Iii. Professional context
Project cost management consists mainly of the following six elements:
1. Cost projections
(1) cost projections are scientific estimates of future cost levels and their likely trends, based on cost information and the specifics of the construction project, using a specific methodology, and are in essence cost estimates made prior to construction。
(2) through cost projections, it is possible to select the best cost option that is cost-effective, subject to meeting the requirements of the project owner and the enterprise, and to address weaknesses, strengthen cost controls, overcome blindness and improve predictability in the development of project costs。
Cost plan
(1) the cost plan is in monetary form the production costs, cost levels, cost reduction rates and the main measures and planned written programmes to reduce costs of the construction project during the plan period。
(2) it is the basis for establishing responsibility for cost management, cost control and accounting for the construction project, it is the guiding document for the project's cost reduction and the basis for setting target costs. Cost plans can be said to be a form of target cost。
3. Cost control
(1) cost control is the strengthening of the management of factors affecting the cost of construction during the construction process and the adoption of effective measures to eliminate loss and waste in construction by strictly limiting the consumption and expenditure actually incurred during construction to the cost plan, by readily revealing and providing timely feedback, by critically reviewing whether the costs meet the criteria, and by calculating and analysing differences between actual and planned costs。
(2) cost control should run through the entire process of the project from the bidding stage to the completion of the acceptance and inspection, which is an important element of the overall cost management of the enterprise. In the course of construction of the project, there is a need to exercise effective control over the process by which actual construction costs are incurred, based on the principle of dynamic control。
(3) the contract documents and the cost plan are cost-control objectives, and progress reports and work changes and claim information are dynamic information in the cost-control process。
(4) cost control procedures reflect the principle of dynamic tracking control. Cost control reports can be produced separately or a comprehensive progress report can be produced, as needed, in conjunction with progress, quality, security and other progress reports。
4. Cost accounting
(1) cost accounting consists of two basic elements:
First, the consolidation and allocation of the construction costs in accordance with the established cost and expenditure range, and the calculation of the actual incurred construction costs
Second, the total and unit costs of the construction project are calculated on the basis of cost-accounting objects using the appropriate methodology. Construction cost management requires proper and timely accounting for the costs incurred in the construction process and calculation of the actual cost of the construction project. The various cost information provided by cost accounting for the construction project is the basis for various elements of cost forecasting, cost planning, cost control, cost analysis and cost evaluation。
(2) the cost of the work is generally accounted for in unit works, but may also be based on the size, duration, or duration of the contractual work project
The type of structure, construction organization, construction site, etc., combined with cost management requirements, provide flexibility in the allocation of cost-accounting objects。
Cost analysis
(1) the cost analysis is a cost-accounting analysis of the process of formation of costs and the factors influencing cost escalation, with a view to finding ways to further reduce costs, including the extraction of positive and negative deviations。
(2) cost analysis runs throughout the construction cost management process, using cost accounting information (cost information) for construction projects, in order to understand changes in costs compared with the target costs, budget costs and actual costs of similar construction projects, and to analyse the impact of key technical and economic indicators on costs, systematically examine cost change factors, examine the reasonableness of cost plans and, through cost analysis, provide insight into patterns of cost change and find ways to reduce the cost of construction projects in order to effectively exercise cost control. Control of cost deviations, analysis is key, correction is central, and practical measures need to be taken to correct the causes of the deviations derived from the analysis。
(3) factors affecting cost changes: external factors that are market economies; internal factors that are business management。
(4) basic methods of cost analysis: comparison method, factor analysis method, margin calculation method and ratio method。
6. Cost assessment
(1) the cost appraisal is the evaluation of the completion of the cost plan for the construction project and the performance of those responsible and those responsible for the construction project by comparing the actual cost indicators with the plans, quotas, budgets and evaluating the performance of those responsible for the project, as provided for in the relevant provisions on the accountability of the construction project costs。
(2) through a cost evaluation, rewards and penalties are provided in order to effectively motivate each employee to pursue the targeted costs in their respective construction positions and to contribute to reducing the cost of the construction project and increasing the accumulation of the enterprise。
(3) cost assessment is the actual result of measuring cost reductions and a summary and evaluation of the achievement of cost indicators。
