Construction cost codes explained in less than 2 minutes
For our first BuilderChat episode with Senior Industry Specialist Cinthia Gil, we dive into the world of construction cost codes. Tune in for a quick recap of what they’re are all about. We’ll highlight their role in cost estimation, budgeting and cost control in construction projects and how each stakeholder group can directly tie their work back to them.
What is the purpose of cost codes?
Cost codes are used to facilitate cost estimation, budgeting and cost control in construction projects. They provide a clear breakdown of expenses, allowing stakeholders to track spending on every aspect of a project.
How is each stakeholder group using or influencing cost codes?
During preconstruction, estimators assign how much money they think will be spent on different cost items, each associated with a respective cost code. During construction, project managers manage the budget and spend it on cost factors such as labor, materials and subcontracted work. All spending is categorized into their respective cost codes. Finally, accountants can easily manage invoicing and billing as all line items tie back to their preset cost code.
As a result, at the end of a project, stakeholders can identify which cost codes were over or under budget. This provides insights into where to make improvements for future projects.
Let’s recap some of the key learnings
- Cost codes play a vital role in construction projects by facilitating cost estimation, budgeting and cost control.
- They provide a clear breakdown of expenses, making it easier to track spending on every aspect of a project.
- Different stakeholders, including estimators and project managers, use them to manage and control costs.
- Cost codes provide stakeholders with categories to evaluate the budgeting and spending on a project. This evaluation allows teams to identify areas for improvement.
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