Analysis on the Cost Management of Construction Enterprises Huihong Feng 1, a, Yu Chen 2,b

Transcription

1 Applied Mechanics and Materials Vols (2011) pp Online available since 2011/Jul/27 at (2011) Trans Tech Publications, Switzerland doi: / Analysis on the Cost Management of Construction Enterprises Huihong Feng 1, a, Yu Chen 2,b 1 School of Civil Engineering and Architecture, Southwest Petroleum University, Chengdu, Sichuan, , China 2 School of Civil Engineering and Architecture, Southwest Petroleum University, Chengdu, Sichuan, , China a fenghh163@163.com, b @qq.com Keywords: Construction stage, Cost management, Active control, Passive control. Abstract. The cost management for construction enterprises is an important link of whole process engineering cost control in project construction. This article elaborates the details and procedures of the construction enterprises cost management in the construction stage. In the paper, it will be divided into three steps which are the stage of preparing, implementation and completion of project, and construction enterprises will separately use the methods of pre-control, control in process and afterwards control in each step for the cost management. Introduction As unceasing development and improvement of China's market economy, the competition of construction market is getting fiercer.in this situation, the construction enterprises would find the most effective way being enhancing their management of costs in order to survive and develop themselves. Cost management is a crucial part for construction enterprises to achieve comprehensive management of their projects, which runs through the phase of the preparation, implementation and final acceptance of the entire process.to ensure cost management to achieve maximal profits, the construction enterprises should adopt the method of active pre-control, dynamic management in process, and analysis and evaluation of afterwards to implement cost control in whole process. The Active Pre-control in the Construction Preparation Stage Pre-control is a kind of active control, and is the control of the future, but also is the most effective means of cost control. Therefore, in the construction preparation stage, construction enterprises should be based on the existing experience of cost management and use some methods that cost forecast, preparation of construction scheme, development of a cost management system and planning of construction budget and so on, to ensure the globality for the project preparation in the cost control. To Forecast the Cost Comprehensively and Accurately. The cost forecast before project construction includes construction enterprises forecast the cost which the enterprises spent in the bidding, the consumption of labor, materials, machines and the cost of administrative management in the construction. In addition, it is necessary to consider the cost of various changes and risks which possibly happens during the construction. Then, construction enterprises can estimate scientifically the level of future cost and the possible growing trend through using the cost information. Therefore, the construction enterprises should forecast cost as thoroughly and accurately as possible before the construction. It requires construction enterprises seriously read up design drawings, the bidding documents and the contents of contract, in view of the weak link strengthen the cost management, and overcome blindness and improve foresight so that they can reduce the cost, improve the quality and accelerate the construction period. To Compile the Reasonable Construction Organization Design. It usually appears the phenomenon of inappropriate personnel assignment, material wasting, and the low utilization rate of mechanical equipments on the construction site. Therefore, the reasonable construction organization design is significant for engineering project management. The construction organization design All rights reserved. No part of contents of this paper may be reproduced or transmitted in any form or by any means without the written permission of TTP, (ID: , Pennsylvania State University, University Park, USA-26/02/15,18:49:54)

