Cost Management and Control in Building Design and Construction

When it comes to the industry as delicate and complex as construction, you need to understand that the overall cost plays a massive role in the success rate of a company. Sure, you don’t want the cheapest construction crew out there to build a residential building you’re going to live in, same as you don’t want them to build an office space where you’re supposed to relocate your business to. However, it’s nearly impossible for a client to compare two fairly similar construction companies. Without the cost management, the price can only go so low.

Moreover, the lower the overall cost, the more money you’re able to save, the greater the cash flow. This means that you can improve the quality of your equipment, opt for more supplies options, hire a more skilful help and, overall, raise the quality of your business up a notch. All in all, the cost management and control in building design and construction are some of the most important things for every contractor and a construction business owner to deal with. Here are several things you need to know about it if you see yourself in either of these two roles in the future.

1. Land and real estate cost

The first major expense you’ll encounter is the cost of the land that you intend to build upon and the potential value of the real estate that you plan to erect. The location itself may play a , later on, which means that the exact same building might end up with a much different value based on the land that it was built upon. Naturally, the more favourable location the greater the cost of the land, which means that you need to consider your ROI long before you start buying. Physical properties of the land may affect the construction process, thus resulting in a different overhead, while the location itself may be inaccessible, further increasing the price of construction.

2. Inspection and surveying

Another thing worth considering is the cost of outsourcing your inspection and surveying tasks. You see, the inspection fees that you have to pay to the local government are something that will depend on the estimate made by local inspectors. Apart from this, you also have to worry about the local rules and regulations which may demand some additional architectural and design fees. Needless to say, depending on the project size or its nature, you may be forced to pay substantially more in fees. Furthermore, tax depreciation reporting is one of the most important property-related requirements in the real estate and construction industry alike, which is why you need to have a on your side.

3. Construction equipment

When it comes to the construction equipment, there are several categories that you can use in order to simplify your list a bit. On the one hand, you have the equipment that, once bought, you can cross off the list. After all, you won’t purchase hard hats, office trailers, radio communication system and minor equipment such as hammers and chainsaws for every construction projects. Once you buy them, you have them for good.

On the other hand, heavy machinery such as cranes may not even be cost-effective to buy, to begin with. Instead, you might want to rent them for the project. Still, if you use this machinery more than 60 percent of the time, buying is definitely a smarter financial option.

4. Loans and interests

The next thing you need to worry about is your own finances. In order to successfully complete a major project, you may be forced to apply for a loan, which would require you to commit to a certain interest rate. This too adds to your overhead, making things potentially difficult for you in the long run.

Aside from this, during the construction process, you’ll have to undergo so many different expenses from paying wages to your employees, handling seasonal workers, acquiring supplies, managing fleet and paying for independent experts. Overall, you might also want to hire a professional accountant in order to help you out handle all of this, file a proper tax report and access .

5. Marketing

At the end of the day, no matter how good you are at what you do, as a business, you still have to worry about the issue of marketing. Think about it, a construction company needs brochures, promotional products and business cards, however, in the 21st century, it also needs an online presence. It’s already speculated that the , which is why those willing expand in this direction might want to consider a more immersive digital marketing campaign. Apart from this, you also need a great PR, especially when it comes to addressing the neighbourhood that you aim to start working at.

In conclusion

The very last thing you should be concerned about is the idea that submitting regular cost reports to the clients may make a difference in your overall relationship with them. Outside of this, you need to discuss the format and the contents of this report long before it even becomes an issue. Doing this will also give you a chance to make a comparison to your previously set financial projection and budget. In this way, you’ll know that you’re on the right path at any given moment.