Cost Management Techniques: Role of a Construction Project Manager

This report delves into cost management techniques within the construction industry, emphasizing the critical role of a project manager. It defines cost management as the planning and control of a project's budget, highlighting the importance of selecting the right techniques for success. The report identifies scheduling work programs as the most effective approach to cost control, supported by references. It then outlines the responsibilities of a construction project manager, including project planning, schedule management, and labor/material cost control. A table illustrates the steps required to manage a project's financial flow. The conclusion reiterates the significance of work programs and the project manager's role in ensuring cost-effectiveness. The report provides a comprehensive overview of cost management, emphasizing the importance of proactive strategies in the construction industry. The report is available on Desklib.

Running head: COST MANAGEMENT TECHNIQUE
Cost Management Technique
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Table of Contents
1. Introduction............................................................................................................................2
2. Most effective approach to controlling construction costs....................................................2
3. Explanation of the position....................................................................................................2
4. Role as a construction project manager.................................................................................3
5. Conclusion..............................................................................................................................4
6. References..............................................................................................................................5

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1. Introduction
Cost management is defined as the procedure of controlling and planning the budget
of any kinds of business or industries. The success of most of the industries depends upon the
selection of appropriate cost management techniques. There are different categories of cost
associated with most of the construction projects or industries such as fixed cost, proportional
cost and time related cost (Akeem, 2017). The prime determination of this assignment is to
recognize the most effective cost management technique from the perspective of a
construction project manager.
2. Most effective approach to controlling construction costs
Cost control techniques such as evaluation of the total works carried out by the project
team members, record keeping, site meetings, inspection of works and works programmes are
the most significant approaches which can be considered to control the different constructions
costs (Hafez, Aziz & Elzebak, 2015). Among each of these cost control techniques,
scheduling the workplace programs with the help of the contractors can be the most effective
way to control the construction cost. According to Miveh et al. (2016), the financial
performance of the construction project can be managed in the most effective manner using
the work programs. The investigator of this paper highlighted that the progress of the project
can also be identified using the work programs.
3. Explanation of the position
The prime responsibility of a project manager in construction industry is to work
closely with the civil engineers and the architects. Creation of the project plan and managing
the entire schedule of a project is the other responsibility of the project manager in a

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construction industry (Pandya & Thakkar, 2016). Managing the labour and material cost is
the other responsibility of a project manager in a construction industry.
4. Role as a construction project manager
The following table can be very much useful to understand the series of steps required
to stop the financial flow of a construction project once the existing financial resources is
exhausted.
Steps Explanation
Creation of baseline Implement a schedule of each of the activities of a project and it has
to be monitored and documented on a daily basis.
Monitor flow The cash flow of the project has to be monitored in right from the
start of a project.
Get a business line
of credit
The inventories of the project must be monitored as it gets
exhausted.
Staying on top of
invoicing
Invoices must be sent to each of the concerned stakeholders of the
project.
Partial payment Daily or weekly payments must be there for the project team
members
Schedule The stakeholders of the project must be aware of the total budget of
the project and the time required to complete the project.
Table 1: Maintaining financial Flow
(Source: Created by the author)
5. Conclusion
There are different categories of costs associated with most of the construction
projects such as the proportional and time-related cost. There are diverse types of cost control
techniques which are used in construction projects such as the record-keeping, site meetings
and work programs. Out of each of these cost controlling techniques work program is the
most effective approach to control the construction costs, it can also be very much useful to
identify the progress of the project. Creation of a project plan and managing the resources
involved in the projects are the prime responsibilities of a project manager in the construction

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industry. The steps to ensure no additional money and budget is spent once the allocated
budget is spent can also be understood from the tabular description.

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6. References
Akeem, L. B. (2017). Effect of cost control and cost reduction techniques in organizational
performance. International Business and Management, 14(3), 19-26.
Hafez, S. M., Aziz, R. F., & Elzebak, H. M. M. (2015). Optimal techniques for cost reduction
and control in construction sites. J. Human Resour. Manag, 3(3), 17-26.
Miveh, M. R., Rahmat, M. F., Ghadimi, A. A., & Mustafa, M. W. (2016). Control techniques
for three-phase four-leg voltage source inverters in autonomous microgrids: A review.
Renewable and Sustainable Energy Reviews, 54, 1592-1610.
Pandya¹, B., & Thakkar, H. (2016). A Review on Inventory Management Control
Techniques: ABC-XYZ Analysis.