Cost forecasting is the process of predicting future construction expenses based on current project data, historical trends, and anticipated risks. It helps contractors and project owners manage budgets and prevent financial overruns.
How Cost Forecasting Helps Construction Projects
By regularly analyzing cost trends, project managers can anticipate budget shortfalls and make proactive adjustments. Forecasting also supports better decision-making when evaluating change orders or scope modifications.
Key Steps in Cost Forecasting
- Analyze historical project costs to identify spending patterns
- Monitor real-time project expenses to adjust forecasts as needed
- Account for potential risks, inflation, and market fluctuations
Related Terms: Budget Variance, Earned Value Analysis, Financial Planning, Cost Overruns
FAQ
How often should cost forecasts be updated?
A: Monthly or whenever significant changes in project scope or expenses occur.
What tools can help with cost forecasting?
A: Construction management software, historical cost databases, and risk assessment models.