Cost management: intervening rather than recalculating

The principle from which everything follows: costs can only ever be a reflection of the design in hand. Changing the costs therefore requires changing the design.

From this follows what cost management is not. The distinction has real consequences in practice.

Not lowering allowances without a design change. Reducing an allowance while quantity, quality and method stay the same is not management but a deferral of the problem.

Not shifting between cost groups. That changes the presentation, not the costs.

Not consuming the contingency. A stated contingency covers a named risk. Using it to absorb a realised deviation leaves that risk uncovered thereafter.

Every genuine management measure therefore touches the schedule of accommodation, the quality, the construction, the technical standard or the programme. A measure touching none of them merely moves amounts about.

The effect of an intervention and its cost move in opposite directions. The later it occurs, the smaller the effect and the higher the cost of the change itself.

Phase	Most effective levers
Briefing	schedule of accommodation, area requirement, use concept
Concept design	massing, compactness, storey count, cellar
Developed design	construction type, spans, facade build-up, plant strategy
Detailed design	execution types, material choice, detail solutions
Preparing procurement	scope of procurement packages, alternative items
Procurement	evaluation of tenders, negotiation within permitted limits
Construction	effectively closed, every change generates variations

The first two rows carry the greatest leverage and are used least, because the cost determination is at its least accurate at that point. That is the real contradiction of cost management: influence is greatest where knowledge is smallest.

In practice it follows that an early determination with a stated range is more useful than a late one with apparent precision. The early stages are covered in cost framework and cost estimate.

One special case deserves mention, because it works differently from mere reposting: deliberately shifting effort between cost groups at an unchanged total. It changes the distribution of cost over time rather than the total.

An example: heavier insulation of the envelope raises cost group 300 and reduces the effort for heat generation in cost group 420. A more elaborate ventilation system raises cost group 430 and may reduce requirements on other elements.

Such shifts are genuine management, because the building changes. They can be assessed, however, only where the determination is finely enough structured: at the first level they cancel out within building cost and remain invisible.

For the client they are moreover only assessable where the effect on operation is considered alongside. Costs in use sit outside DIN 276 and are covered in the article on distinguishing the standards.

The standard expressly provides for testing the feasibility of a cost target before it is fixed. This is the most effective contribution of cost management and sits ahead of management in the narrow sense.

The reason is simple: a target that does not fit the schedule of accommodation and the standard cannot be held by any management measure. Agreeing it nonetheless means the later overrun results not from inadequate management but from the agreement itself.

The test covers three questions:

1. Do schedule, standard and target fit together, measured against benchmarks from comparable projects?
2. Which cost groups does the target cover, and is the client aware of the remainder?
3. To which price date does it refer, and is price movement up to procurement accounted for?

Where the quantities do not fit, either the cost side or the scope side must be adjusted, and before contract. The liability consequences of an agreed ceiling are covered in cost risks, contingencies and tolerances.

Cost management is frequently described as the designer's task, which is only half right. Identifying the options and deciding on them must be kept apart.

Role	Task
Lead designer	identify the deviation, attribute causes, develop and assess measures
Specialist designers	establish effects within their discipline, set out alternatives
Client	decide on accommodation, quality, standard and programme
Project manager	coordinate the process, obtain and record decisions

The third row is decisive. Every effective management measure touches characteristics of the building on which the client alone decides. A designer who removes an area or lowers a standard without that decision having been taken exceeds their role and creates a risk of their own.

In practice: the designer supplies decision papers, not decisions. A paper is complete when it states, for each measure, the saving, the effect on the building, the effect on the programme, and the date by which the decision can still take effect.

That last entry is the most frequently missing and the most important, because a measure resolved after that date loses its effect and generates redesign costs instead. Measures resolved after that date no longer take effect.

Where it becomes apparent that the costs determined will be exceeded, the client must be informed without delay. This duty is standard in German design contracts and is taken seriously by the courts.

It is simultaneously the trigger for management, since the designer does not decide about the building. They identify the deviation, propose measures to address it and put the decision to the client.

A four-step sequence follows for practice. The steps must be taken in that order.

1. Identify the deviation and attribute it by cause.
2. Inform without delay, stating amount, cause and when it became apparent.
3. Propose measures, with their effect on accommodation, quality and programme.
4. Record the decision, including a decision to do nothing.

The fourth step is the most frequently skipped and, in a dispute, the most important. A recorded client decision to accept a cost increase shifts the attribution.