A Study On Cost Management Of Air Conditioning Project Of Jilin Power Supply Company's Office Building

The development of project management in China commenced from the contact of project management method in the early period of 1980's. Although with only twenty years'history, the application of the project management methods brings big impact on the field of investment and construction. In practice, project management technology really plays an important role and brings good effect.Project management develops rapidly in China although it appeared not for a long period. Project cost management, as one field of the project management; its practical effect does not reach a satisfactory level in some industries, especially in some state- owned industries or enterprises. In some enterprises, backward cost management ideas formed for a long period are difficult to be removed in short period of time. China has joined WTO for eight years. With widely opened market from depth and width, and with the speeding-up steps of Chinese economic globalization and global economic integration, the market competition becomes more and more violent. To improve the level of project cost management is not only the need of continuous development of enterprises, but also necessary choice of success of the enterprises under market competition.Under such economic background, it is full of significance to study the problems existing in project cost management of private enterprises featured with strong state-owned enterprise characters. The issues of these enterprises'project cost management are representative, and their solutions are also important references for other companies of the same industry.This paper puts forth the solution of the issues of project cost management, and builds a low cost management system to counter high cost through studying the current situation of project cost management of private enterprise that is born from state–owned construction company and through studying issues existing in the project"Air conditioning project of Jilin Province Power Supply Company's Office Building", in order to ensure that the company has core competition ability to win the bid. This paper is divided into four parts:In the first part, the first chapter of this paper expounds the development situation of project cost management theory at first, and this paves the way for thorough study of issues of specific project cost management later. Then the paper describes the current situation of the company's project cost management: the concept of company's cost management is behind the time; in-full competition in the industry restricts the company's cost management; staff's weak awareness of cost; experiences and methods of project cost management can not be accumulated; lack of the cost management personnel with comprehensive ability; project materials'price is difficult to control; lack of communication between departments, and so on. Then the current situation of cost management of the air-conditioning project of office building of Jilin provincial power supply company has been studied, and it is found out that the cost management of company projects still has a lot of management problems, specifically in the following main aspects: lack of plan for the cost of construction projects; cost management of construction projects lacks dynamic process control; post goal cost does not exist; no cost accounting and cost analysis; the responsibility and right during the cost management are not in place; controls of quality and price of project materials are not effective; procedure of materials in and out of storage is not complete; the procedure of materials management is non-standard, on-site construction management is not scientific, situations of materials wasting and losing often happen, and so on. Finally, in view of the present situation of project cost management of the company and problems arising from project cost management in project under construction, the necessity of solving the problems of project cost management is put forth. Firstly the second part introduces the constitutes of the project costs, which are divided by time, elements and nature; then classifies the cost of power supply office building's air conditioning project according to the time, and the costs include the project start-up costs, project design and plan costs, cost of the project implementation, end cost of the project. This paper mainly studies on the project implement cost, and project implement cost composes equipment and material cost, labor cost,machine leasing fee etc. The costs constituted to the electric power air condition project then are analyzed, the main analysis objects are: air-conditioning equipment cost, the machine fee, the machine tool usage cost, labor fee and material cost. This part mainly analyzes the material cost from purchase link, the conveyance link, stock link, usage link. Through analysis, main reasons of the high project cost are expounded. In view of the current project cost management's problems in company, the paper puts forward the most effective methods to solve the project cost management problem, such as building up the company project cost management system, carrying out the project cost process management, carrying out the project cost process dynamic control etc.In the third part, the purpose and the principle of the establishment of the project cost management system is introduced at first. Then steps and implementation of the project cost management system are introduced. Project cost management system is built in two steps: first step, the establishment of the organization; the second step, make the goals, regulations and implementation details of all levels. Implementation steps of the project cost management system: to strengthen the organization and leadership; to strengthen cost management system and quality control; to carry a regular review and keep continuous improvement; to strengthen the construction project cost assessment. In the end, the procedure control of construction project cost management is introduced. Usually the construction project cost management is divided into six inter-related links, that is, cost forecast, cost plan, cost control, cost check, cost analysis and cost assessment. Through the management of project cost, all elements during the project process will be operated in accordance with the certain objectives, and the actual cost of the project is scheduled in the scope of cost plan.In the fourth part, this paper introduces that the controlling of the construction project cost is the major measure to reduce the cost of the projects, and how to establish the concept of cost control. First the content and principles of the cost controlling are introduced; the project cost control can be divided into: pre-control, middle-term control and afterwards control. Middle term control is mainly researched in this paper. According to the elements of the project cost during the construction process, middle term control will be divided into equipment and materials cost controlling, labor costs controlling; machine and equipment using fee controlling, measure costs controlling. Main principles of the project cost controlling include the minimum cost principle; whole cost control principle; dynamic controlling principle; the project objectives control principle, and so on. Secondly, the measures and steps of cost controlling are introduced. The basic methods of controlling of material costs are as below: to control the expenditure by construction drawing budgets; to control the consumption of material resources by construction budget; to control project cost by tracing cost and project progress. The procedure of the project cost control is to break down the cost of the budget, to determine the plan cost, to carry out cost control, to implement cost check, to organize cost analysis. Then discussed the project cost deviation control, the basic procedure of cost deviation control is to form cost standard, to supervise the formation of cost, and to rectify deviations in time. Measures to realize the control process are also introduced; specific control measures regarding the procurement of materials are especially put forth. In order to strengthen the management of materials procurement, and control the expenditure of material procurement expenses, the company should establish internal control system for the procurement of materials. Finally, this paper tells us that we should set up the idea and concept of cost-effectiveness meanwhile strengthening cost control, to study the control of project cost from a broader aspect, and how to achieve project profit maximization.