Cost Management Based On Lean Construction

Lean Construction is a new construction management paradigm, and particularly suits for complex, uncertain, and quick projects. It applys the philosophy and techniques of Lean Production to construction industry , which causes tremendous change of project delivery system, and in turn leds to the revolution of management concept, management theory and management technique. This also brings forward a challenge and an implication for traditional cost management. Therefore, to develop a new cost management system based on Lean Construction is currently an important research for Lean Construction. This paper first intruduces the theory of Lean Construction, and deeply analyzes what challenges are put forward by Lean Construction for cost management. It indicates that traditional cost management merely implements activity centered contract management due to the inadequacy of its conceptual base, thus causes many problems of cost control, such as uncertain and local optimizition and so on. Then this paper discusses potential conflicts lying in cost plan, cost control, cost accounting and cost analysis, then put forward the implication of Lean Construction for cost management. This paper suggests that cost management should support Lean Construction in three dimensions: design, construction and the whole value stream. After that, it discusses corresponding cost management methods, and the applicability of every method to Lean Construction. Furthermore, This paper proposes a new cost management system framework to support Lean Construction by integrating these management methods and technique. As to the study of application, this paper mainly discusses the method of Process Oriented Cost Control , analyzes its flow chart and key steps, and illustrates its application in order to prove its effectivity and feasibility. Process Oriented Cost Control is only one part of cost management system, other parts still need further study.