Times sure have become challenging and the construction industry is no different from other industries as long as the impact of COVID-19 on it is considered. Whilst the entire world is still grappling with the worst economic crisis in decades, it is imperative for clients to realign and re-establish their corporate goals as soon as possible by implementing appropriate business mechanisms. Construction cost, a significant influencer in construction projects, in particular has to be addressed and managed in order to achieve the above mentioned desired outcomes. Hence, sound construction cost management is vital in dealing with the construction cost and, when applied properly will yield the value for money invested by the client for his investment.

Generally defined as the process which complements the broad functions of estimating and tendering, scheduling, cost and financial controlling, construction cost management is the entire process, which ensures that the contract amount stays within the cost limit of client’s approved budget. In light of the recent heavy financial setbacks attributed to COVID-19 pandemic, construction cost management, if implemented properly, can reap even more benefits for clients in their respective projects. Being a process running throughout the whole life span of the construction, a proper cost management has to be in place from the inception of the project. The application of construction cost management at several stages of construction and how it can be beneficial, specifically in this current post COVID-19 financial atmosphere is elaborated in the following examples.

DEVELOPMENT APPRAISALS
A development appraisal can be an essential tool for all developers to assess and evaluate the land value of any piece of land, site or building which has the potential for development. An accurate development appraisal could provide details on the profitability of an opportunity and requirements for careful management of the finances.

Why in post COVID-19 times?
Opportunities and financial viabilities of the post COVID-19 era may have changed significantly due to the impact on factors affecting the cost and profit of the construction projects, therefore, developers shall have all the more reasons for having an accurate development appraisals.

COST ESTIMATIONS
Effective cost estimation can provide the essential information on his financial commitments including project cash flow as well as the cost significant components of the construction, which will be helpful in defining his requirements within the budgetary constraints presented.

Why in post COVID-19 times?
COVID-19 pandemic’s impact on the economic situation has stirred a paradigm shift in the approach to the evaluation of inputs such as material, labour and plant. Therefore an effective cost estimation could avoid unpleasant surprises at the latter stage of the construction.

COST PLANNING
Proper cost planning is paramount in pre-contract cost management and can provide clients with more accurate cost information related to their projects. Cost management professionals generally deploy standard documents such as methods of measurement (NRM, ICMS, IPMS, BCIS, etc…) to streamline and obtain more accurate cost planning.

Why in post COVID-19 times?
Post COVID-19 times can be particularly challenging for new projects which may require changes to the client’s requirements for the end products. Cost planning can provide the clients an accurate picture with a detailed analysis of the project cost, which will ultimately assist clients in making better decisions.

TENDERING PROCEDURE AND DRAFTING OF CONTRACTS
Identifying the correct and most suitable tender procedure can be useful in saving both the pre-contract duration and cost, while helping to select the most suitable offer for the construction project. Cost management consultants deploy different tendering methods and procedures, while catering to relevant authority requirements as applicable. Once the most reasonable offer is identified, the relevant parties shall enter into a binding contract, in which the balanced risk sharing has been established.

Why in post COVID-19 times?
In the post COVID-19 era, the projects might be more than ever susceptible to several contractual risks related to factors of cost, time, etc., which requires the involvement of trained professionals to minimize the risks and provide benefits to the clients in their respective construction projects.

POST CONTRACT COST MANAGEMENT
For many construction projects several changes may occur at the post-contract stage due to revised client requirements, financial constraints, statutory changes etc. therefore, a robust change management procedure can be crucial in saving time and money of the clients, when the changes are occurred.

Post COVID-19 times?
COVID-19 pandemic may persuade the clients for many changes in both ongoing and future projects during the post COVID-19 era, where trained professionals can guide the clients in managing the changes to their projects. Additionally, other post contract cost management aspects such as payment administration, cost reporting and cash flow forecasting can keep the clients well informed on the current and future standpoint of their construction projects, which will be fundamental in their financial decision making.

CONTRACT MANAGEMENT
Contract management includes formation, administration and execution of the contracts with the intention of maximizing financial and operational performance, while minimizing the risks of construction projects. The process extends from pre-contract phase of the project, through execution, to post-award phase and is salient in ensuring the smooth execution of the project. Contract management encircles a vast array of activities, of which contract administration is considered to be one of the key aspects.

Why in post COVID-19 times?
The COVID-19 pandemic has created many financial and operational disturbances to construction projects, which may give rise to many claims, therefore post COVID-19 times require appropriate assessment of contractual obligations of parties to the contracts by experienced professionals. Contract management professionals can be of great assistance in guiding the clients through the process, securing the expected performance of the contract, ultimately safeguarding the clients’ business goals and objectives.

The post COVID-19 world could be plagued with gloomy financial constraints, therefore the necessity of sound cost and contract management in construction projects is significantly important more than ever. The inclusion of the trained cost and contract management professionals can bring the required support for the project management team in managing the construction cost providing the above services altogether, ultimately providing clients with competitive advantages.

We at Excom Project Development Consultants, are capable of providing total project cost and contract management solutions with our highly qualified and experienced professional staff and would like to assist our clients in any project cost related matters in the challenging times ahead.

Venusha Senarathne
BSc QS (Hons), MAIQS
Cost Manager