Effective Cost Control in construction projects

Cost Control Project controlling

Budget overruns or cost overruns are unfortunately not unfamiliar concepts, especially for those working within the construction industry. Challenges in keeping costs under control are a recurring theme. Research actually shows that around 40-45% of projects are not completed on time or within budget (KPMG, Effective Project Controls. Confidence in Delivery). It’s about time to explore solutions that offer improved cost management and enhanced efficiency.

As someone responsible for finances, you know how crucial it is to establish good routines for cost control in projects. A simple Google search reveals countless examples of projects encountering challenges in keeping costs in check. Take for example the Sydney Opera House, initially budgeted at A$7 million but eventually costing A$102 million. Or the Olympic Stadium in Montreal, originally budgeted at CAN$300 million, ended up costing $1.5 billion due to inflation and complexities in construction. (https://www.constructionbriefing.com/news/7-construction-megaprojects-that-severely-overran-their-budget/8029458.article 

It may seem that the larger the project, the more things can potentially go wrong (or at least not quite according to plan). Companies in the construction industry face constant pressure from both customers, suppliers, and market conditions, making it essential to have tools that streamline and simplify this process. But how? Aren’t standard professional solutions from reputable building material chains good enough? To find solutions, we need to look into the challenges that must be addressed.

Download guide: Do you have effective cost control in your compan’ys procurement procedures?

Common pitfalls associated with Cost Control

Common challenges for those working in project-based companies in the construction industry include: 

  • Unclear project scope: An agreement with the customer should outline precisely what is included in the delivery and specify the expected delivery times. Failing to do so could lead to misunderstandings, delays, and dissatisfaction for both the customer and the supplier. 
  • Scope creep: When a project gradually expands beyond its original plan, either by adding new tasks or changing existing ones, it can result in delays and increased costs. 
  • Unclear agreements with subcontractors: This can create friction, discussions, and uncertainty regarding cost estimates and other expectations. 
  • Information overload: Companies can lose track of project details, leading to errors in budgeting and cost control. 
  • Delays in orders: Problems with getting materials delivered on time can lead to cost overruns. Good timing and clear routines are key. 
  • Manual procedures: The use of Excel, documents, and storing invoices in the van’s dashboard can lead to errors, delays, and lack of accuracy in cost management. 

These pitfalls can affect you by leading to increased costs, delays in project implementation, and general inefficient cost control. This can in turn have a negative impact on profitability and customer satisfaction in your company. 

The path to Cost Efficiency

To achieve effective cost control in construction projects, it is important to have a holistic approach. Here are the key factors crucial to your success: 

  1. Realistic and detailed budget: A solid budgeting foundation, including materials, services, labor, and equipment, is crucial to avoid budget overruns.

  2. Good planning and routines: From scheduling to good procurement routines, planning is a key component in maintaining cost control. This also includes clear agreements with both customers and suppliers. The goal is to create a foundation that minimizes friction between parties.

  3. Monitoring and reporting: Continuous monitoring of project status and reporting of deviations is valuable. A purchase order system provides you with real-time information and alerts, allowing you to quickly identify and address any deviations.

  4. Risk management: Carefully plan for risks and have a strategy to handle and mitigate them. This may include ensuring access to materials and managing price changes. Incorporating liquidated damages clauses in contracts with subcontractors, whenever possible, mitigates the risk by ensuring you don’t shoulder the entire burden alone.

  5. Change management: Efficient management of change orders is essential to prevent cost overruns and ensure that all parties agree to the changes.

  6. Use of technology: Implementing modern technology, such as CostTracker, purchase order system, provides you with continuously updated information and simplifies project management, reducing the risk of errors and inaccuracy.

  7. Ensure continuous learning: Evaluate each project to find out what worked well and what can be improved next time. This contributes to better cost control and improves competitiveness and margins. 

Did you know: CostTracker serves as a central platform for information, providing full overview and control, and significantly reducing costs. This allows you to spend more time on important tasks such as follow-up, communication, and project management. This results in satisfied stakeholders and successful projects. The benefits you have with CostTracker include: 

  • Purchase order: Implementing a purchase order system ensures clear agreements with suppliers using standard templates and efficient processes.
  • Real time cost control: Get an overview of planned purchases, commitments made, and actual costs.
  • Liquidity forecast: Stay updated on future payment obligations, automatic updates based on agreements made with suppliers.
  • Completed orders: Get detailed information about completed purchases.
  • Product price development: Gain insight into cost changes for materials and equipment.
  • Delivery: See a clear view of planned deliveries.
  • Digital workflow: Streamline your workday with digital workflow. Use professional procurement templates to ensure clear agreements, and use digital approval to streamline the purchasing process.


Effective cost control in the construction industry depends on good routines along with the right tools. A purchase order system provides you, as a finance professional, with a unique opportunity to have full control and overview of your orders. By utilizing real-time information and automated reports, you can eliminate manual reporting and quickly identify any deviations. This not only provides better cost control but also frees up valuable time that can be used for strategic planning, follow-up, and overall good project management.

Still wondering if you have good enough cost control in your company?

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