The Application Of Low Cost Management In Qingdao Lidong Aromatics Complex Project

Based on the theory of project management, this paper discusses in details the theory, content and application of"low cost management". At present most construction enterprises are stranded in the dilemma- "To lose a project is to die, while to get a project is on the way to hell", the application of low cost management-on-spot improvement in actual construction project management is really a way out of it. It can improve effectively the situation of high in cost and low in efficiency of state-owned construction enterprises and also strengthen their competitive advantages. It can also improve the construction enterprises'economic benefits by finding the squanderers, control of the quality and schedule and putting more emphasis on accounting procedures and methods and optimizing between quality improvement and low cost control.In phases of Lidong Aromatics Complex Project, project management tools and statistical methods have been widely and fully utilized and that had brought about a satisfied economic effect as a result.In bidding stage according to the particularity of this project that there are four separate and interrelated projects in the same place we reduced our target cost by focusing on qualification of construction personnel, reasonable resources collocation and performance of project management team, and we finally won the bid at the lowest price of the four projects. Therefore, based on the engineering characteristics we put emphasis on selection and collocation of human resources with the comprehensive consideration of single-calculated man, machine and material resources during the four stages. The work of high tech and complex procedures was controlled as challenging key quality control points by our effective quality assurance team and as to the simple work of labor-intensive technology content we decided to complete it with economical social resources instead of our available resources and to reduce costs.In the process of construction management, we need to widely control the quality, time limites, allocated cost budget and thus the crux of low cost management improvement is the control of progress, quality and cost control.We set up a control circulating program and the rate of progress was tracked in time and analyzed comparatively with the earned values, and thus the cost can only deviate within the target range.The optimal project quality cost was determined according to the statistical analysis of quality cost and excessive quality objectives and squanderers were avoided; We made quality cost analysis of total amount of quality cost and its components, constituting proportion, quality loss rate according to the induction, comparison and analysis of quality cost computation. A construction personnel data base was established followed foreign companies'experience and thus we put under control the biggest dynamic factor- level of construction operators which affects engineering quality greatly and reduced internal cost loss caused by human factors; A project execution cost target was set up and total budget estimation management was assured by optimizing the resource allocation, construction scheme, material management mode and physical quantity efficiency management. We set up an all-personnel HSE management system and define the role and responsibility of every position in the system. By strengthening their function, the main contractors improved their control over subcontractors by the means of selecting subcontractors and economic control.In the process of clearing,"Full Production Preservation"was further refined and on-spot improvement was implemented to ensure accounting work going smoothly. In this process, the information management tools and project risk management system fully played their roles and provided basic data and conditions for project improvement and in determining the correctly optimized goal.With the information management tools, we determined the information during the site construction process and the information about construction, specify the flow process of information. The project management software, self-made material software, welding software and office software formed the project information management system of Lidong Aromatics Complex Project.Establish project risk management organization system, strengthen risk identification, analysis and evaluation of the project may appear to project implementation risks for us to improve and optimize goals determine the correct provides basic data and conditions.The application of low cost management in Qingdao Lidong Aromatics Complex Project had put the low cost theory into engineering practice, effectively improved the level of management. It had set a reference for the future continuous application of low cost management in engineering projects, played a certain role in promoting the completion of enterprise management system and work procedures. Work became institutionalized, and executable. Low cost management not only promoted the enterprises market competitiveness, and effectively improved their profitability. However improper low cost management application in construction management in the project cost control sometimes may affect the product quality, misunderstanding of the concept of low cost management will cause the runaway of management and even increase of engineering cost and loss of income.Through the study, we put low cost management methods based on project management into construction project management practice, found the preliminary application mode of low cost management pattern, and also found the lacking of low cost management methods. This study has set a reference for future application of low cost management method in project management and it is of important practical significance for the state-owned construction enterprises to move away from the operation difficulties and develop well in market and establish a distinguishing system of low cost project operation.