Project Cost Management—Global Issues and Challenges
Abstract
This paper examines the global issues and challenges facing the project cost management profession. This relates to professionals in the fields of quantity surveying, cost engineering, project controls and project managers providing cost management services. As a profession that is not widely recognized in society compared to professional disciplines such as engineers and architects, the project cost management profession faces many challenges in creating greater awareness of the value that they provide for projects. The global construction industry is littered with many examples of high profile projects that have experienced significant time and cost overruns and this is merely a reflection of similar problems at all project levels. However, these high profile projects attract considerable attention in the wider community and highlight the need for more effective cost management and project controls. The paper is based on a literature review of global project cost management issues and research undertaken through professional cost management associations that include the International Cost Engineering Council, the Pacific Association of Quantity Surveyors, the African Association of Quantity Surveyors, the International Project Management Association, the Association for the Advancement of Cost Engineering, the China Engineering Cost Association and the Royal Institution of Chartered Surveyors. The research identifies the need for global recognition of the profession and the development of global professional standards and certification programs. The paper culminates with a series of recommendations and strategies for the profession that includes formal recognition through global organisations such as the United Nations, the World Bank, the World Trade Organisation and the International Management Fund, the development of ISO cost management standards, formal recognition under the global Central Product Classification (CPC) scheme, development of a project cost management certification program for the European region and raising of global professional standards particularly in developing countries and countries where the profession is not traditionally recognised.
Keywords project cost;global;issues and challenges
- Introduction
The management and control of costs is fundamental to most projects but around the world overruns in project scope and cost are commonplace. This can be broadly attributed to ineffective approaches to identifying, managing and controlling client needs, project scope and project cost. Numerous cost budget blowouts on major projects around the world in the order of hundreds of millions and billions of dollars have attracted increasing concern and attention at all societal levels. The Global Financial Crisis in 2008 further exacerbated the problem and continues to have a significant impact on project financing around the world as financiers tighten lending controls and avoid lending for projects lacking sufficient risk controls.
Governments, major private sector developers, financiers and global entities such as the United Nations, the World Bank and the World Trade Organisation have increasingly recognised the need for more effective cost control on construction projects. This provides an opportune global setting for the project cost management discipline to raise awareness amongst these major organizations on the importance and value of engaging expert cost managers rather than have the role carried out by other professionals as a subset of their overall roles.
Major barriers to achieving this are the fact that there is not a single descriptor for the professional discipline that is recognized globally (such as an architect and engineer) and that there is a lack of common professional standards and competencies (such as an ISO standard). The main professional disciplines providing specialist project cost management services around the world are cost engineers, quantity surveyors, construction economists and project managers. Quantity Surveying is a profession with origins in the United Kingdom and is a professional title recognised mainly in Commonwealth countries. Cost Engineering is the term mainly used in North and South America, China and some parts of Europe. Construction Economist is used in some European countries and in other parts of the world as an alternate descriptor for the service. In other regions, particularly in Europe, these three professional titles are not recognised with cost management services largely carried out by Project Managers as part of their suite of services. A relatively new professional discipline of Project Controls has also emerged as a more encompassing descriptor of the role of the cost manager. The fundamental cost management principles and practices of these professions are the same.
But cost management is not the exclusive preserve of these professionals and there are few countries that require official registration to practice as a professional in the field. Accordingly cost management is commonly carried out by a range of other professionals that may well lack the specialist technical competencies and expertise that is required for effective cost management.
This paper will explore the issues and challenges that the profession faces both on a regional level and a global scale in gaining greater recognition, improving professional standards and ultimately improving the cost performance of projects around the world. It will conclude with a range of recommendations and strategies to help meet these challenges.
2. Literature Review
2.1 Project Cost Overruns – A Global Problem
Construction and the development of infrastructure are fundamental to economic growth and societal advanc
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