April 2025
Reining in construction costs is a persistent challenge, made all the more unwieldy by the broad range of factors that drive them up. These factors include things like scope creep, material pricing volatility, rising energy costs, labor shortages and supply chain delays. Layer on shifting international trade policies and the pressure on construction costs only intensifies.
No matter the cause, the impact is the same: construction managers must constantly contend with growing cost control challenges.
This becomes especially problematic once a project is underway, as the execution phase tends to bear the brunt of these uncertainties.
It can feel like an endless game of Whac-a-Mole. Sure, addressing unexpected or escalating costs as they pop up helps, but it’s not enough—especially with so much financial risk at stake. Getting ahead of these cost increases before they impact the budget calls for a more proactive approach—one that leverages technology to provide deeper insight and control.
Construction managers can use these tools to their advantage in several ways:
- Track and manage escalation with real-time cost monitoring
- Forecast and mitigate future cost risks with predictive analytics
- Combat price inflation with digital procurement platforms
Track and Manage Escalation
The dynamic nature of construction costs makes it hard to stay ahead of budget risks—which amplifies the value of automated real-time cost-monitoring tools.
These tools give construction managers a continuous view of how each project cost responds to internal and external factors—and, more importantly, why. Is unplanned overtime adding up because crews are short-staffed? Are material prices spiking due to supply shortages? Is critical equipment delayed or underperforming? Catching these issues early can mean the difference between staying within budget and scrambling to keep it from snowballing.
Here’s how real-time cost monitoring helps:
Respond faster with immediate notifications. How many times has a construction manager thought, “If only I had known sooner?”
Real-time cost monitoring eliminates those “too late” moments. The moment a cost exceeds a predefined limit, managers get an alert—no being caught off-guard, no last-minute panic.
This instant awareness allows them to dig into what’s causing the variance, figure out the impact and act fast to keep things on track. When that happens, budget overruns become less frequent—and so do tough conversations with project owners.
Prevent escalation with early issue detection. Immediate notifications help managers react in real time, but what about catching risks before they turn into problems? That’s early issue detection.
The difference is timing. Instead of just responding to cost spikes, early detection helps managers spot trends before they become serious budget concerns.
Dashboards are one of the most effective tools for catching cost issues early. They turn raw project data into clear visuals, making it easy to see how costs are performing. Need just the basics? They track planned versus actual costs and resource allocation with simple graphics. Want a more detailed analysis? Dashboards can tap into earned value management (EVM) metrics, offering a deeper dive into cost variances and their root causes.
Rather than just reacting to individual spikes, dashboards reveal patterns that signal underlying cost issues. This gives managers more time to investigate root causes, adjust spending strategies and keep budgets on track—preventing small concerns from turning into major budget shocks.
Forecast and Mitigate Future Cost Risks
Given that construction costs always carry some unpredictability, managers know to expect volatility—and the occasional blindside. That makes staying ahead of cost swings and maintaining budget control more challenging.
The key is knowing what might change, when it could happen and by how much—so managers can focus on the cost risks that truly demand attention. Underestimating costs from the outset is a mistake that can come back to haunt a project.
Staying ahead of these cost risks requires greater accuracy and deeper visibility. The answers lie in the data.
Predictive analytics makes sense of that data. It draws from not just the massive volume generated by megaprojects, but also external factors, industry benchmarks, historical project data, and past spending patterns and cost trends. Better data means better predictions; the more data there is, the more accurate those predictions are.
This practice uses different models to perform its analyses. For example, regression analysis is ideal for looking at how particular variables impact costs, while Monte Carlo simulations help model potential outcomes of various contingencies. These models help answer questions like: What can be expected in terms of material price hikes due to supply chain glitches? How might wage increases driven by skilled worker shortages affect the budget? What regulatory changes could trigger higher project costs?
Armed with data-driven answers to those kinds of questions, construction managers can create a risk-adjusted, reality-based budget. They also can prepare more focused strategies to mitigate the identified risks. That might mean securing fixed-price contracts before costs rise, adjusting timelines to avoid foreseeable labor shortages or reallocating contingency funds to cover the more volatile risk factors.
With predictive insights, construction managers can stay in front of cost risks and make more informed decisions that improve cost control.
Combat Price Inflation
Procurement can significantly impact a project’s budget, especially in large-scale construction where inefficiencies or poor oversight can drive costs up. Transitioning to a digital procurement platform designed for megaprojects streamlines complex processes and elevates procurement’s strategic role in mitigating cost escalation.
Here’s how leveraging digital procurement can help control construction cost escalation:
Secure competitive pricing to prevent cost inflation. With access to real-time pricing from multiple suppliers and the ability to centralize the bidding process, construction managers can compare bids, negotiate favorable terms and avoid paying inflated prices.
Automate procurement to reduce costly delays. Automation improves operational efficiency by eliminating bottlenecks that slow approval processes and stall orders. Ensuring timely purchases reduces the risk of material shortages and price hikes.
Gain real-time cost visibility to adjust spending proactively. Control starts with visibility into ongoing costs and spending behavior. Spotting fluctuations as they occur affords construction managers time to modify spending before an overrun happens.
Technology Empowers Control over Construction Cost Escalation
Controlling construction cost escalation is one of the most pivotal responsibilities of a construction manager, making technology adoption—especially solutions built for the complexities of megaprojects—a smart strategy for staying ahead of rising costs.
Real-time cost monitoring catches issues early, allowing swift intervention to prevent overruns. Predictive analytics forecasts potential cost fluctuations, enabling proactive budget adjustments. And digital procurement optimizes bidding, approvals and cost tracking for a more efficient purchasing process.
Even though uncertainty around cost escalation will always be a part of construction, technology equips managers with the visibility, predictability and control needed to mitigate financial risks and keep projects on budget.
What technology solutions most interest you? If you’d like to explore options, reach out to Contruent. Its lifecycle cost management solution, Contruent Enterprise, integrates the above capabilities to help companies optimize their cost management strategies throughout their projects’ lifecycle. Learn more or request a demo today.