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What is Cost Management in Construction

Cost management in construction refers to the process of estimating, controlling, and monitoring the costs of a construction project from its inception to completion. It encompasses the development of a budget, the tracking of costs as the project progresses, and the identification and resolution of cost overruns or underruns. Cost management is a crucial aspect of construction projects, as it helps ensure that the project is completed within budget and on time.

In the UK, construction projects are typically divided into three phases: the pre-construction phase, the construction phase, and the post-construction phase. During the pre-construction phase, cost management activities include the selection of a cost consultant or quantity surveyor, and the preparation of estimates and/or cost plans. The cost plan is a detailed document that outlines the estimated costs for each aspect of the project, including materials, labour, and equipment. It is used as a basis for monitoring the project’s costs and ensuring that the project stays within budget.

During the construction phase, cost management activities include the tracking of actual costs, the comparison of actual costs to the budget, and the identification of any cost overruns or underruns. The cost consultant or quantity surveyor is responsible for monitoring the project’s costs and providing regular reports to the client and the construction team. If a cost overrun occurs, the cost consultant or quantity surveyor will work with the construction team to identify the cause and implement corrective actions to bring the project back within budget.

The post-construction phase is the final stage of the project, during which the actual costs are compared to the budget, and any discrepancies are resolved. The cost consultant or quantity surveyor will prepare a final cost report, which is used to determine the final cost of the project and to make any necessary adjustments to the budget.

In the UK, cost management in construction is governed by a number of professional bodies and organisations. The Royal Institute of Chartered Surveyors (RICS) is one of the leading organisations in the field, and it sets the standards for cost management in construction. RICS provides guidance on best practices for cost management, including the development of a cost plan, the selection of a cost consultant or quantity surveyor, and the tracking of actual costs.

Cost management in construction is also governed by various laws and regulations, including the Construction (Design and Management) Regulations 2015 (CDM 2015). CDM 2015 sets out the legal requirements for health and safety in construction projects, and it requires that a competent person is appointed to manage the project’s costs.

In conclusion, cost management in construction is a crucial aspect of construction projects in the UK. It helps ensure that the project is completed within budget and on time, and it is governed by professional bodies and regulations. A cost consultant or quantity surveyor is typically appointed to manage the project’s costs, and they are responsible for monitoring the project’s costs, preparing cost reports, and identifying and resolving any cost overruns or underruns. Effective cost management is essential for the success of construction projects in the UK, and it is a critical factor in ensuring that the project is delivered on time, within budget, and to the required quality standards.

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