How to Track the Actual Cost in a Construction Project
Tracking the actual cost of a construction project is very hard unless there is a proper cost tracking system. In a construction project, the cost can be divided into categories as follows;
Project Management Team
The main objective of this team is to set an appropriate and executable construction timeline for the project. It should contain all necessary items that cover the whole project within the project timeline. The field experience and knowledge of the different types of construction methods will be very important in this regard. The project management team should often contact the engineering team to discuss that the timeline they provide is executable with the actual site condition.
Quantity Surveying Team
After finalizing the timeline by the project management team, a copy of that should be given along the each team of the project. Therefore, once the project timeline handed over the quantity surveying division they must prepare the material, labor, tools & equipment, transport items are required prior to the timeline. This report should be given to the project purchasing team and the accounting team.
Purchasing Team
Looking into this report issued by the QS team, purchasing team can have a premature idea of the material and labor and other items to be available in the site prior to the timeline. Therefore, they have enough time to contact suppliers and discuss the prices and deliver them without having a delay.
Accounts Team
Same as purchasing team, the accounts team can realize the expenses to be made with the timeline. They can make the cash flow for the project stages wise of the project.
Engineering Team
The engineering team is the most important team in the project. Because they are the ones who actually execute the project. If they do not follow the instructions are given to them, the project will be unsuccessful.
How to track Actual Cost
- Material Cost
- Labor Cost
- Tools & Equipment Cost
- Transport Cost
- Operational Cost (Accommodation, Electricity, Water, Sanitary, Safety, etc.)
- Overheads such as employee salaries, main office operation, etc.
- Legal cost
- Tax's
There may be more cost to it than above based on the business setup and how it operates.
Project Management Team
The main objective of this team is to set an appropriate and executable construction timeline for the project. It should contain all necessary items that cover the whole project within the project timeline. The field experience and knowledge of the different types of construction methods will be very important in this regard. The project management team should often contact the engineering team to discuss that the timeline they provide is executable with the actual site condition.
Quantity Surveying Team
After finalizing the timeline by the project management team, a copy of that should be given along the each team of the project. Therefore, once the project timeline handed over the quantity surveying division they must prepare the material, labor, tools & equipment, transport items are required prior to the timeline. This report should be given to the project purchasing team and the accounting team.
Purchasing Team
Looking into this report issued by the QS team, purchasing team can have a premature idea of the material and labor and other items to be available in the site prior to the timeline. Therefore, they have enough time to contact suppliers and discuss the prices and deliver them without having a delay.
Accounts Team
Same as purchasing team, the accounts team can realize the expenses to be made with the timeline. They can make the cash flow for the project stages wise of the project.
Engineering Team
The engineering team is the most important team in the project. Because they are the ones who actually execute the project. If they do not follow the instructions are given to them, the project will be unsuccessful.
How to track Actual Cost
When ordering material or service for a particular work, it is necessary to make a material or service requesting note by an authorized person before purchasing the materials or services. Then these request orders will be recorded under purchasing team of the project. Then they make the purchasing of material or services according request order. Once the good received note or service received note arrives from the supplier, we should make the manual Good Received Note (GRN) or Service Received Note (SRN) for the work and record it. This should be done under the financial management team of the project.
Therefore, all the departments have to work as a team to track the actual project cost. If any mistake happens, this system can show it directly who is responsible for the mistake so everyone will have to work properly and accurately.
Advantages of having a proper cost tracking system
- Figure out the Actual Profit.
- Figure out the Actual Project Cost.
- Increase the knowledge about the project in each department.
- Figure out the financial status in the progress of the project.
- Figure out the errors in quotations & estimations.
- For a similar type of future project cost realization.
Good note
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