Explain why contractors use cost control methods on construction projects.

What will be an ideal response?


There are several different reasons contractors use cost control methods on construction projects. Cost control can range from a simple collection of costs for labor, material, equipment, and subcontractors, organized in projects or subprojects, to detailed compilation and analysis for every work activity. The overhead cost of cost control increases as the detailed collection and expected reporting detail increases. Therefore, contractors need to determine how much information they want from their cost systems, according to their managers and the needs of their risk partners, such as banks and bonding companies, and compare this to the staff costs to compile this information. Cost control involves construction expertise from construction engineers or project controls specialists as well as accounting staff.

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