Maintaining projects within their budgets is done through construction cost management. This prevents projects from going over budget and eating away at general contractors' profits. Effective construction cost management guarantees that expenditure stays on track throughout the project's life cycle.

Construction cost management has an effect on every stage of a project. Planning and design come first, followed by estimating, on-site specialty contractors, change orders, and finally the finished product. Your business will gain a good reputation in the industry with effective cost management of the construction process. General contractors who are proactive, effective, and accurate with cost estimation and staying within budget are preferred by property owners.

Managing enterprise risk for significant construction projects requires the use of construction audit and review methodologies. No matter how big the team you put up for the construction compliance assessment is, your efforts could result in some project cost savings. Consider adopting some of the following strategies the next time your organization builds a new school, wastewater treatment facility, or public safety building to assist you and management in knowing that appropriate spending and resource allocation has been made. No matter how large or expensive construction activities are, establishing a strong internal control process can deliver risk reduction and advantageous outcomes.

Continuous construction auditing aims to produce an ideal project result in terms of quality, deadlines, and finances by working with all parties involved and implementing ongoing checks, controls, and target definitions. To do this, every process for every phase is examined, monitored, and, if necessary, modified. The long-term objective shouldn't lose focus because of a person's immediate needs. That is the construction auditing maxim.

Construction audit and accounting services make sure that risks are reduced and that your project is finished on time and on budget. Some items that will be on the checklist are as follows:
• Areas where danger is higher;
• Charges that are accurate when compared to your contract;
• Assessing whether money is being spent as intended;
• Finding opportunities for cost savings and better ROI;
• Determining what needs to be improved for maximum effectiveness;
• Identifying problem areas and taking action to fix them;
• Making sure the project is finished on time.

Increasing credibility
It is crucial to foster teamwork among the internal audit or compliance professionals when reviewing construction operations. It is vital to get an understanding of the construction process in order to do that. Your staff must become fluent in the dialect spoken by contractors and the building industry. Without this information, your team won't be able to probe senior executives, project managers, and other staff to find out how controls should be applied or where more investigation is needed.

Which strategy is most successful?
Think about the implementation of your team's review. Will they be participating in a construction project right away? Will the construction review become a crucial component of the work being done on the project? Or will the review happen after the project is finished but before any final payments or retainages are given out? Each strategy will be beneficial, but involving construction compliance experts from the beginning of the project will develop a culture of trust but verify throughout the whole endeavor. Contractor compliance may increase as a result, without halting the project's development. On the other hand, because data collection and analysis take time, just incorporating your compliance team in the project close process may delay final payments to contractors.

The explanation that follows assumes that your compliance team participates in the construction project from its inception to its conclusion.

Performing a risk analysis and fostering a cooperative atmosphere
The first stage in the construction audit process is to conduct a risk assessment of the common risk areas in a construction project to verify that high-level risks are addressed. Verify that you are protected in these five typical areas:
- All parties are aware of the definitions of the contract terms;
- Records are available for inspection to check for compliance, and the costs charged fall under the parameters of the construction contract;
- The contractor has the financial wherewithal to meet its operational and financial construction obligations, pay subcontractors, and finance them;
- The contract's promises have been fulfilled.

Additionally, some inquiries to make throughout the project planning stage to help reduce hazards might be:
- Are important phrases defined, such as "substantial completion"?
- Have the permitted and prohibited costs been identified?
- Does the contract include clauses allowing for the evaluation of supporting documents (such as invoices from subcontractors, time logs, calculations of the payroll burden, etc.), as well as other record access?
- Are there any exact delivery dates?
- Are the fee calculation formulae and contract pay rate schedules precise and clear?
- How does the prime contractor's financial stress test look?

The compliance project team should schedule time for attending ongoing operational meetings for construction. It's important to establish guidelines for the compliance team's comments to the contractor and construction project manager at your company. Additionally, established protocols should be followed.

Examine the first pay request
This is the algorithm you should follow:
- Make sure your math is correct.
- Verify the burden calculations and pay rates.
- Compare the pay request's labor and equipment billing amounts to the relevant supporting paperwork.

Despite being a rudimentary audit, this activity does serve to alert the prime contractor to the fact that certain areas would be examined and that the contractor's evidence must support the amounts asked, laying the groundwork for further pay request documents.

Where in the process are the important internal controls?
Four important parties are involved in any significant building project:
- Owner's representative (rep) or the project manager from your business;
- Owner of internal controls;
- Designer of a project or architect;
- General contractor or construction manager.

Owner roles and internal controls duties
The internal control review function permeates nearly every phase of the process, even if job duties vary by position throughout the project based on the project activities. A primary project construction risk is addressed or mitigated by each control in the team. The management will feel secure knowing that project risk is being assessed, documented, tested, and reported because this continuous monitoring procedure is the most comprehensive and will produce the highest degree of outcomes.

Control of expectations
Budgeting audit hours at 0.001% of the cost of the construction project is the industry standard. A $50 million project, for instance, needs 500 audit hours.

Like project management, engineering services, and building supplies, the cost of the construction audit is a capitalized project expense. The cost of a construction audit may be offset in part by a number of funding methods, such as:
- Adding the expense to other building expenses;
- Cost recovery from facilities management;
- Budgeting for the expense in the yearly internal audit budget.

Large construction projects will benefit from increased certainty, comfort, and risk mitigation when a compliance team is used as part of the construction audit process. Increased use of construction audit procedures will, on the continuum scale, provide you more confidence that the cost side of the equation has tighter controls and that those controls are being used to your organization's advantage.

You should anticipate excellent outcomes regardless of whether your firm uses internal audit resources, gathers a team of employees, or contracts out these services to a construction audit specialist.