Effective cost management is crucial for successful construction projects. This glossary defines key terms to empower you with a clear understanding of financial aspects:

Project Budget:

• The comprehensive financial plan outlining the total expected costs for a construction project. It includes all direct and indirect costs, categorized for materials, labor, equipment, permits, and other project-related expenses.

Cost Estimating:

• The process of forecasting the total project cost based on historical data, industry standards, and project-specific factors. It involves various methods like quantity takeoffs, parametric estimating, and bottom-up estimating.

Cost Control:

• The ongoing process of monitoring project costs against the budget, identifying variances, and implementing corrective actions to stay within budget. It involves cost tracking, cost reporting, and cost variance analysis.

Change Order (CO):

• A formal document outlining modifications to the project scope, schedule, or budget that require approval from all relevant parties. It ensures clarity on the impact of changes on cost and helps minimize disputes.

Impact Cost Estimate:

• A detailed breakdown of the additional costs associated with a proposed Change Order. It considers the cost of materials, labor, equipment, and any potential schedule adjustments required due to the change.

Earned Value Management (EVM):

• A performance measurement technique that compares the budgeted cost of work performed (BCWP) to the actual cost of work performed (ACWP) and the schedule performance index (SPI). It helps assess project progress, identify potential cost overruns, and take corrective actions if necessary.

In summary a detailed budget sets the financial baseline. Estimating techniques predict total costs. Constant monitoring ensures spending stays on track. Adaptability is crucial, as changes require approval and cost estimates to maintain budget control and project success.