Study On Construction Cost Control Of LINHE-FENGJING Building Engineering Project

With the increasingly fierce market competition, cost control on construction enterprises is more and more important, since It has a direct impact on the economic efficiency of enterprises and the profitability level of projects.In this paper, the construction cost control of engineering project of LINHE- FENGJING residential building have been studied,based on the theory and methods of the construction project cost control.The paper analyzed the cost variance of the work performed in the previous stage of the project,with earned value method. Identified the problems in the process of cost control and analyzed the causes via factor analysis approach and fishbone diagram . And then developed appropriate measures to improve the situation.The paper also applied pareto principle and value engineering methods,to clearly determine the focus of cost control.And from the perspective of construction cost,choose the advanced methods to effectively control the cost of labor, materials, machinery and so on. This paper provide reference and basis for the next phase of the project cost control and the implementation of corporate cost-control system.In today's construction industry, each individual situation calls for a specific approach.However, there are common guidelines that form the basis of efficient project cost control.Then ten principals are shown as below.Firstly, create cost-consciousness in the project management team. This is the most important principle. A cost-conscious project teem not only controls its own actions but also tries to influence subcontractors,vendors,and workers to make cost.effective decisions . Without this awareness , the whole cost control cycle is nearly pointless.Many of the principles discussed below are hard to implement without the basic direction of cost-conscious. Without it, project teems would probably rigidly follow existing policies and procedures without any creativity or willingness to improve . The promotion of a cost-consciousness concept is largely upper management's responsibility.The project manager is directly responsible for creating an environment that will enable project control to be properly exercised.The project manager must be a cost leader, actively encouraging project cost consciousness at all project levels.Secondly, capture data realistically in a timely Fashion.Construction projects depend on the reliable and quick exchange of information.How data is recorded, refined, and organized affects its usefulness as a snapshot of the project. This principle is also critical for bidding and budget set-up Realistically capturing information on the local market(1abor, unions, the subcontractor and vendor pool,material availability, etc.), project complexity, and possible contingencies helps to develop a competitive and profitable bid, as well as an realistic budget.Thirdly, set up a realistic budget. The importance of the budget cannot be over-emphasized.It shows the general contractor's commitment to the owner. It establishes targets ,item-by-item,to be measured against during project execution. Years of experience,accurate historic data, local market knowledge,all ability to predict possible changes,and all other relevant information combine to determine the feasibility of a budget.A comparison between the as-built cost and the original budget indicates the quality of the budget and should help with preparing the next budget.Fourthly, compare to-be-committed to the budget before It Is committed. The first quantitative measure criterion against the budget is the ability to compare to be committed to the budget before the commitment.The comparison is between resources(work hours,workers,etc.) allocation,bidding,trade subcontracting,materials and equipment purchase,direct labor hiring,and so forth. Fifthly, compare actual cost to the budget. This is the comparison most often used to measure project performance.The result is analyzed to facilitate any corrective actions.Without accurate and timely data or a realistic budget,the comparison of principles 4 and 5 is senseless. Sixthly, recognize the cause instead of the symptoms when analyzing variances. Distinguishing between the four types of causes(common, special,structural,and tampering)is critical because the appropriate managerial actions are quite different for each one.Without this distinction,management will are rarely be able to tell real improvement from merely an adjustment of the process,or tampering. In practice,management is used to treating everything as a special cause.Trying to explain the mason for the exact amount of an increase or decrease will most likely identify false causes and result in false solutions.Time,energy, and money are wasted,probably exacerbating the situation instead of improving it.Seventhly, allocating appropriate time and budget to each project task. This is illustrated by emphasizing bidding and contract negotiation for the smooth execution of later phases,by preparing a better budget to focus on a more effective comparison, and by setting up and maintaining an accurate historic database. A nearsighted focus on only local objectives instead of on the overall project goal leads to sub optimization or a short-term goal in one area being reached at the expense of other resources.Eighthly, using accumulated historic data to improve the cost control cycle. Each project, once completed and well documented,generates invaluable historic data for better management of future projects.A small amount of time spent organizing data into a meaningful formats very useful.Even during the project execution, each cost control cycle forms the latest reference material for the next cycle,and this improvement should be continued cycle after cycle.Ninthly, consider the overall cost effect of changes. Not only direct costs and indirect costs need to be considered,but also the impact costs. Changes in the project cost end schedule baselines is as much a political problem,as it is a technical problem.Tenthly, continuously improve the existing system. There is always a better system.There is always a better way of conducting business.Everyone in the project team,as well as in the company, must participate in a disciplined way.Respective to engineering project of LINHE-FENGJING residential building, this article points out the following existing problems on cost controlling based on the above principles. First, the system is unsound for not building feasible system of cost controlling. Second, the way of cost controlling is not scientific and reasonable. Because traditional way of cost controlling is used in the project, synchro and dynamic control have not been realized. Third, cost controlling has the characteristics such as arbitrariness and passivity. Fourth, cost overspending is serous. To solve these issues, corresponding improvement suggestions are described as follows. First, cultivate the consciousness of cost controlling and improve the quality of employee. Second, build a set of control system for project cost to normalize the work of cost management. Thirdly, adopt pareto principle and value engineering methods to clearly determine the focus of cost control.Fourth, realize ynchro and dynamic control.