Cost Control Process by Employer
If the Employer’s brief is accurate and the variations are limited, the construction cost can be easily controlled. Contract sum is known at the time of awarding the contract and if it’s revised with every approved variation, the Employer can be confident that the construction cost is within the budget.
If the Employer’s brief is accurate and the variations are limited, the construction cost can be easily controlled. Contract sum is known at the time of awarding the contract and if it’s revised with every approved variation, the Employer can be confident that the construction cost is within the budget.
With every interim application of the Contractor, it’s possible to ascertain the financial progress and also predict the future need fairly accurately. As a result, the Employer will be in a position to effectively manipulate his funds for his benefits without affecting the cash-flow to the project.
Cost control Process by Contractor
Cost control Process by Contractor
A Contractor’s cost control process is much more difficult than the Employer. He is already committed to accomplish a contract within the established contract sum and duration and to the expected quality.
The assessment of the profitability of a particular contract consists basically of knowing precisely the value of work executed at a specific date, compared with the actual costs incurred in achieving that value of work. The difference between the two figures will be the amount available to allocate to the off-site overheads of the company, to fund it is working capital and make a profit. In an adverse situation the difference may show that off-site overheads are not being covered and that no profit is being made.
Many construction companies become insolvent through bad estimating and planning, ineffective contract control or inadequate cost control in site. The factors to be controlled include the tangible physical resources of operatives, materials, plant & machineries and subcontractors. Equally important are the non-tangible items such as progress and productivity cost (Time & money), quality, safety, information, methods and the performance of subordinate management.
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