Study of Cost Control Techniques Used in Construction Industry and Their Impact to Minimize Cost Overrun A.G.D.Premalal 1 , R.K.P.C.B. Mudalige 1 and S.N.Malkanthi 1 1 Department of Civil and Environmental Engineering Faculty of Engineering University of Ruhuna Hapugala, Galle SRI LANKA E-mail: snmalkanthi@cee.ruh.ac.lk Abstract: Construction industry plays an important role for the development in any country. Individual project success depends on how it can achieve project objectives, which is to complete the project within the estimated budget, to the required quality within the pre-determined duration. For that planning of the project as well as the monitoring is essential. Cost overrun is a major problem encounted by many of the contractors which contribute to less secured profit for the contractor and many more problems for all the parties involved. To solve those problems, good practice of cost control techniques is essential. So identifying cost controlling techniques and their impact to minimize cost overrun is very important. This study was conducted through a questionnaire survey considering C1 to C5 grade contractors. Collected data were analyzed by converting those in to quantitative values using percentage analysis and weighted score analysis. The analyzed results show the frequently used cost controlling practices and importance of those practices to minimize the cost overrun. That is it leads to minimize over budget, overhead and profit margin. Finally it was suggested to CIDA(ICTAD) to promote contractors to use cost controlling techniques, by conducting training, awareness programme etc. In addition it was suggested to include some of the documents as mandatory documents. Keywords: cost overrun, cost controlling techniques, impact to project budget. 1. INTRODUCTION Project planning cannot be completed satisfactorily by only planning and scheduling. Project controlling which consists of project monitoring and updating, is the other important stage to be carried out to accommodate the dynamic nature of construction work. Without a proper control, even a well- planned and scheduled construction system can lead to problems, delays and cost overruns. In general most (if not all) construction projects experience time delays and cost overruns during their implementation phase. Cost overruns are considered as one of the most critical issues during the execution of construction projects. Project control includes both progress control and cost control. This research mainly concentrates on cost control. There are various techniques available as cost control techniques that can be applied to construction projects. It is good to have knowledge of effectiveness of those cost control techniques to the contractors and how to use those techniques to minimize cost overruns. The control of project cost is not an easy task and it requires knowledge of applying cost controlling techniques. Therefore professionals in the construction industry are required to have theoretical knowledge on cost controlling techniques. Also based on the selection of appropriate method, time of applying the technique, etc. are also important aspects that project manager/ planning engineer or other related professionals should know. Therefore, use of proper project cost controlling mechanisms is a must in today’s construction industry. But the relevant bodies like ICTAD, Ministry of Construction etc. have not still make sufficient rules and regulations or include closure in the conditions of contract to overcome this problem. So this research topic is timely needed to address the above mentioned problem. With this research, it is expected to provide immense help to government and other private sectors who do not follow good monitoring programs and cost controlling techniques. 164