"Construction projects frequently deviate from their projected costs - which makes the use of effective KPIs critical to project success."
Controlling cost is more complex than accounting for time and cost only. In fact, effective cost control for construction projects requires ongoing assessment of project progression, with frequent updates that compare and contrast project projections against actual performance.
Well-defined KPIs are the first step towards effective cost control in construction. Beyond standard construction time and budget conformance, today’s PCM should be tracking these KPIs for construction cost planning and control.
- Actual costs versus forecasts or cost estimates. Estimated construction costs (for example, the number of cubic feet of concrete poured per hour) may vary significantly, due to project specifics (for instance, an increase or decrease in feet poured per hour, due to shifting weather conditions). Periodic assessment of construction progression allows the PCM to proactively communicate areas in which actual costs veer from budgeted cost estimates.
- Schedule accuracy. As onsite conditions shift, so does the accuracy of the original project timeline - and slippage can quickly spiral into snowballing costs. Consistent assessment and realignment of the project schedule is critical to controlling costs in large-scale construction.
- Labor productivity. The productivity of labor can be affected by work conditions (site accessibility, job size and complexity, availability of equipment, and work stoppages) as well as actual characteristics of the labor force itself (skill level, experience, and motivation of the workforce). A study by Carnegie Mellon University indicates that labor productivity can be assessed similarly to employee evaluations, in order to inform effective cost control techniques for project construction.
- Material usage and waste management. Failure to adhere to an effective waste management plan can result in increased overhead costs - as can inefficient use of materials. Accurate tracking of materials usage can help reduce overall waste, inform approaches for onsite reuse of materials, while benefiting sustainability measures and reducing project cost.
- Machine evaluation and equipment usage. Evaluation of equipment performance is a vital KPI for construction cost control. Objectively demonstrating the ability of equipment to meet project specifications and quality standards allows users to optimize onsite application of resources.
- Project safety and risk management. An excellent safety record is vital to project success - and a failure to safely conduct onsite activities can result in incidents that waste valuable time and resources. Effective safety initiatives should include frequent and proactive assessment of onsite risk (as well as ongoing alignment with the project recovery plan), in order to eliminate risk and safety issues which expose stakeholders to cost overruns.
- Quality assessment and items performance
Quality is a major project performance attribute. Continuous evaluation and improvement of compliance with project standards and procedures is critical to ensure the delivered product will meet project specifications. Non-consistency in the application of project processes and standards leads to rework, poor quality audits, and increased occurrence of non-conformance reports (NCRs) - resulting in increased project costs.
Construction Cost Control, Monitoring, and Accounting
Developing a construction project cost control baseline can help PCMs compare and contrast project conditions with planned costs - still, tracking daily progression is a daunting task for those who still rely on spreadsheets and manual processing.
Cost control software for construction can offer incredible benefits - but ALICE Technologies takes that a step further, using novel AI-driven tech to empower PCMs throughout the entire lifecycle. While most cost control software for construction is useful only in the construction phase, ALICE can be used during pre-construction and project execution - offering deep insight from ideation to completion.
Leveraging ALICE’s cost control software for construction helps PCMs and their project control teams define, track, and assess KPIs which demonstrate project health - as well as proactively identify risks which may affect project cost, and realign projects that stray from their ideal project budget.
Construction projects frequently deviate from their initial budget - but it doesn’t have to be that way.
Despite the availability of various control techniques, and the introduction of cost control software for construction, many large-scale projects still fail to meet project budget and time objectives. The effectiveness of these techniques and tools must be evaluated, in order to prove their viability and worth.
ALICE Technologies is the only AI-driven software for construction optimization - and we have a proven track record of success in the construction industry. Learn more about how we support project control teams and their PCMs, while reducing both project duration and cost - or schedule your demo, today.