International Research Journal of Engineering and Technology (IRJET)
e-ISSN: 2395-0056
Volume: 12 Issue: 05 | May 2025
p-ISSN: 2395-0072
www.irjet.net
A Review on Cost Optimization in the Construction Industry Abinaya Dharshithaa1, Aiswaya Aileen Thomas2, Cheran3, Dhaveethu Raja4, Dinakar5, Harish6 UG Students of Faculty of Architecture, Design and Planning Karpagam Academy of Higher Education Coimbatore – 641021 ---------------------------------------------------------------------***--------------------------------------------------------------------Abstract - Construction cost management is a critical Over the years, various cost management strategies have
been introduced to mitigate financial risks in construction. Traditional budgeting methods, cost estimation techniques, and financial forecasting models have been employed to manage expenditures. However, with advancements in technology and data analytics, modern cost control methodologies, such as activity-based costing and big data analytics, have gained prominence. Activity-based costing, for example, helps identify specific cost drivers within a project, enabling better allocation of resources and reducing unnecessary expenditures. Similarly, big data analytics offers predictive insights, allowing project managers to anticipate potential cost overruns and implement proactive solutions. Despite these advancements, the effectiveness of cost control measures varies depending on project scale, complexity, and implementation practices.
factor in ensuring the financial success of projects. Cost overruns and inefficiencies can significantly impact profitability, project delivery timelines, and overall industry sustainability. This review explores various cost control practices and techniques employed in the construction industry. The review examines cost management methodologies such as activity-based costing, cost variance analysis, rework management, budgeting, and value engineering. By synthesizing insights from multiple studies, this paper presents a framework for effective cost management in construction projects, highlighting key strategies to minimize cost overruns and improve budget adherence. Additionally, it discusses the integration of proactive and corrective measures to mitigate financial risks and optimize project performance.
Key Words: Cost Management, Cost Control, Rework and
This review article critically examines the phenomenon of cost overruns in the construction industry and evaluates the efficacy of different cost management approaches. By analyzing existing literature, industry case studies, and emerging technological trends, this article aims to provide a comprehensive understanding of cost control practices and their role in enhancing project success. The discussion will highlight the advantages and limitations of various cost management strategies, offering insights into best practices that can be adopted to optimize financial performance and ensure the timely and cost-effective completion of construction projects. Through this analysis, the article seeks to contribute to the ongoing discourse on improving cost efficiency in the construction sector and addressing the persistent challenge of budget overruns.
Budget Overruns, Financial Planning, Cost Optimization
1. INTRODUCTION The construction industry is a cornerstone of global economic development, driving infrastructure growth and urbanization. However, it remains plagued by financial challenges, with cost overruns being one of the most critical concerns. Numerous studies have highlighted that a significant proportion of construction projects worldwide experience cost overruns, sometimes exceeding 30% to 40% of the initial budget. In extreme cases, overruns have been reported to reach up to 86%, posing severe financial risks to investors, contractors, and stakeholders. These budget deviations not only threaten project viability but also undermine profitability, leading to financial strain and potential project failures.
2. LITERATURE REVIEW P. Suganya, S. Alan & Jostin.P Jose
Cost overruns in construction projects arise from multiple interrelated factors. Inefficient project management, inadequate planning, resource misallocation, inflationary pressures, and regulatory changes all contribute to the escalation of costs beyond the projected estimates. Additionally, poor cost control mechanisms and the absence of robust financial tracking systems exacerbate the problem. Without effective monitoring and intervention strategies, construction projects may struggle to maintain financial stability, ultimately affecting their long-term success.
© 2025, IRJET
|
Impact Factor value: 8.315
The research by P. Suganya, S. Alan, Jostin.P Jose. explores cost-effective construction techniques, particularly in the context of affordable housing solutions. The authors emphasize that reducing construction costs without compromising quality is a pressing issue, especially for low-income and middle-income groups. The research compares traditional construction methods with innovative cost-effective approaches, such as the use of alternative materials like quarry dust, interlock bricks, and aerocon blocks. These materials not only help in reducing
|
ISO 9001:2008 Certified Journal
|
Page 1349