Abstract
The construction industry plays a critical role in the establishment of sustainable national economic growth and development. Recent years have seen the emergence of cost modeling and cost estimation in nearly all construction projects. Cost management identifies the efficient strategies that put checks, cost overruns and avoid project delays.
When a contractor adopts sound and effective controls over project expenses, maximum profits are realized, and the desired quality of work is achieved. By analyzing Cost Value Reconciliation as one of the cost control techniques, this study is hypothesized that CVR efficiently helps construction firms to improve the financial performance in construction projects. Therefore, Investigation was carried out using two main approaches which include an extensive review of the literature on cost control techniques and conducting field work. The field work approach was done by quantitative data collection through the administration of an online questionnaire to 120 professionals working in construction industry based firms. The questionnaire’s sole aim was to collect data about the challenges faced by contractors, the cost control methods they apply and familiarity and implementation of CVR during the post-contract stage.
The collected data was analyzed statistically to make detailed and proven conclusions upon the investigation. A 62% of the respondents strongly agreed that cost controlling techniques play a major role in overall project performance, and CVR technique is a great cost management tool in the UAE construction industry. Further, 56% of the analysis revealed that the professionals agree on it as a successful tool that helps them avoid cost overruns and improve their firm’s financial performance. The results showed that in post-contract cost controlling techniques, budgeting was the third most challenging function of cost controlling professionals at 61% followed by cost estimating at 45.6% and cost control at 42.6% in the construction industry. It was further noted that 72.1% of all respondents agreed that establishing standards and norms to measure performance was a significant activity in their organization. 62% placed a comparison of the actual costs to the established norms as the second priority in cost control at their organization while 61.9% stated that corrective actions were the least prioritized activity in cost controlling. This indicated that construction companies are aware of the cost controlling techniques but do not follow all the activities in cost controlling hence do not achieve maximum benefits from cost control management. At 88%, CRV was the most commonly used cost control technique followed by EVA at 7% in all construction projects often implemented after cost commitments occur in a project. Execution and commercial project team members were responsible for project cost control. Cost control reviews were carried out monthly in 92.65% organizations. Therefore, it was concluded that CVR is efficient in helping construction firms to manage their project costs. It enables forecasting on project costs, reference for future projects, generating value, planning against actual expenditure, controlling wastages, focusing on all cost components and controlling costs instead of monitoring them in construction industry based firms operating in UEA.
Keywords: Cost control, Cost Management, Cost Value Reconciliation (CVR)
