Difficulties Of Cost Control During Construction Stage

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CHAPTER 1: INTRODUCTION – 1.1 Problem Statement:

In every industry, cost control is a must in order to make sure that a project or production can make maximum profit or to make sure that the budget of a project does not burst. Locally, the actual costs of development of a project will normally being higher than necessary. In order to have an effective cost control in construction industry, it is necessary for us to determine the difficulties of cost control and to identify the factors contribute to the cost control difficulties in a project in order to overcome the difficulties or to avoid those factors that may cause difficulties to cost control of a construction project during construction stage, thus to have an effective cost control for the construction project and complete the project within the budget or under budget.

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1.2 Aim and Objective:

The aim of this paper is to study the difficulties of cost control in construction industry during the construction stage. In order to achieve the study of aim, some objectives have been established as below:

To ascertain the importance of applying cost control in local construction industry.

To highlight the cost control difficulties in local construction firm during the construction stage.

To investigate the factors contributing to cost control difficulties in local construction firm during construction stage.

1.3 Background:

Cost control is a process that should be continued throughout the project life cycle of a project. In construction industry, cost control should be continued from the inception of the project until the completion of the project to ensure that the cost of the construction project is kept within the agreed cost limits. For cost control of construction industry, it can be divided into two major stages; the control of cost during design stages and the control of cost by construction firm right after the commencement of the construction work of the construction project.

According to Ashworth (2004), cost and schedule control is one of the most important functions of management once a project is identified. Cost control is paramount during the feasibility and design phases because a project’s feasibility is normally tied to the cost of a project. Besides that, cost control during the construction phase can be paramount for large projects due to their potentially high construction cost and profiles.

As mentioned by Nunnally (1998), the measuring and collecting the cost record of a project and the work progress are included in the cost control of a project. Besides that, the comparison of actual progress with the planning is also involved. The main purpose of cost control of a project is to gain maximum profit within the designated period and satisfactory quality of work.

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