2 Applied Mechanics and Materials Vols should organize materials, machines, construction methods, labor and technical measures orderly on the basis of saving cost, and arrange reasonably paragraphs and lap of the construction and deploy responsible construction site to ensure civilized and secure construction, make full use of the construction site and manage the construction activities scientifically in whole process. That a successful construction organization design is a reliable guarantee of reducing the project cost, improving engineering quality, accelerating project progress and preventing accident. To Establish the Responsibility System of Cost Control. Project manager department is an important department to complete construction tasks. In the process of establishing organization, first of all, it is necessary to confirm the core status of project manager and as the project director, project manager should be responsible for all economic activities of the project after winning the bid; secondly, construction enterprises should establish and improve various regulations and management system, establish the account of cost, confirm clearly responsibility, right and interest of each department and stuff, improve cost control consciousness of all stuff, establish award system so that it plays a full part in cost management, realize the evaluation connecting with personal interests, and then ensure putting the cost control measures into effect. To Compile the Construction Budget. The effect of cost control can reflect in the "two calculations" which refers to the construction drawing budget and construction budget. Construction budget is the real reflection of actual cost. In order to compile accurate construction budget, enterprise quota must be compiled before the start of the project according to the level of enterprise technology management. Usually, the unified quota on the market only reflects social average level. But enterprise quota is fixed according to enterprises specific circumstances and referring to the level of state or regions, and it reflects enterprises advanced level. In order to reflect the actual cost and control the project cost in construction process, the enterprises should compile construction budget, and constantly connect the internal quota data, and use this data as the basis of compiling construction budget and two calculations contrast so that they can lay a foundation of engineering settlement. The Dynamic Management in the Implementation Phase of Construction Intermediate control is a kind of dynamic control, and is the implementation stage for the adjustment of deviation in plan, but also is an ignorable management in the process of cost control. Therefore, in the construction preparation stage, construction enterprises should be based on the implementation of the project, and have the coordination management of the main construction material, construction machinery and technology management by personnel, and construction contracts, quality and safety and so on, then combined with the results of cost accounting, analyze the situation of project implementation about cost control, and correct the deviation timely. The Cost Management of Construction Materials. The cost of construction materials accounts for 65% to 75% of the total cost which is the focus of construction enterprises to control cost, and there are great potential savings. The cost control of construction enterprises should start with the choice of material suppliers and the surplus of material consumption. Firstly, construction enterprises should select suppliers which have a less freight, good quality and low price of supply unit, and establish long-term relationship with such suppliers. For materials which has a high unit price and large quantity demand, tendering should be considered in the procurement, thus, procurement become standard and cost of materials is reduced by reasonable competition; on the part of material consumption, before the procurement of materials, scientific and reasonable plan is necessary, so the material department can procured material according to the plan, when materials approached, strict acceptance is required to ensure the quantity and quality of construction materials. Otherwise checking of the factory certification and other necessary information is necessary. Meanwhile, construction enterprises should strengthen the site management, make material procurement and supply in strict accordance with project management, establish limits picking system, and achieve oddments-recycling to avoid material waste. After all, in order to effectively control the cost of materials, construction enterprises make checks at all levels planning, procurement, inspection, storage, recipients.

3 442 Frontiers of Green Building, Materials and Civil Engineering The Cost Management of Construction Machinery. The cost management of construction machinery refers to the cost occurs in the use of construction machinery, mechanical royalties and mechanical safety, demolition charges and off-site shipping, it usually accounts for 20% -25% of the total construction cost. In the management process, we must ensure that machinery and equipment has a reasonable model selection and collocation. Secondly, we must take full account of the construction work surface, construction strength and construction process, and use a machine as far as possible without affecting the overall progress of the premise, thus, improve the utilization of machinery and achieve the purpose of cutting mechanical cost. Finally, regular maintenance of construction machinery is needed to ensure the operability of machinery to avoid unnecessary losses. The Cost Management of Personnel and Technology. The construction labor cost accounts for about 10% of the total cost. Personnel and technology management is divided into on-site and internal personnel and technology management. Construction enterprises should put on-site management in the same class as internal management. Work amount of each process should be arranged according to the plan of construction progress. A reducing-expense reward could be set to control labor costs. In order to improve the labor productivity, construction enterprises ought to enhance the technological level of production workers and organization management of the crew. Management of personnel and technology should be strengthened inside the enterprise. Improve working efficiency according to the discipline of more pay for more work and thus control engineering cost. In addition, technicians should work closely with cost control personnel. Technicians, due to the restrictions caused by the characteristics of their work, often considered security and interoperability instead of economical efficiency, thus, the cost control personnel should cooperate with the technicians actively. Only the combination of economy and technology can the best results be achieved. To Strengthen the Contract Management. Contract is the important foundation of project implementation as well as project file which cost personnel should focus on. Therefore, contract management is the effective way to reduce cost and improve economic benefits. The time of contract management should be from the date of contracts negotiation until the end of the warranty period. For the engineering change during this period, contract parties should handle and confirm the engineering change price and deal with visas and claims during the process of construction in time, to ensure the settlement price of project reflects extremely the actual situation of construction site and to guarantee the benefits of construction enterprises. To Strengthen the Cost Accounting. Actual cost accounting of construction project is a basis of the cost analysis and evaluation. Project staff should account for various happened cost during project implementing, and cost personnel should submit the project s image progress to their higher authorities in the end of the month to report the actual progress in the month and the actual consumption of labors, materials and machines, so that enterprises can know the situation of cost change at any time, compare the actual cost with budget cost and analyze their difference, find out the causes, formulate the corresponding measures for problems and strengthen cost accounting of construction project. Therefore, the cost accounting has a positive effect to reduce cost and improve economic benefits of construction enterprises. The Ex-post Analysis and Assessment in the Construction Acceptance Stage The ex-post control is a kind of passive control and a method which works with the active control, and it is also an inevitable and necessary means of the cost control. Therefore, after the completion of works, construction enterprises should finish the data treatment timely which is about the engineering changes and visas, and then summarize achievements and deficiency, complete the cost assessment and cost management information through the completion settlement and cost analysis. To Complete the Completion Settlement. The completion settlement of project is an important index to evaluate the economy of construction enterprises. After the completion of project, construction enterprises should actively prepare the related economic technology documents, engineering change visas and claims report of each stage. Meanwhile, construction enterprises

