After the excitement of breaking ground on a new project has faded the process of forecasting the cost to complete comes into play. By most definitions, a forecast is a prediction that includes both science and art. Because there are so many moving parts and pieces in a construction project, developing a reliable forecast requires a broad understanding of the various elements that can affect it.
The role and experience of the project manager is the key to successful forecasting. From my experience in hiring hundreds of general contractors across the country, the successful companies have true managers of the project in this role. Working with field staff, subcontractors and vendors the project manager will have his fingers on the pulse of the project and be in a position to forecast the impacts changes will have on the schedule and ultimately the cost to complete.
As a policy, schedules should be updated weekly with a focus on percentage complete to provide early warning on any deviations from the work plan. This update should be made during the weekly project meetings with all subcontractors in attendance. This discipline provides the project team with the ability to course correct as required to recover any lost time.
Potential change orders and change orders should be reviewed weekly with any impacts to the owner communicated immediately. At one company, as an owner, we required general contractors to provide us with an estimate of the cost for a potential change order within 24 hours. This required the general contractor’s project manager to apply historical data (science) against project specific-impacts (art) to come up with an estimate. This was certainly not a role for an administrative manager or glorified submittal clerk. Before the advent of today’s sophisticated project management tools, I had a project manager that kept notes in a spiral notebook as we designed and built a new prototype store. Every morning I had an update on the financial and schedule impacts our decisions from the day before would have on the project. This project and two others were completed on schedule and under budget.
Monthly project progress meetings should be held with all stakeholders in attendance. With owners, consultants, contractors, and vendors reviewing RFI logs, schedule updates, change orders and potential change orders with an estimated cost to complete (forecast) better decisions can be made and the element of surprise should be removed.