Thursday, 28 March 2013

TECHNICAL FILES: The role of cost manager in Real Estate projects

Real Estate projects engage a wide set of stakeholders, among promoters, contractors, designers and consultants. It’s an industry that is very exposed to derived demand effects, which is the same that saying that is very volatile to disruptions in demand from final customers. In this way, variables like productivity, profitability and cost play an essential role. On this kind of multidisciplinary teams, there is the tendency to an inefficient communication between the promoter/owner and the remaining stakeholders, making the management of these variables difficult.

In a market where clients tend sometimes to choose the lowest-priced contractors, it is common to verify the existence of unrealistic low price proposals – with the development of the project, either contractors ask for post-contract extras or don’t meet with the agreed quality level. The opposite can also happen, through the presentation of inflated proposals that don’t meet with the reality of the market. Several cost control mistakes can also be verified in the design phase – usually designers don’t take into consideration cost control issues, originating unnecessary cost increases that hardly represent added-value for the project. Also in the execution phases cost control is not well assured, causing the noncompliance with the stipulated costs and budget overruns.

"Rua do Alecrim" is a project in which DIMSCALE is been providing cost management consultancy since its design phase
Cost management makes the connection between all stakeholders, preserving the interests of the client regarding the costs of the project. Should be integrated from the design phase, in order to work directly with the architecture team and early optimize costs. The cost manager provides with its specialized technical knowledge, expertise in constructive solutions and should seek to understand and preserve the concept drawn by the design team. In this way, it’s important that the cost manager owns both the technical and conceptual backgrounds. All design changes are discussed with the client, to whom are presented all possible scenarios and respective cost implications. The cost management team should in this way be composed by professionals with specific technical expertise in all different specialties.

Cost consultancy should provide also with all quantity surveying work, assuring that the project is accurately quantified and all written and drawn information is correct. Also all the information from different specialties should be compatibilized. Quantity surveying work assures that all information is taken into consideration and avoids eventual errors and misinformation, enabling to establish an accurate cost for the project. This cost prevision is also based on market consultations, being its final values the base of the specifications document that is delivered to applicant contractors. The quality of the work done so far will enable the promoter, together with the cost manager, to negotiate a fairer deal with the selected contractor. 

During the execution phases, cost management continues to act as a link between the project team (designers, contractors and other consultants) and the promoter/owner in order to control all the costs involved. After being made an optimization of the invested capital in the early stages, the job of the cost manager in the execution phase is to assure that is being followed the stipulated plan regarding the project’s costs. The goals are to prevent budget overruns situations and to safeguard the final quality of the project.

"Rua do Alecrim" is a project in which DIMSCALE is been providing cost management consultancy since its design phase

Photos: João Morgado

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