4 Applied Mechanics and Materials Vols should arrange and submit relevant completion acceptance materials on the basis of contracts, and complete the completion settlement timely to ensure that construction enterprises carry the cost management through to the end and be helpful for capital returning timely. Thus, construction enterprises can reduce internal operating cost. To Contrast and Analyze the Cost. The ex-post analysis of project cost is that construction enterprises compare the real work quantity and consumption of labors, materials and machines, etc with budget cost to know the changes of cost. Then according to analyzing the main economic and technical indexes by deviation analysis, construction enterprises will discover problems in cost management and summarize the fluctuation rules of cost, and gather experience so that they can adopt more reasonable, more scientific and more effective method to control the cost in the future. To Assess the Cost. After the completion of project, construction enterprises should compare the actual indexes of cost with plan s, and assess them in accordance with the related regulations of project cost controlling responsibility system, and evaluate the completion situation of construction project cost plan and the performance of each responsible person, thereby give responsible persons corresponding rewards and punishment. Through the assessment of cost, enterprises will let their workers understand the discipline of reward and penalty, so that they can mobilize effectively every worker working hard in his job to finish the cost target and achieve the goal of saving and controlling the construction cost. Summary The cost management of construction project is a complicated system working and needs all workers participating, while it runs through the whole process of construction and needs enterprises adopting the scientific management method. Then through pre-control, control in process, afterwards control, enterprises can strengthen the calculation and control of the project cost in all phases of construction, and can realize the goal of saving and reducing the construction cost. Only in effective cost management, construction enterprises can ensure to get the best economic benefits while the targets of quality, progress and safety are reached, and lay a good foundation for the sustainable development of them. Acknowledgment The authors acknowledge the National Natural Science Foundation. China (No ) for financially supporting this research. References [1] Dai Jiashui, Concern with Project Investment Analysis and Cost Control Measures, Sichuan Building Materials,2010(2): [2] Zhang Jianwei, Yan Qingmen, Research the Control and Management of Engineering Cost Management, Contemporary Economy, 2009(12):76-77 [3] Zhu Genfa, The Methods and Measures of Construction Project Cost Control, Engineering and Construction, 2009(23): [4] Wang Enmao,Liu Xiaojun, Study of Construction Project Cost Management Mode, Building Technology, 2005(36): [5] Ren Hong,Zhu Lianbo, The Status Analysis and Countermeasures of Construction Enterprises Cost Management, Construction Economy, 2005(12):68-70

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