Project cost saving Strategies

1. Strategic sourcing : sourcing best products with competitive pricing.
2. Highly efficient and professional contractors.
3. Defining and Implementing best business process.
4. Value addition through alternate materials, working methodologies, new technology.
5. Project monitoring through daily production report by quantity based system
6. Annual business operating plan

Area wise cost saving methodology

• Design optimisation and Value Engineering
• Use of correct Construction technology
• Competitive raw material cost saving

• Sourcing directly from manufacturers
• Alternate materials usage
• Global material sourcing

• Design, DBR, BOQ optimisation
• Use of energy efficient equipment and process
• Incorporate latest design process and materials
• Global material sourcing

• Design optimisation and Value Engineering
• Design, DBR and BOQ optimisation
• Alternate materials usage

Project Cost Optimisation Strategies

• a) Design and Drawings Review
• b) Value Engineering
• c) Strategic Material sourcing
• d) Alternative Materials identifications
• e) Right contractor section
• f) Budgetary control
• g) Inventory control
• h) Cost reduction techniques at site
• i) Wastage reduction
• j) Housekeeping

Project Cost reduction Techniques

1. Material Management: To manage productivity and cost efficiency material management is essential. It contributes the major portion of expenses in construction projects. Controlling procurement and carrying cost can reduce total project cost. It helps in completing the project in a fast track method.
2. Budgetary Control: For cost control on a project, the construction plan and the associated cash flow estimates will provide the baseline reference for subsequent project monitoring and control. For schedules, progress on individual activities and the achievement of milestone completions can be compared with the project schedule to monitor the progress of activities. The final or detailed cost estimate provides a baseline for the assessment of financial performance during the project. To the extent that costs are within the cost estimate, then the project is thought to be under financial control. Overruns in particular cost categories signal the possibility of problems and give an indication of exactly what problems are being encountered. To control and monitor, the original detailed cost estimate is typically converted to a project budget, and the project budget is used subsequently as a guide for management. Specific items in the detailed cost estimate become WBS elements. Expenses incurred during the course of a project are recorded in WBS cost accounts to be compared with the original cost estimates in each category. Thus, individual WBS accounts generally represent the basic unit for cost control.
3. Cost Optimization Techniques: In design, construction, and maintenance of any engineering system, engineers have to take many technological and managerial decisions at several stages. So ultimate goal is to minimize the effort or to maximize desired benefit. Various statistical techniques are used for optimization of construction cost of project.
4. Cost Reduction Techniques at site: Weekly project review meetings at site to review the progress of work which provides motivation to all Engineers, Contractors and stake holders to improve their performance. Documentation of all project progress, bottlenecks or record keeping is important to enable detection of failures.

Cost optimization by Value Engineering

Value Engineering: Value engineering is a systematic application of recognised techniques which identifies the functions of the product or service. Establishing the worth of those functions which provides the necessary functions to meet the required performance at the lowest overall cost. Value engineering to building projects management team obtains a solution which emphasis the functions of project which helps to team to make final choice and which results in cost effective design for project.

1. Develop target direct construction cost budgets
2. Improve working drawings
3. Define materials standard specifications
4. Change the level of specification if it’s not fitting in the budget
5. Implement an efficient Procure to pay cycle
6. Issueing complete construction drawings and packages prior to start
7. Improve estimating and Budget Control
8. Conduct “As-Built Audits”
9. Control of construction cost variances
10. Break Materials and Labour contracts which can save 15 to 20%
11. Improve material inventory and control
12. Standardize construction processes