Steel prices are increasing. Can we still control construction costs?

In the monthly review of my Real Estate client recently, we observed that steel prices have increased by almost 50% in the last two months. As evident from the following article, this factor will certainly increase construction costs and reduce profitability.

Realty firms may witness margin shrink by 4-6 due to steel price rise – https://m.hindustantimes.com/real-estate/realty-firms-may-witness-margin-shrink-by-4-6-due-to-steel-price-rise/story-PPEx9nfHItzxzar3idWc6O.html

But can we still control the construction cost at the desirable levels? The answer is Yes.

We can control cost using following 3 ways,

  1. Do detail estimation & budgeting & then monitor cost using technological solutions – If construction budget is available then monitoring & controlling construction cost is easier using products such as ERP, Dashboard, or advance Excel. Budget preparation and cost controlling is a specialised job.
  2. Control project delays – A single day delay can cause a loss in lakhs and crores. We should be able to control delays due to reasons within our control – timely availability of material, manpower, drawings, etc. By making smart use of technological products such as Microsoft Project or Primavera, we can certainly avoid delays. Few monitoring techniques can be useful.
  3. Avoid Rework – The cost of quality can increase substantially if construction is not up to proper quality standards. Use preventive techniques OR Quality Assurance Techniques, to prevent or reduce defects and hence rework.

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