Common Cost Control Problems on Construction Projects

Here is a list of common cost control problems found on construction projects:

  • Improper estimates, standards and budgeting techniques.
  • Unrealistic budgets.
  • Activities started or completed out of sequence.
  • Inadequate WBS (Work Breakdown Structure) or insufficient WBS detail.
  • Lack of management policy on control practices.
  • Poor corporate and project management governance structure and policies.
  • Reducing budgets or bids to be competitive.
  • Inadequate planning.  This is very common, particularly on privately funded projects.
  • Unnoticed and uncontrolled increases is scope.  The all too common “Scope Creep”.
  • Lack of comparison between “actual” and “planned” costs.
  • Unforeseen technical problems.  Inadequate contingencies and management reserves.
  • Project schedule delays and lack of systems to flag and deal with delays.
  • Additional overtime and acceleration costs.
  • Escalation of material costs.
  • Contractual discrepancies and inconsistencies.  These could result in gaps and ambiguities in contracts which often result in cost increases and erosion of bargaining strength.
  • Unrealistic appraisal of in-house resources.
  • Improper assessment of risks by the bidding team and by executive management.
  • Excessive pressure on the bid team to WIN the project.  “Must Win” projects are often destined for eventual failure.

 

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