19.1 Purpose and Principles

Revised on 02-20-2025

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PURPOSE

Cost control is a key element of the construction management phase of a project. For Bureau of Engineering (BOE) projects, construction costs include the contractor costs, as well as BOE staff and consultant costs, and charges from other Bureaus and Departments to the project.

REFERENCES

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RESPONSIBILITIES

  • Project Manager (PM): The PM is responsible for overall project cost control. The PM must work closely with the Construction Manager to ensure that changes are minimized, and that construction is completed within the approved budget and schedule.

  • Construction Manager (CM): Once the project is under construction, the CM is responsible for day-to-day cost control. The CM must not only know the project’s costs to date but also be able to project costs forward to forecast project completion values. The CM is responsible for controlling costs to ensure that construction is completed within the approved budget and schedule. An increase in delivery time is likely to cause an increase in the construction budget. If major changes are anticipated, the CM should notify the PM as soon as possible, so that an informed decision can be made on whether or not to proceed with the change and the necessary funding can be obtained.

PROCEDURE

Construction cost control includes:

  • Performing an adequate constructability review to minimize unexpected costs

  • Establishing a construction cost cash flow plan

  • Monitoring cost performance to detect and understand variances from the plan

  • Forecasting potential change orders

  • Ensuring that all appropriate changes are recorded accurately in the cost baseline

  • Preventing incorrect, inappropriate, or unauthorized changes from being included in the cost baseline

  • Informing appropriate stakeholders of authorized changes

  • Acting to bring expected costs within acceptable limits

Cost control requires searching out the “whys” of both positive and negative variances. Cost control must be thoroughly integrated with the other control processes: scope change control, schedule control, and quality control. For example, inappropriate responses to cost variances can cause quality or schedule problems or produce an unacceptable level of risk later in the project.

In regards to the Contractor, the city will pay the Contractor what is owed, but not more. Every effort will be made by the city to pay the Contractor in a timely manner (see Procedure 19.2 – Progress Payment Procedures).

RELATED PROCEDURES

LINKS / ATTACHMENTS

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