It is expected that an advanced scientific method which can minimize client expenditure by managing project costs more scientifically and rationally will be introduced to the Korean construction industry.
On September 9, 2009, HanmiParsons, a leading CM company in Korea, announced it was to establish a joint venture in cost management with English QS firm, Turner & Townsend. Cost management provides detailed in-depth analysis of “project cost” continuously from the early phase of the project until completion.
Turner & Townsend is a global company operating 56 international offices with approximately 2,600 employees. It recorded a turnover of 4.3 billion won last year. In 2008, approximately 2,000 English cost management firms provided consulting services around the world.
HanmiParsons was founded in 1996, and has become a top CM (Construction Management) company, with an 80.3 billion won (based on fee) turnover and eight international offices. HP is currently ranked 16th among international CM companies, and is aiming for a 102.7 billion won turnover this year.
Chairman Kim Jong-hoon said that cost management is one of the core business services of the world construction market. This service can contribute to a successful project, satisfying or exceeding a client’s expectations. He expects cost management will play a significant role in providing competitive services to various clients, domestic and international, by creating a synergy effect drawn from HP’s accumulated CM experience.
Cost management is highly important and utilized in the field of international construction management; nevertheless, it has not become widespread in Korea. This is due to various reasons, such as problems with construction delivery systems, insufficient understanding of the importance of cost management, a lack of education for professional cost engineers, and nonsystematic accumulation. Cost management is at a rudimentary stage in Korea. Furthermore, despite demand for cost management services, client’s requirements have not been appropriately fulfilled, leading to doubts and misunderstanding about what cost management actually is.
Due to the absence of specialized cost management services, there have been many cases, from midsize private projects to large government projects, where the budget established at the planning stage has been exceeded.
The goal of cost management is to establish a project budget at an early stage and to complete the project within this budget while also fulfilling the client’s requirements. Through experience, knowledge, accumulated data and information regarding similar construction projects, it is possible to establish a realistic budget at an early stage. Continuous review allows the Construction Manager to remain in budget, as well as giving them the opportunity to suggest any countermeasures against possible cost overruns.
Consequently, it is important that specialists provide adequate and continuous information regarding project costs, and thus assisting the client with cash management. This requirement and the experience and knowledge of construction management coupled with cost management from the early phase of the project will provide the client with detailed cash flow projections.
The bid administration, contract management, claim management and project risk management of foreign cost management firms and construction management consultancies are more advanced compared to domestic circumstances, and it is absolutely necessary to strengthen the capabilities of these fields.
In foreign countries, not only in Europe and the US, but also in Southeast Asia and China, cost management services, which are known as QS (Quantity Surveyor) services, are common. Detailed studies in cost management are also being offered by many universities.
HanmiParsons will provide competitive services for various international clients by strengthening current cost management capabilities. Cost Management will become a strong core field of CM. With HanmiParsons becoming a listed company in June, it is committed to identifying and expanding new business sectors, such as through joint venture. It is expected that this will pave the way for expansion in both domestic and global markets.