Construction is one of the largest industries in the world. It is fast-paced and ever-changing. Adding to this, there are many unknowns which must be managed using a multitude of resources. It is usually difficult to manage expectations from the Client, designers, shareholder, main contractors, subcontractors and third parties, which must all align in order to deliver a scheme. in the heart of these expectations are costs, resources and profit margins. Surely, we all want to build a better world, but it comes at a cost. Individuals want to make money to put food on the table and the corporate industries want to increase their portfolio and assets. Cost management therefore is vital to everything in the living world.

The element which is sometimes ignored, is time. Ultimately, the longer the project lasts, the more the project will cost. These two elements are paramount to any project. If the costs and time are not managed correctly, then you run the risk of exceeding the sales value (run at a loss). When this is a regular occurrence, the company will most likely become bankrupt. It is also vital, to portray the costs as they are. Some companies will manipulate costs to show better performance, however in the long run and if left ignored, this becomes harder to manage. An example of this is the collapse of Carillion. A mixture of poor cost management and a false inflation of performance led the shareholders of Carillion to believe that the company was succeeding, up until the actual costs materialised and massively exceeded sales to the point at which future operations were not an option. This is just one example of many companies that have seized to exist due to poor cost management. Spending more than sales on a temporary basis can be forgivable to attain future business or clients however, even in these instances cost and time management is necessary to monitor the magnitude of losses against future investments.

In order for a QS to capture the costs, they will usually use the tender documentation as a good benchmark. Comparing actual costs to forecast costs and monitoring discrepancies is part of cost management. It is vital for this activity to happen as the sale is based on the tender. If the costs exceed the tender forecast, then you are corroding the margin. If the costs are poorly monitored, then they could exceed the sales value. This is a true risk because costs do not materialise when the activities occur. They will usually trickle in at a later date, sometimes months later. Should these liabilities / allowances be missed off the cost management process, then by the time these costs become due, it may be too late to achieve a profit.

In order to monitor costs correctly, it is vital to review and update costs on a monthly / weekly basis depending on the size of the scheme. Regular review meetings will aid in capturing discrepancies early which will help to recoup losses by deploying mitigation measures. An example of this would be to source cheaper aggregate if the current costs from the quarry exceed the tender allowance or value engineering the deliverable to achieve required specification at reduced cost.

In other instances, it may prove beneficial to thicken resources and promote acceleration to reduce programme duration and prelim costs (instances where preliminary costs are substantial).

In all of the above examples, it is paramount to fully appreciate and manage actual costs in order to maintain the margin of sales.