The role of engineering supervision in controlling project costs

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Abstract: Under market economy conditions, how to control the project cost of construction projects? Implementing full-process engineering supervision is an effective approach. As a scientific method for managing construction projects, the construction supervision system relies primarily on **policies, technical standards, quotas, contracts, etc., to monitor and control the investment, schedule, and quality throughout the design and construction phases, thereby ensuring the achievement of these three objectives. The special status of supervisors ensures the objectivity and scientific nature of their actions, as well as the rationality and effectiveness of their investment control efforts. Engineering supervision can help the owner achieve the goal of controlling project costs at various stages of construction, through scientific management and effective control. Our company’s years of experience in project supervision have shown that, to enable project supervision to play a key role in controlling project costs, it is necessary to carry out strict and effective supervision on a continuous and comprehensive basis at each stage – design, bidding, construction, and completion. Keywords: project supervision, project cost. I. Proper investment control during the design phase – Strengthening supervision at the design stage, determining reasonable design solutions and mature techniques, and reducing major design changes and alterations during the construction phase will play an important role in effectively controlling project costs. According to statistics, the phase that has the greatest impact on project investment is the design stage, with a probability of 75% affecting the project cost. If the design phase focuses on economic efficiency and is carried out with careful planning, the potential for saving investment is much greater than in the construction phase. Therefore, effective control of project costs during the design phase is the primary task for effectively preventing \"loss of investment control\". 　　Main methods for investment control during the design phase: 1. Use design bidding to select the most reasonable design solution, encouraging design firms to adopt advanced technologies in order to reduce project costs ； 2. Evaluate the overall layout plan and individual design plans for the preliminary expansion design; by calculating, comparing, and analyzing technical and economic indicators, select the most reasonable plan ； 3. Implement limited-design approaches. Throughout the design phase, integrate technology and economics, adhere to the principle of \"calculate first, then design,\" and allocate funds where they are most needed. Completely change the current poor practice in the design process, where no calculations are done and the final cost is only determined after the design is completed. 　　Experts say that with the involvement of project supervision in the design phase of a project, 80% of errors can generally be avoided, while after construction begins, it can at most result in a 20% savings in costs. Strengthening supervision during the design phase is scientific and reasonable from the perspective of total quality management, as proactive management and prevention are key. Therefore, it is crucial to strengthen supervision and investment control during the design phase. After receiving the construction drawings, the on-site supervision team for one of our company’s projects found through estimation that the reinforcement layout for the base slab was not entirely reasonable. Following multiple discussions with the owner and the design firm, they conducted further analysis and reviews of the design calculations, and modified the reinforcement arrangement for the base slab. This resulted in a savings of 450 tons of steel, which not only reduced costs but also shortened the project timeline. II. During the bidding phase, assist the owner in selecting the best contractor. By strictly adhering to the approved design budget as a control target, prepare the construction bidding documents, draft the terms of the construction contract, prepare the bill of quantities and material specifications, and help the owner choose a contractor through the bidding process – these are the important tasks of project supervision during the bidding phase. For a certain project, our company served as the financial supervisor and was involved in the bid evaluation for the glass curtain wall. Strictly in accordance with the approved preliminary design drawings, the total cost of this project shall not exceed the corresponding cost specified in the approved design budget. The contracting agent estimated that the cost of the project would be 24 million yuan, while our company’s calculation indicated that the cost would be only 12 million yuan. There is a shortfall of 12 million yuan; therefore, we proposed to the client that first, the reasons for this discrepancy should be analyzed ； Second, it is necessary to control costs. The owner immediately held a meeting with various parties to analyze the reasons; the aluminum panels used for the exterior walls replaced the exterior wall paint specified in the initial design, resulting in a significant increase in area. Moreover, higher standards led to a substantial rise in costs. The outcome of the meeting’s discussions was to keep the cost of the curtain wall project at around 16 million yuan, while maintaining its basic appearance and functionality; the 4 million yuan shortfall would be covered by savings from the equipment contracts that have already been negotiated. III. Scientific implementation of control over quality, schedule, and cost during the construction