Construction Contractor Cost Control

by James M. Neil, Morrison-Knudsen Co, Boise, ID, USA,

Document Type: Proceeding Paper

Part of: Liability in Construction Management


Cost control for a contractor engaged in a fixed-price construction contract encompasses all actions directed toward the controlling or influencing the cost outcome of the project. When cost control is associated with a budget, the system of control has two subsystems. The first subsystem is concerned with determining in a continuous, timely manner whether items are currently under, on, or over budget (or schedule), what the trends are, and what the sources of any difficulties might be. The second subsystem encompasses the actions taken to react to unfavorable situations noted by the first subsystem. On the typical project, the first subsystem is operated by project controllers who report and analyze the data for the managers, while the managers take the actions required to correct problems. This paper is concerned with the first subsystem.

Subject Headings: Construction management | Construction costs | Contracts and subcontracts | Project management | Budgets | Pricing | Benefit cost ratios | Control systems

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