Dodge Data & Analytics, Hamilton, N.J., and Procore Technologies, Carpinteria, Calif., released a report, finding that owners and contractors face a variety of challenges when it comes to project cost management.
Conducted this past July, the study explored how the construction industry perceives project cost management and how industry professionals leverage technology to effectively manage project costs. Participants in the study included construction owners, general contractors and specialty contractors in the public and private sectors across the United States, Canada, the United Kingdom, Australia and New Zealand.
The report noted several key findings. First, respondents ranked two issues, “Converting a final cost estimate into a project budget compatible with cost accounts” and “Tracking costs for every aspect of the job to determine how they impact overall project cost,” as the most difficult cost management challenges to solve.
Only 39% of respondents agreed and less than a quarter (24%) strongly agreed that their organizations’ current cost management capabilities allowed them to effectively manage costs, indicating room for improvement globally. When it comes to challenges with cost management between project-related staff and office-related staff, respondents noted that the greatest disparity lies with “Understanding in real-time where we are making or losing money.”
Finally, among the future needs to solve with project cost management, respondents ranked “Forecasting critical costs with real-time data from the field” and “Dynamically tracking every dollar in my budget” as the most important.
The need for improved project cost management is increasing, as noted in an October 2021 report from the National Association of Homebuilders (NAHB), which stated that, while there are signs that the housing market is steadying after a period of cooling, housing affordability will decrease in future quarters. In fact, home prices have already risen more than 30% on average nationwide since the start of 2020.
New home sales are 24% lower than a year ago due to higher construction costs and some limiting of sales. A year ago, according to the NAHB, 43% of new home sales were priced below $300,000. In August, that share fell to 30%.