phase. First and foremost, it is necessary to determine a reasonable contract price through bidding; meanwhile, stricter scrutiny should be applied to the qualifications of the construction teams. The quality of the construction team directly affects the quality and timeline of the project, playing a decisive role in its economic viability. At the same time, determine a reasonable price for the engineering contract. Adhering to bidding processes and determining reasonable contract prices plays a positive role in progress control and settlement during the construction phase. Supervision work must comply with the contract requirements; it is necessary to ensure, within the framework of relevant laws and regulations, that every payment related to a particular project meets the stipulations of the contract. In construction projects, the supervision engineer plays a leading role; whether the financial transactions between the contractor and the owner are accurate and reasonable depends on whether the project costs approved by the supervision engineer are fair. Contract management serves as the basis for control and coordination, as well as a legal tool for economic activities; therefore, it is very important to enhance awareness of contract management and improve contract terms. The contract must be submitted to the relevant regulatory authorities for review and notarization, in order to ensure its legality and fairness and to protect the rights and interests of both parties. The completeness of the terms and the precision of their content help to reduce contract disputes and prevent breaches in the future. Practice has shown that the project owner and the contracting party must strengthen contract management, promptly correct any issues existing in the contract, ensure its full implementation, and improve investment efficiency. As a construction supervisor, it is an undeniable responsibility to ensure the proper implementation of the contract terms. 　　The second is the control of equipment and material costs. Equipment and material costs account for about 70% of the total cost in construction projects, and they constitute the main part of the direct costs of such projects. Therefore, during the supervision process, this aspect cannot be ignored; a competitive mechanism should be introduced, and bidding processes for equipment and materials should be carried out to ensure product quality and reduce project costs. 　　Third is the control of project progress during the construction phase. Contract management involves control over three key aspects: quality, schedule, and cost. Project progress is of vital interest to both the owner and the contractor, and it is key to the successful execution of the contract. To this end, in the supervision of project progress, it is essential to focus on the gap between the planned progress and the actual progress as a key aspect of progress control. In addition to meeting the schedule requirements, the project quality and cost requirements specified in the contract must also be satisfied. The three key controls of quality, schedule, and cost are all essential and cannot be neglected. It is necessary to take comprehensive and thorough action to achieve efficient and cost-effective project construction. IV. Strict review of project settlement at the completion stage: During the project’s completion phase, the settlement statement submitted by the contractor is reviewed, an engineering cost assessment report is prepared, and a financial audit is conducted. The review of project settlement is a very tedious task, yet it is the most crucial part of project cost control. In one particular project, with a construction area of 42,000 square meters, our company conducted a thorough review of the costs submitted by the contractor regarding the pile foundations, retaining structures, basement, superstructure, as well as the overall settlement costs. The total amount quoted by the contractor was 83,200,432 yuan, while the final approved amount was 77,433,893 yuan ； Among them, for construction, the total amount submitted was 30,806,167 yuan; the approved amount was 28,267,035 yuan, and the amount reduced was 2,539,132 yuan, representing a reduction rate of 8.24%. The results of a thorough and fact-based review not only protected the legitimate rights and interests of the owners but also ensured that the construction contractors were not disadvantaged, truly reflecting the fairness and impartiality of construction supervision. 　　The whole-process control of supervision projects is an organic whole. However, in terms of the work content, it consists of several components that form a whole. Based on the distinct characteristics and tasks of each stage, it is the important responsibility of supervision engineers to adopt appropriate measures and methods to ensure that everything is coordinated properly and implemented thoroughly, thereby exercising control over the entire project construction process. Construction supervision is an intellectual-intensive service that requires a range of multidisciplinary knowledge and skills, including various technical expertise, as well as knowledge in economics and law. This demands that supervisors have the ability to control investment, manage contracts and information, and resolve economic disputes; they must also continuously improve their own qualifications and enhance their awareness of legal principles and contract management. Only by continuously improving themselves, adhering to a pragmatic attitude and a responsible mindset, and exercising strict supervision with utmost diligence, can supervision engineers ensure quality control at every stage of the construction process, thereby effectively helping the client manage the cost of the construction project.