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Cost Management Control and Optimization

The document discusses the interconnected concepts of cost management, cost control, and cost optimization in construction project management, emphasizing their roles in ensuring project success and maximizing value. It outlines key processes such as developing a cost management plan, tracking expenses, and implementing corrective actions, as well as the benefits of effective cost practices. Additionally, it highlights tools and challenges in implementing these practices, advocating for an integrated and proactive approach to cost handling.

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109 views9 pages

Cost Management Control and Optimization

The document discusses the interconnected concepts of cost management, cost control, and cost optimization in construction project management, emphasizing their roles in ensuring project success and maximizing value. It outlines key processes such as developing a cost management plan, tracking expenses, and implementing corrective actions, as well as the benefits of effective cost practices. Additionally, it highlights tools and challenges in implementing these practices, advocating for an integrated and proactive approach to cost handling.

Uploaded by

deepastudios2023
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Cost Management, Cost Control, and Cost

Optimization - Key Highlights


Let’s explore the interconnected concepts of cost management, control, and optimization in construction project
management. Let’s learn how these distinct processes work together to ensure project success and maximize value.

by Dr. Sarbesh Mishra


Professor & Dean
NUCS, Hyderabad.
Understanding Cost Management
Develop Cost Management Plan
Set the framework for all cost-related activities throughout the project
lifecycle.

Estimate and Budget


Determine project costs and allocate resources effectively.

Monitor and Control


Track actual costs against the budget and implement control measures.

Report Performance
Communicate cost performance to stakeholders regularly.
The Role of Cost Control
1 Track Expenses 2 Analyze Variances 3 Implement Corrections
Monitor all project expenditures Identify and investigate Take action to address cost
and financial commitments in differences between actual and overruns and keep the project on
real-time. budgeted costs. budget.

4 Report Performance
Communicate cost control results to project stakeholders regularly.
Exploring Cost Optimization

Value Engineering Resource Allocation Procurement Risk Mitigation


Identify alternative design Optimize the use of
Improvement Identify and address cost
solutions to maximize value materials, labor, and Enhance purchasing risks early to prevent future
and minimize costs. equipment for maximum processes to secure the issues.
efficiency. best prices and terms.
Interconnected Processes
Cost Management
1 Overarching framework for all cost-related activities

Cost Control
2
Reactive process to keep costs in line with budget

Cost Optimization
3
Proactive approach to maximize value and minimize costs

These three processes work together to ensure project success and financial efficiency.
Benefits of Effective Cost Practices
Increased Profitability Improved Project Delivery Enhanced Stakeholder
Maximize returns on investment Complete projects on time and
Satisfaction
through efficient cost management. within budget more consistently. Meet or exceed expectations
through transparent cost practices.

Competitive Advantage
Stand out in the market with superior cost management capabilities.
Tools and Techniques
Earned Value Life Cycle Cost Building Information Target Costing
Management (EVM) Analysis (LCCA) Modeling (BIM)
Determine target cost and
Measure project Assess total cost of Improve cost estimation design to meet that cost
performance and identify ownership over the and optimize design using effectively.
cost variances accurately. project's entire life cycle. 3D modeling technology.
Implementation Challenges
Data Collection
1
Gathering accurate and timely cost information can be difficult.

Stakeholder Buy-in
2
Ensuring all parties understand and support cost management practices.

Technology Adoption
3
Implementing and integrating new cost management tools effectively.

Continuous Improvement
4 Regularly updating processes to address changing project
needs.
Key Takeaways
Integrated Approach Proactive Mindset Leverage Technology
Combine management, control, Focus on optimization to prevent Utilize modern tools and
and optimization for issues, not just react to them. techniques to enhance cost-
comprehensive cost handling. related processes.

Continuous Improvement
Regularly assess and refine cost practices for ongoing project success.

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