Managing Construction Cost Control in Volatile Times

In November 2024, Construction Management Magazine and Access Construction hosted a joint webinar titled ‘Managing Cost Control in Volatile Times’. 

Michael Cracknell, Director of Real Estate at Turner & Townsend presented on the current economic outlook within the sector, focusing on the cost impact of regulatory changes, including the upcoming Procurement Act and Planning and Infrastructure Bill. He highlighted recent increases in labour costs, highlighting a need to increase productivity and the importance of value engineering within construction to keep control on costs.  

Steven James, Partner, Construction and Engineering at Burges Salmon LLP discussed levers that can be pulled in construction contracts to deal with cost volatility, including managing the risk of price inflation and major global events within contracts – an issue which is particularly prescient after the impact of COVID-19 and the Ukraine War on construction costs.  

Alex Hall, Head of Solutions Engineering at Access Construction focused on his experience reviewing cost control processes within construction companies, focusing on forecasting, controlling cash flow and ownership of change.  

Hall discussed the difficulty of predicting the future in such an unpredictable sector, where weather, delayed deliveries, equipment failures and rework can have a huge impact on costs.  

Better cost forecasting can be achieved by analysing accurate, real-time data and comparing that against historical trends. This can be achieved through using a cloud-hosted end-to-end ERP platform such as Access Coins.  

Hall also highlighted two overall trends within the sector which impact on costs and cost forecasting – lagging productivity and a lack of technological innovation within construction, leading to a ‘race to the bottom’ where a lack of accurate forecasting leads to cost overruns, bad debt and insolvency.  

Hall also discussed the uncertainties around cash flow in construction. Complexities such as the Construction Industry Scheme, payment delays, information lags and disagreements can lead to a very murky picture of cash flow within a construction business.  

Construction cost management software can help construction companies get a better understanding of their cash flow by providing a ‘single source of truth’ across the construction lifecycle.