It’s no surprise that cost control is both a priority for clients and a recurring contributor to disputes and claims. Every construction project is a one-off, completed in a market where cost of materials and labour are constantly changing. At the time the initial budget is set, the project may contain a myriad of unresolved possibilities, with very little definition of brief and scope. And yet every client wants certainty that they can have the outcome they want, for a price they can afford.

The challenges faced by the consultant team include:

• Setting a realistic starting budget, while also making the client aware of the factors that can cause that budget to change;
• Keeping the client informed as variations, delays and other factors affect the likely project cost; and
• Maintaining quality and compliance if the project comes under pressure to find cost savings.

On domestic projects, receipt of construction tenders is a common point for cost control problems to come to a head. If the construction tenders far exceed the client’s budget, the client may have to abandon their project. Sometimes, this causes the client to make formal complaints to a registration board, or claims to recover losses and wasted consultant fees. These disputes often have a strong emotional aspect on top of the monetary grievance, especially if the client feels they were kept in the dark about the budget increase.

Commercial and government projects tend to have better systems for continuous monitoring and management of cost. While this reduces the risk of disputes arising solely out of unexpected budget over-runs, it can transfer the risk into other places. On these projects, cost pressures may contribute to excessive (and disputed) builder variation claims, for example, or to quality and compliance problems resulting from substitutions of materials.

The impact of cost control can be felt across the whole project.

Our next webinar provides an overview of cost control, covering a fundamental understanding of the quantity surveyor’s role and process, then moving into more specific questions like the effect of incomplete documentation on cost control, and the integration of BIM. A catch-up recording will be available for six weeks after the live presentation, and Planned Cover clients are welcome to email us for a discount code.

COST CONTROL – TUESDAY 5 APRIL
INFORMATION AND BOOKINGS

Wendy Poulton
Risk Manager
informed by Planned Cover

This article is only general advice in respect of risk management. It is not tailored to your individual needs or those of your business, nor is it intended to be relied upon as legal or insurance advice. For such assistance you should approach your legal and/or insurance advisors.