Cost management

ERA CAPITAL helps control the cost of a construction project from budgeting to completion. The team links design decisions, CAPEX, tenders, contractor commitments and actual costs so that the customer understands the current budget and project completion cost forecast.

The cost of the construction project is formed long before the contractor enters the site. It is influenced by the area and functional program of the facility, technical solutions, engineering equipment, procurement conditions, implementation schedule and changes that appear as the project develops.

Therefore, cost control cannot be reduced to checking invoices after completion of work. ERA CAPITAL builds value management as a continuous process: the budget fixes the financial framework, project decisions form future liabilities, tenders specify the market value, and a regular forecast shows the expected result of the project.

When value management is particularly important

The service is necessary if it is important for the customer to understand not only the current costs, but also the future cost of completing the facility.

A realistic budget and cost structure should be established at an early stage. During the design process, monitor how architectural and engineering decisions affect CAPEX. When purchasing - compare the proposals of contractors on a single volume. During construction - take into account the actually completed work, commitments and changes.

The investor gets the financial picture of the project before the deviation becomes a fait accompli.

Formation of the project budget

The initial valuation becomes the starting point for further control.

ERA CAPITAL structuring costs by direction and linking the budget to the project scope, schedule and implementation stage. The calculation may include design, construction work, equipment, finishing, connections, consultant services, reserves and other CAPEX categories.

The budget shows the limits, the contracts form the obligations, the actual costs reflect the completed part of the project. Comparison of these data allows you to estimate the expected cost of completion.

Cost of design decisions

A significant portion of future costs are determined at the design stage.

Changing the facade, engineering equipment, structural scheme or finishing materials can affect several budget items at once. Therefore, the cost of the decision must be estimated before its final approval.

ERA CAPITAL analyses the financial implications of design decisions and considers alternatives if necessary. The task is not to mechanically reduce the cost of the project, but to find a solution that meets the functional requirements and financial model.

Tenders and procurement

Contractors’ offers cannot be correctly compared only at the final price.

One company can include the full scope of work in the cost, another can exclude individual materials, equipment or risks. Formally lower supply in the future can lead to additional costs.

The ERA CAPITAL team helps to form a tender package, analyze proposals of participants and bring them to a comparable structure. The customer sees not only the price, but also the composition of obligations, exceptions and potential financial consequences of the choice.

Cost control during construction

After the conclusion of contracts, the budget continues to change. There are clarifications of project documentation, additional work, volume adjustments and proposals of contractors. Each significant change must be measured in terms of cost and impact on the overall financial result.

ERA CAPITAL specialists analyze the cost of work performed, contractual obligations and proposed changes. When working with COP-2 and COP-3, financial data are compared to the agreed scope and current status of the project.

The contractor proposes a change, the team estimates its cost, the customer makes a decision based on the financial implications.

Change management

Small adjustments can gradually form a significant excess of the original budget.

Therefore, changes should be recorded in a single system. For each decision, it is important to understand the cause, cost, source of funding and impact on the final forecast.

This approach allows you to see the cumulative effect of changes and control the use of reserves.

Cost of completion forecast

For the investor, not only the amount of funds already spent, but also the amount that will be required to complete the object is especially important.

The forecast is updated as contracts are concluded, tenders are held and new data become available. It takes into account actual costs, contractual obligations, expected purchases, changes and remaining reserve.

If the forecast begins to go beyond the established financial framework, the customer has time for a management decision.

Completion of the project

Financial controls continue until the closing of contracts.

At the final stage, it is necessary to confirm the total cost of work, settle changes and claims of contractors, determine the balance of obligations and form a final picture of costs.

ERA CAPITAL links budgeting, design decisions, procurement and construction costs into a single cost management system. As a result, the customer does not receive a set of separate financial statements, but an understanding of how each decision affects the project economy.