Abstract
Managing cost is an integral part of any engineering project. The impact of overspending can be significant in both private and public sectors. Despite better cost management systems and training, major projects are still suffering large cost overruns. In this article, the author examines the impact of how we think and the project environment on how we manage cost. From the early profit motive, or budget ceiling, to the delivery pressure during construction, managers are often pushed either to reduce budgets or spend unwisely. Contracts such as rates-based design can encourage the wrong behaviours and increase cost dramatically. There is no single answer. We need to consider how our thoughts affect our behaviour and look at the bigger picture of the overall (business) project beyond a short-term cost issue. Communication is how we convey are thoughts, so needless to say it is vital to effective cost management.
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