Capturing of costs in construction is a necessity to build and complete a successful project, insure budgets are met, and provide historical data for estimating future projects. Once costs are stored they can be analyzed for accuracy, forecasting the final cost, and usefulness of accurately tracked cost in future bidding processes. The cyclical nature of construction projects, when tracked and managed effectively, provide excellent historical data. Cost tracking methodologies require activity codes for each specific scope of work, type of units, and number of units or quantity (qty). Activity codes are generally established in an estimating template and are typically 4 to 8 digits in length. The first few numbers represent a general type …show more content…
Production tracking is usually accomplished with the use of a spreadsheet or cost capturing software that provide cumulative costs and quantities by summing the daily timecard inputs ($t and qty). Reports can then be generated from the spreadsheet or cost tracking software that show cost to date, unit costs to date and quantities to date compared to the budgeted values. Analysis of this information is then necessary to properly control the construction process.
Olawale and Sun (2010) state that in the construction industry, the aim of project control is to ensure that projects finish on time, within budget and achieve other project objectives. If after analyzing the data it is found that more costs were spent than quantity was claimed, based on the percentages, then it can be inferred that that activity is on track to exceed the budgeted cost and potentially the budgeted time. Performing this analysis daily provides the opportunity to make adjustments to the approach of each activity before there is no chance to
…show more content…
Heagney (2012) also finds that no learning takes place without feedback. Estimate, then track actual time to improve estimating ability. Historical data must be analyzed based on numerous factors including similarity of projects. The historical data for the construction of a gas station should not be used for the construction of a large warehouse without careful analysis and adjustments based on the complexity of each project. Additional analysis is also necessary for activities affected by weather compared to the anticipated time of year that the work will be
Kim, B. &. (2011). Combination of project cost forecasts in earned value management. Journal Of Construction Engineering & Management, 958-966.
Asmar et al. (2013) found that IPD has been gaining recognition due to the various benefits it offers to the architecture/engineering/construction (AEC) industry and that much research has not been done to gauge the performance of IPD projects in contrast with other project delivery systems such as design-bid-build, design-build and construction management at risk systems. The metrics that are used to analyze the performance of IPD according to Mollaoglu-Korkmaz, Swarup and Riley (2011) are cost, quality, schedule performance, and owners perception of post-occupancy performance)
It is observed that finding out the technique that can be utilized to manage the cost lifecycle of the project. There is a high probability that cost management are conducted better result can be obtained.
In today’s uncertain economical business environment there is an understandable pressure to improve the quality of decision making at all stages of the project. A number of techniques have been developed to address this concern, two of the leading approaches used in the construction industry are Earned Value Management and Risk Management (Hillson, 2004), those two approaches share a common aim of providing decision makers with the best information available when setting objectives and considering management strategies. However, they take differing approaches, Earned Value Management establishes project performance status and extrapolates that information to gain an understanding of future trends and the allocation of resources needed to successfully
The material changes could include fluctuation in material prices, contractor’s financial problems, and selection of unsuitable material or material storage problems (Kazaz,2012). Financial factors include relative importance values. Inflation is the most important factor, which cause material prices fluctuation (Kazaz,2012) .Although cash flow problem caused by the owner ,it directly lead to the main contractor could not gain the monthly progress payments. Equally, inflation and the constant increase of material prices are having a close relationship with another change design material factors. This relationship could be explained by the realities that unsteady inflation making a great influence on material prices. In fact, the one factors in this group indicate budget problems in the project-level, while the others mean financial problems in the country-level(Kazaz,2012) .However, it is evident that overrun-based financial factors in construction basically arise from private owners and public institutions, and lead to time extension, from general contractors . It would also be claimed that a country’s financial atmosphere has secondary effect on the time extension issue of a construction project investment. （Steffens，2007 ）These evidences obviously highlight that a sound time preparation and projection is not caused by the parties in a construction project, and that
Cost escalations in relation to a number of construction projects including DPS and WAPS were identified in September 2013 (Smith, 2013)
Kezner, H. Project Management: A Systems Approach to Planning, Scheduling, and Controlling. 6th. New York: John Wiley and Sons, Inc, 1998. Print.
Simpson, W. (2010). Project Planning and Control When Time Matters: Focus on Process to Synchronize and Drive Results. Production and Inventory Management Journal, 46(2), 26-43. Retrieved July 19, 2011, from ABI/INFORM Global. (Document ID: 2278162401).
Scott Jardine, 2007, “Managing risk in construction projects – how to achieve a successful outcome – an article”, PricewaterhouseCoopers.
In Task one I have to explain the basic economic principles that underpin construction projects. I am going to mention the different markets, such as labour, commodity, housing and finance. I will also explain the different impacts that will occur in the the construction industry. Further on I will discuss the the inflaiton and interest. I will first give a brief introduction on what economics is, and then in detail what supply and demand is and what affects it. Further on I will explain the markets and the inflation.
Then again, in the book, it is one sort of estimation which is done by the site manager and needs to update the database step by step for reference and further arranging. Here physical progress measurements, field schedule and progress controls, and management level reporting by construction and concrete manager. Each one of these focuses from the book could be connected each other at this point.
With forecasting software, many complex statistical forecasting techniques can now be used to forecast construction cost escalation. Univariate time series method, cannot predict turning points. It follows the existing pattern of the data. Multivariate forecast methods are dependent on the accuracy of the explanatory variables used in the forecasts. One of the main difficulties in using the multivariate forecast method is the identification of statistically significant explanatory variables. The accuracy of the multivariate forecasts depend on the accuracy of the explanatory variables used to make the forecasts. The analytical forecasting techniques are only valid for short-term forecasting in stable condition, generally less than one year. No analytical forecasting technique is capable of long-term forecasting of cost escalation. Hastak et al (1996) have carried out a study on cost management planning support system for project cost control strategy and planning (COMPASS). It was presented as a new paradigm and a management tool for formulating effective strategies for project cost control. The study found that through the life cycle of a project COMPASS methodology assists management in evaluating the potential degree of cost escalation. The study identified attributes such as management errors, regulatory
Cost allocation is the process of identifying, aggregating, and assigning of cost to various separate activities. There is no overly precise method of charging cost to objects, hence resulting to approximate methods being used to do so. Amongst the approximation basis used includes square footage, headcount, cost of assets employed, and electricity usage amongst others. The main aim of cost allocation is to spread cost in the fairest possible method and also to impact the behavior pattern of the cost.
Brooke (1997), explains Estimation as the technical procedure of anticipating the value of the project. Building construction estimation is the process of acquiring the construction value for the whole project before the project starts. Thus, construction attaining process depends hugely on financial management to sustain workability and smooth operations. The delay in construction is a global issue which is due to improper preparation of estimates and lack of drawings (Ajanlekoko, 1987). In accordance to Gkritza (2008), the source of delay in a project are identified to be in the initial stages, like bad quantification, errors in design and ground conditions. Thus, the purpose of a proper estimate is to foretell the cost needed to finish the
My interest toward technology and computers discriminates me from other Civil Engineering students. My intrinsic desire to use computers made me learn Visual Basic programming as I was in the Secondary School. Today’s construction industry definitely feels the need for construction automation and computer use. My past research experiences include these aspect of construction projects. I worked on a hybrid model to optimize the cost and evaluate the risk of projects. My researches led to submitting “A new ...