Project Cost Management
- First Online: 04 July 2018
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Sanghera, P. (2019). Project Cost Management. In: CAPM® in Depth. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4842-3664-2_7
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A CRITICAL LITERATURE REVIEW ON IMPROVING PROJECT COST MANAGEMENT PRACTICE AND PROFITABILITY OF DOMESTIC CONTRACTORS
Construction cost management is the most important function for project success, and the construction project performance is generally expressed in terms of cost and its variance from the budget. However, it has not been effectively used due to the presence of a large quantity of data with many complex interrelationships. Construction firms, being project based organizations, have to develop their project management capacity in order to accomplish firm and project objectives successfully. Hence contractors need to focus on project cost management process. The study presents the limitations, drawbacks and shortcomings of each project cost management functions related to current practices of domestic contractors, which need to be improved for achieving the predefined project objectives and the profitability of contractors along with the proposed improvement recommendations, through critical literature review.
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Achieving project completion within the estimated cost is fundamental criteria for success of any project. Hence cost management and control is very important consideration for ensuring cost performance. Various cost management techniques can be applied throughout the project life cycle to avoid poor cost performance and overrun of cost. This study focused assessing project cost performance and level of effectiveness of various cost management techniques implemented in large construction project in south Malaysia. Data collection was carried out through structured questionnaire survey which resulted in collecting 97 data samples. It was found that most of projects face cost overrun problem with an average overrun in the range of 5% to 10% of the total project cost. Most effective approaches of cost management adopted in construction projects were cash flow forecasting, tender budgeting/estimating and elemental cost plan. Value management and cost code system were rated as less effective technique. One of possible reason for low level of value management application in Malaysian construction industry may be unawareness of the benefits of value management. Realizing the advantages of value management, it should be considered to implement this method to achieve better cost performance.
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Results showed that there was authorization that was needed before project resources can be released for use, at score of (M =3.75, SD =1.207) and to maintain the project costs, expenditure ...
Construction cost management is the most important function for project success, and the construction project performance is generally expressed in terms of cost and its variance from the budget. However, it has not been effectively used due to the presence of a large quantity of data with many complex interrelationships. Construction firms, being project based organizations, have to develop ...
Abstract. This paper examines the global issues and challenges facing the project cost management profession. This relates to professionals in the fields of quantity surveying, cost engineering, project controls and project managers providing cost management services. As a profession that is not widely recognized in society compared to ...
1.2 Research Significance. This paper sorts out the relevant theories of cost management and project performance, explores the relationship between cost management and project performance through questionnaire research and empirical research, and studies the degree and size of the impact of each component of cost management on project performance.
According to the Project Management Institute (PMI), Cost Management can be divided into three stages, which will be described in detail in this section and the following two: 1. Cost Estimating, the stage during which the cost of the resources exploited for the project is forecasted, so as to estimate the overall cost of the project. 2.
LITERATURE REVIEW ON IMPROVING PROJECT COST MANAGEMENT PRACTICE AND PROFITABILITY OF DOMESTIC CONTRACTORS." International Journal of Engineering Technologies and Management Research, 5(1), 51-58. DOI: 10.5281/zenodo.1164074. 1. Introduction Construction firms are the key stake-holders of the construction industry and they are ...
1 Introduction to the Challenge of Cost and Value Management in Projects 1 1.1 Importance of Cost and Value Management in Projects 2 1.2 Keys to Effective Project Cost Management 6 1.3 Essential Features of Project Value Management 8 1.4 Organization of the Book 9 References 14 2 Project Needs Assessment, Concept Development, and Planning 17
Project cost management consists of developing a cost management plan, estimating costs, determining a budget, and controlling costs. First of all, we need to distinguish between cost and budget. Cost is the value of the inputs that have been (or will be) used up to perform a task or to produce a project
Figure 1. Project management practices. 3. Cost Overrun in Construction Projects Cost overrun in construction projects aris es from factors beyond the budget, necessi-tating e ective project management and cost control to identify common causes [1]. E ec-tive project management involves addressing these causes through proper estimation,
The schedule and cost form integral part of planning. Cost management constitute one of the major components of project management. The processes involved in project cost management are cost management planning, cost estimation, cost budgeting and cost control. A transformation in society is initiated through cooperative programs.
Cost overrun has long been a significant concern in the construction sector, posing obstacles to project profitability and financial viability. It occurs when actual costs exceed the initial budget estimates, leading to financial hardship, delays, and stakeholder disagreements. This paper investigates the impact of project management techniques on construction project cost overruns. The study ...
Cost Overrun Examples The U.S. Internal Revenue Service (IRS) 1990s: A series of project failures cost taxpayers more than $50 billion a year (=annual net profit of the entire computer industry) In 2004, CIO Magazine reported problems with the IRS's $8 billion modernization project, resulting in > $200 million cost overrun In 2006, the IRS tried to upgrade its fraud-detection software but ...
Summary. Project cost management involves management of the processes required to ensure that project work is accomplished within an approved budget, assessing changes to the budget based upon changes to the project scope, and establishing a new budget baseline when necessary. This chapter identifies the processes, procedures, and tools that ...
This book covers fundamentals of project cost management. The important topics covered include cost management planning, cost estimation, budget determination, and cost control. Compared with ...
The relationship between the project risk management process and the project cost management process should, therefore, be considered in the estimate of the total project budget. Confidence Level Historical data and experiences are aggregated to review and determine an appropriate level of confidence.
Nabil El Sawalhi and Adnan Enshassi "Cost Management Practices by Public Owners and Contractors in the Gaza Strip", International Journal of Construction Management, 2004, 17 - 28. [11] "Guide to the Project Management Body of Knowledge - Project Cost Management" Project Management Institute, USA, 7, 2013, 193-226. [1]
Project Cost management for Project Managers based on PMBOK By Dr. T D Jainendrakumar The Cost Management includes the processes involved in estimating, budgeting, and controlling costs so that the project can be completed within the approved budget. Project managers must make sure that their projects are well defined, have accurate time and ...
Project Estimating and Cost Management covers the fundamentals of esti- mating projects in a discipline-independent context. It covers the essentials of project estimating, progress monitoring, and cost management, and is intended for project professionals who need a quick overview of the process of estimating the cost of projects.
Key Concepts of Project Cost Management The focus of project cost management is cost of the resources needed to complete project activities. Cost management also considers the effects of various project decisions on recurring project costs. One typical project decision is the number of design reviews to be undertaken. Minimizing design