Cost Factor In Construction

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2.3.5.1 Cost factor For this factor is observed more important for owners and contractors because escalation of material prices affects the liquidity of owners and the profit rate of contractors. It has been ranked by the consultants’ respondents in the 3rd position and by the contractors’ respondents in the second position. It is not surprising to find out differentiation of currency prices is more important for contractors than for others because this factor affects contractors' profit rate and cost performance. Cash flow is more important for owners and contractors than for consultants, because it can give an important evaluation for the owners' and the contractors' cost performance at any stage of project. Equipment and material…show more content…
Materials represent a major expense in construction, thus reducing the cost of procurement or acquisition presents significant opportunities to reduce costs. Poor management of materials can also cause significant costs and avoided during construction. Natural conscious construction has been the subject of research over the past decade. Acording to Deniz et al, (2012), Chen et al (2012), Mahamid (2012) and building material suppliers have yet to experience a drag of delays and costs, and various efforts to create a statistical model to adjust the float and budget planning of the schedule that has in a study conducted recently, just to stress the impact of the surplus has been at every construction project. First, if the materials are purchased early, capital may be tied up and interest charges levied on the excess…show more content…
For example, electrical equipment often must be stored in a waterproof location. Second, delays and additional expenses incurred if the materials required for certain activities is not available. According Chenndra (2013) insure the timely flow of materials is an important concern of project managers. Materials management is not only a concern during the monitoring stage where construction is taking place. The decision on the acquisition of materials may also be required in the early stages of planning and scheduling. For example, activities may be included in the project schedule to represent the purchase of major items such as a lift to the building. Availability of materials can greatly affect the schedule in projects with a fast track or very tight time schedule: sufficient time to obtain the necessary materials must be allowed. In some cases, more expensive supplier or the sender can use to save time.
Materials management is also an issue at the organizational level if central purchasing and inventory control are used for standard items. In this case, the various projects undertaken by the organization will present the request to the central purchasing group. Next, the group will maintain an inventory of standard items to reduce delays in providing materials or to obtain lower costs due to bulk purchases. This organization is the same problem with the management of inventory control

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