When working with a cost consultant as the owner of a project, you may hear a number of terms that are new to you, or at least new in the context they’re being used. This field has a language of its own, and a good consultant will break down every step of the process in an understandable way. Still, it can be helpful to have some background knowledge going into the partnership on terms to expect. Here’s a look at ten key terms to know.
Auditing: the process of holistically reviewing a construction project to ensure all components are running according to the plan and the estimate. Auditing often includes going over change order reviews, to help ensure they are reasonable and determine whose contingency will cover the added cost.
Cost Consulting: a field encompassing estimating, risk management, auditing and consulting in the world of construction. Cost consultants can be valuable partners for project owners and assist with estimating project costs, dealing with risks and advising on cost saving ideas.
Estimating: a process to forecast the total cost of building a structure. This doesn’t stop at material costs to build the structure; estimating accounts for costs associated with labor, equipment, rentals, etc. Typically, items like permit costs or zoning fees are not included. A good estimate builds confidence for stakeholders that their investment is being spent wisely.
Feasibility: a study/process that covers the viability of both the conceptual and financial sides of a project. It aims to answer the questions “Can we do this?” and “What would it take?” An estimate is typically a component of a feasibility study.
Lifecycle costing: an approach that looks at the lifetime cost of owning and operating a structure, going beyond the initial investment required to build. This is especially useful if an owner hopes to turn a profit over time with a building after construction is completed. Operations and Maintenace studies are sometimes part of lifecycle costing.
Performance Indicators: deliverables and baselines that gauge the success of a project. Also called outputs.
Risk Management: a process for determining the risks present in a project and evaluating the ability to minimize their impact. While some risks are inherent in a construction project, a focus on risk management may help you avoid some challenges or reduce the associated costs.
Value Engineering: a process that enables owners and project teams to analyze building design plans, equipment, structure and materials and identify opportunities to minimize overall lifecycle costs. The goal is to cut costs, not scope and function.
Ready to jump in a new project in 2022? Contact us for cost consulting partnership throughout the project – we’re ready to guide you every step of the way.