Cost Management adds value to Construction Management services
A significant engineering company needed a Cost Management system to support the operations of a new business unit providing Construction Management services. The Cost Management system was required to also support Procurement on behalf of the Project Owner. The Cost Management system was required to have the capability to communicate with the Project Owners' financial systems as well as the customer's cost calculation and supplier responsibility information services.
Cost Management for Construction Management services
PLM-Zone delivered a Cost Management service suitable for the delivery of construction management services. The Cost Management service was integrated into the customer's cost calculation and supplier responsibility information services. Projects can be created in the Cost Management service for different Project Owners. The integration into the Project Owner's financial system is implemented once and configured for new projects as needed. PLM-Zone and the customer jointly developed a new Procurement function for the Cost Management service.
Establishing Target Costs
The customer independently creates a new project and uploads a suitable Activity Code structure for it. The cost estimate is obtained either from the customer's cost calculation service or downloaded from an Excel file. The target estimate is formed automatically when the cost calculation data is assigned to the Activity Codes. At the same time, a Procurement Plan and Packages are created for the project.
Procurement and Supplier Management
Procurement proceeds by selecting and forming requests for quotations (RFQ) that correspond to the Procurement Package for selected suppliers. A comparison of supplier offers is made, and based on this, a recommendation for the selection of the supplier is proposed to the Project Owner. After the acceptance of the offer, a contract corresponding to the procurement package is created, and its value is added to the project's Committed Costs.
Supplier information is updated regularly through an implemented integration into the customer’s supplier responsibility information service. Additionally, the customer can evaluate their suppliers after each delivery.
Project Owner's Purchase Invoices and Actual Costs
The provider of Construction Management services agrees separately with each Project Owner regarding the integration with the Project Owner's financial systems. An integration that has been implemented once can be utilized for new projects of the same Project Owner as well as others.
Integration with the Project Owner's Purchase Invoice system allows for the transfer of invoice review process from the Project Owner's system to the Cost Management service. During the invoice review phase, Purchase Invoices are allocated to project’s Activity Codes, Cost Category Codes, and Payment Instalments.
Integration with the Project Owner's financial system enables the retrieval of Actual Costs into the Cost Management service. Accounting ledgers automatically inherit the allocation data of the respective Purchase Invoices.