The write up below discusses on the most effective approach to control construction cost as a project manager, procedures to be used, in collaboration with the contractor, to track construction activities and costs. Discuss on the write up while raising 2 important questions to the writer.

?Each company, according to its own product can develop suitable systems for collecting the necessary data so that they can be properly analysed.? Cozzi, (2008)

Cozzi (2008) describes the problem quite simply; if one wishes to maintain control of costs, a system must be utilised for capturing and delivering the necessary data to the PM so that he may understand the actual progress of the works and therefore the actual costs. These same data should also enable him to forecast remaining works in terms of time and money and compare these against the baseline from planning.

Planning

Biffi (2008) and De Marco et al (2009) tell us that ?scope control is the major culprit? (Biffi, 2008) towards lack of cost control. This stems from a failure to correctly plan the project at the early stages. Often, pressure from the client can create a feeling of urgency to begin, yet it has been stated over and over again that the planning stage is worth taking time over since, ?the later the corrective action, the less the ability of influencing the project outcomes.? (De Marco et al. (2009)

So, at the planning stage ? without increasing the bureaucracy or complexity (if possible) ? of the PM?s job (De Marco et al, (2008), Cozzi, (2008)) the scope should be set out as completely as possible and broken down into Work Packages and activities that can be costed as per a standard WBS. The use of the WBS (and associated Dictionary) will enable a solid costed plan to be created that will form a baseline to measure variation from.

Further, the use of a software package, such as MS Project or Primavera, will enable all the necessary data to be complied in one are for monitoring purposes and for baselines and resultant variation schedules to be set.

Measuring

Measuring variation is also important. The standard methods of Earned Value are noted by De Marco et al. (2008) as being a little ?simplistic? yet they do give control and enable corrective actions to be taken if used correctly. Olawale, & Sun, (2010) make the point that ?there seems to be an obvious similarity between the time control rankings [of their study] and the cost control rankings,? proving the adage that time=money and that one of the key problems causing cost and time overrun is with lack of detailed design. Again pointing towards time taken at the planning stage reaping rewards later when monitoring and controlling.

It is also key that both the PM and the contractor establish early on the method of reporting information in order to match work completed with work planned for payment purposes. A sensible and standardised reporting system will enable fair calculations to be made that keep payments and budgets on track ? this also means an agreed change control procedure to avoid un-approved changes.