What is Cost Engineering?
Cost engineering is the engineering practice devoted to the management of project cost. Cost engineering consulting involves estimating, cost control, cost forecasting, investment appraisal, and risk analysis.
This is value cost engineers bring to each construction project. Cost engineers do the budgeting, planning, and monitoring to ensure that your construction project is viable and successful.
It’s a fine line between managing the cost, quality, and time required to see your project come to life.
A skilled cost engineer has the experience to anticipate problems and challenges before they result in cost overruns and scheduling slow-downs.
Why Construction Projects Fail
Construction projects fail because of communication break-downs and the inability to address underlying issues.
These core reasons for failure can be traced to some key factors in the management of the construction project:
- Poor Estimating
Accurate estimating is essential to construction project success. Estimating involves assessing material, human, budgetary, and processing demands.Are the materials available? Have the permits been filed and approved? What are the environmental impacts? Do we have a reliable workforce to complete the project? Are there ample funds to manage any unexpected costs and interruptions?
- Scope Creep
Scope creep is extremely common, regardless of the size of the construction project. It’s super important that everyone understand the project goals – what needs to be built, what isn’t going to be built, and why.Your cost engineer and entire construction management team needs to work with you to clearly detail the project scope – what will and won’t be done and why new changes can’t be introduced once the project is underway.
There are times when the paperwork, approvals, and regulations simply don’t all come together on-time. While this is often considered a normal practice in construction, it doesn’t have to be this way.The better planning, communication, and investigation into site regulations and permits – the easier it is to prevent construction delays. This planning might seem tedious at the outset, but it pays huge dividends once the construction project is underway.
- Confusing Specifications
The more specific the project details – the better. You, the client, have the right to be demanding and make sure that the PCS team is interpreting your requests correctly.It’s important that the entire construction team understands what you want. This allows the cost engineer and other team members to properly plan and budget for your project.
- Budgetary Problems
Budgetary problems can typically be traced back to the core issues of poor communication and lack of planning. The cost engineer is responsible for planning all aspects of the construction project cost – this includes the budget.You and your cost engineer need to have honest, open conversations about what you can and can’t afford. It’s important that there is a plan in place in the event unexpected costs occur.
- Communication Failures
Managing and seeing a construction project to successful completion requires clear and open communication at all times.Your construction team should be providing you with regular updates on the project schedule, project problems, and any unexpected issues. You need to be ready to answer any questions the construction team has and be ready to challenge the team when unexpected events occur.
- Inadequate Planning
The failure to properly plan always results in construction project failure. The more planning, double-checking, reviews, and assessment before the project starts – the better.Yes, this planning process may appear to be slowing down the project start, but it’s critical that a clear schedule and plan is in place before the project starts.
Now that you understand why so many construction projects fail – you’re able to ask the PCS team the hard questions about scheduling, costs, permits, planning, risk, and benefit analysis.
What is Cost Engineering?
Cost engineering is critical to the success of your construction project.
Cost engineering is the application of scientific principles and techniques to problems of estimation; cost control; business planning and management science; profitability analysis; project management; and planning and scheduling.
So, what does this mean for you and the success of your construction project?
It means that cost engineering consulting is crucial to avoiding the key reasons for construction project failure and ensuring the success of your project.
You can expect your cost engineer to be guided by 3 core principles, ensuring that your project is successful:
- Areas for Improvement
When you meet with your cost engineer, ask about previous construction projects. Ask this person about the project successes and failures. Ask the cost engineer about his or her change management principles.It’s key that your cost engineer is committed to learning from each construction project. How could the budgeting have been improved? What worked really well? Where did the slow-downs occur? Are there tools that could be used to improve scheduling and planning?
- Assessment and Measurement
To successfully manage the entirety of the construction project costs, your cost engineer must have a complete understanding of the resources available.This includes understanding the viability of these resources (people, materials, budgets, time) and how these resources will be used. Your construction project plan should include a clear analysis of what is needed for the project to succeed, what could cause the project to fail, and detailed checks and balances used through-out the project to keep it on track and budget.
- Cost Control
Cost is about more than dollars. Cost control includes managing every aspect of the construction project – the people, materials, permits, regulations, budget, scope, project details, and being prepared for unexpected circumstances.This includes looking for issues that could cause project interruptions and cause the construction to be delayed or to end up in cost overruns. Anticipation of costs is critical to successful construction project planning.
What Does a Cost Engineer Do for Your Construction Project?
A cost engineer ensures that your construction project can and will be a success.
For us at PCS, this means we are connected with you and your project from start-to-finish. Our commitment to professional construction standards means that our team:
- Assists with feasibility studies.
- Studies architect and engineer plans.
- Identifies costs and sets an overall budget.
- Creates project benchmarks.
- Plans costs to help the team stay on-track.
- Communicates with you through-out the project.
- Reviews and assesses project timelines.
- Resolves scope creep and any other project slow-downs.
- Assessing the project upon completion for areas of improvement.
Know that your cost engineer is the person who keeps all the pieces of your project working and fitting together. Rely on your cost engineer to do the planning, scheduling, management, and review of your construction project from start-to-finish.
I urge you read more about PCS and our approach to project construction. For us, at PCS, Construction Is Personal™ – we are invested in your project success.
The entire PCS team is tired of reading and hearing about debilitating cost overruns that have resulted in critical failures. Get the confidence you need with our proven approach to make informed decisions regarding your construction project.
About the author
Lee Thomas, MBA is the chairman and CEO of Project Cost Solutions. Lee has over 20 years of hands-on operational process experience under his belt. He is deeply committed to seeing your construction project succeed.