifetime, until the retainage is released by the client at the end of the project. This debt must be financed by the contractor, through company money or though establishment of a line of credit from a bank. However, there are other methods to minimize the maximum debt of the contractor every payment cycle. These methods are listed below as:
	*Acceleration of Revenues, through Mobilization Payment		*Acceleration of Revenues, through Mobilization Payment
	*Front Loading		*Front Loading

S162469: /* Close Out Agenda Odeh I. (2017), Cost Estimating and Cost Control, Columbia University, [URL:https://www.coursera.org/learn/construction-cost-estimating] Retrieved on 29 December 2017 */

2017-12-29T19:28:03Z

Close Out Agenda Odeh I. (2017), Cost Estimating and Cost Control, Columbia University, [URL:https://www.coursera.org/learn/construction-cost-estimating] Retrieved on 29 December 2017

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	==Close Out Agenda<ref name="Coursera"> Odeh I. (2017), Cost Estimating and Cost Control, Columbia University, [URL:https://www.coursera.org/learn/construction-cost-estimating] Retrieved on 29 December 2017</ref>==		==Close Out Agenda<ref name="Coursera"> Odeh I. (2017), Cost Estimating and Cost Control, Columbia University, [URL:https://www.coursera.org/learn/construction-cost-estimating] Retrieved on 29 December 2017</ref>==
	It is extremely important for the project and cost manager to close out the project in a clean, organized and sensible way, without leaving pending actions, ensuring a proper financial status. The project and cost manager must prepare all ~~the~~ the necessary documents and ensure that all change orders have been closed out and agreed. Final payments have been or are near to be executed. Final Reporting, including Project Turnover must be also documented. Below, the essential components which must be included in a Final Account are listed, as the Final Handover Documents of the project.		It is extremely important for the project and cost manager to close out the project in a clean, organized and sensible way, without leaving pending actions, ensuring a proper financial status. The project and cost manager must prepare all the necessary documents and ensure that all change orders have been closed out and agreed. Final payments have been or are near to be executed. Final Reporting, including Project Turnover must be also documented. Below, the essential components which must be included in a Final Account are listed, as the Final Handover Documents of the project.

	'''Final Account'''		'''Final Account'''

S162469: /* Annotated bibliography */

2017-12-29T19:27:50Z

Annotated bibliography

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	=Annotated bibliography=		=Annotated bibliography=
	:'''1. Halpin D. W., Senior B. A., (2009), Financial Management and Accounting Fundamentals for Construction, John Wiley and Sons Inc., Hoboken, New Jersey'''		:'''1. Halpin D. W., Senior B. A., (2009), Financial Management and Accounting Fundamentals for Construction, John Wiley and Sons Inc., Hoboken, New Jersey'''
	::<u>Summary:</u> The book covers aspects in construction industry and construction firms related to company and project revenue and expense management. The book emphasizes how project information regarding financial activities is collected to provide effective financial management. The book also reflects present-day practices and, also, information regarding business taxation, project cost control and construction economics. The book targets students and ~~practisioners~~ with a engineering background, but limited knowledge and training in financial management and ~~aaccounting~~.		::<u>Summary:</u> The book covers aspects in construction industry and construction firms related to company and project revenue and expense management. The book emphasizes how project information regarding financial activities is collected to provide effective financial management. The book also reflects present-day practices and, also, information regarding business taxation, project cost control and construction economics. The book targets students and practicioners with a engineering background, but limited knowledge and training in financial management and accounting.

	:'''2. DS/ISO 21500:2013 Vejledning i projektledelse, Guidance on project management 2.udgave'''		:'''2. DS/ISO 21500:2013 Vejledning i projektledelse, Guidance on project management 2.udgave'''
	::<u>Summary:</u> This international Standard offers guidance on concepts and aspects of project management, important for ~~successfull~~ planning, implementation and performance of projects. This international Standard targets on senior managers and project sponsors to provide them a better understanding and the necessary tools for effective project managers. ~~Morevoer~~, it targets project managers and their teams and developers of other national standards to have a common basis for their projects and to use them for further developing, respectively.		::<u>Summary:</u> This international Standard offers guidance on concepts and aspects of project management, important for successful planning, implementation and performance of projects. This international Standard targets on senior managers and project sponsors to provide them a better understanding and the necessary tools for effective project managers. Morevover, it targets project managers and their teams and developers of other national standards to have a common basis for their projects and to use them for further developing, respectively.

	:'''3. Maylor, H. (2010), "Project Management". Fourth Edition'''		:'''3. Maylor, H. (2010), "Project Management". Fourth Edition'''

S162469: /* Annotated bibliography */

2017-12-29T19:26:40Z

Annotated bibliography

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	:'''6. Kim G. H. et al. (2004) Comparison of construction cost estimating models based on regression analysis, neural networks, and case-based reasoning, Building and Environment, Vol. 39, Issue 10, pp.1235-1242, Elsevier '''		:'''6. Kim G. H. et al. (2004) Comparison of construction cost estimating models based on regression analysis, neural networks, and case-based reasoning, Building and Environment, Vol. 39, Issue 10, pp.1235-1242, Elsevier '''
	::<u>Summary:</u> This article examines the performance of three cost estimation models. As adequate estimation of construction cost is of utmost importance to construction projects, the article delves into examinations based on ~~mutiple~~ regression analysis, neural networks and case-based reasoning. The results obtained by the three models and a comparison between them are presented.		::<u>Summary:</u> This article examines the performance of three cost estimation models. As adequate estimation of construction cost is of utmost importance to construction projects, the article delves into examinations based on multiple regression analysis, neural networks and case-based reasoning. The results obtained by the three models and a comparison between them are presented.

	:'''7. Odeh I. (2017), Cost Estimating and Cost Control, Columbia University'''		:'''7. Odeh I. (2017), Cost Estimating and Cost Control, Columbia University'''