Construction cost control

When it comes to cost control in project management, it can be challenging to forecast and manage project costs effectively. In fact, there is news every day about construction projects going over budget and time, yet this is avoidable with strong cost management.

Project cost management sets the baseline for project costs. Effective cost management ensures that a project’s budget is on track and will be completed according to its planned scope. Without cost control, a company can easily lose money and costs can go above project profit.

What is cost control in construction projects?

Cost control is the process of monitoring, tracking, and controlling the actual cost of any construction project. This includes:

  • Monitoring cost performance
  • Ensuring all changes are correctly submitted
  • Announcing any changes and impact to costs to project stakeholders

The process of managing project costs can be carried out in 3 steps. The first is estimating and planning costs, followed by developing a project budget, and finally, controlling spending and tracking costs in real-time to make sure there are no unexpected changes.  

There are two types of costs in construction projects: direct and indirect costs. The direct cost is the amount of money spent directly to finish the project (e.g. necessary material, equipment, labor). The indirect cost is the amount of money spent to support the indirect completion of the project (e.g. office costs, salaries, general administration).

Another way to observe costs is how they appear in different stages with ongoing processes. Planned and estimated costs are the sum of direct and indirect costs over a given period of time. The actual cost is the sum of committed direct and indirect costs on an activity of the project’s duration.

How can project management reduce costs?

Project overrun can dramatically cut margins and profit substantially. In order to minimize and prevent such risks, it is important to pay attention to initial planning. This task can be extremely difficult, as it necessitates a full awareness of everything involved in the field of construction projects.

Another way to reduce project costs is to find work phases that can be done with less money or with cheaper resources. Moreover, as we all know, time is money, so a project period can be shortened, this will obviously help to reduce project costs.

The role of software in project management cost control

It is important to create a plan for the next steps and constantly track ongoing processes. The best way to monitor the progress of each task is to use proper and efficient construction project management software. When we think about this challenge, it is also important to know the difference between regular accounting and construction accounting. We have an article about construction accounting and cost control here.

Some may believe that such software means only extra cost with no major advantage. However, the long-term benefits far outweigh final costs in comparison to projects using only manual methods, even taking into account the upfront cost of the software.

We have put together also a handy buyer’s guide to software construction control software that you can download for free.


Cost control in construction is never easy, and sticking to budget is almost as challenging. Still, with the proper methods and construction project management software, you can ensure that all projects will be carried out on time and within budget, allowing project managers to focus fully on leading any project to success.

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