Construction Cost Management

A construction program is, more often than not, an unwelcome necessity. Owners/Developers are forced to go through a process which is not part of their routine and for which they are not always fully prepared. Yet, the process of getting a new plant, a new structure or a new money producing real estate project cannot be left to outsiders alone. Sponsors/Developers/Plant Managers must retain control with some hands on involvement. In short, a cost control program, is not only highly desirable but very necessary to be able to obtain full value for every dollar spent. Trusting this task to outsiders only is not recommended. Most Developers know this instinctively. And, most, will go as far as hiring a Director of Development who is entrusted with the task of protecting the Owners’ interest. Most Owner/Developers/Builders, however do not provide this Director with the tools (and backup) to do an effective job. Out of necessity, therefore, all management burdens fall on the Designer or the Construction Manager whose interests run counter to the interests of the Owner. Having a Construction Manager provide the pre-construction services, for example, is like telling a drunk to watch the bottle on the bar. The answer is "cost control", a program to be tailored for each Developer which must include pre-construction services, estimating, budget evaluation, cost reduction, change order evaluation, scope reviews, psychological warfare, contract negotiations and cost significance interpretation. In short, a total program of cost engineering. No matter how sophisticated the assigned Owner’s representative may be, cost related topics must be evaluated by experienced cost engineers, not estimators nor accountants nor PM’s. This treatment of the overall cost engineering topic is intended to show the pitfalls, show the options available and convince the Owner/Developers to "do it right" to obtain economic benefits.