A Study On Cost Control For Engineering Project In Hunan Construction Engineering Group Based On Earned Value Method

During recent years, with the national large-scale investment in infrastructureconstruction, rapid increasing of urbanization process and low-income housingconstruction, China’s state-owned large and medium-sized construction enterpriseshave experienced unprecedented development opportunities. Meanwhile, because ofthe fiercer competition in construction market, construction enterprises face manybrand-new challenges, such as macroeconomic control, real estate bubble, increasinglabor cost and risks in project quality because of the fiercer competition in constructionmarket. However, China’s most construction enterprises’ project cost managementmode is still rough and single, and its’ cost control effect also cannot reach ourexpectation, which lead to lower profit for construction enterprises because of the highproject cost. Therefore, introducing a scientific, advanced and effective new controlmethod to guide engineering cost control to promote project profitability and corporatecompetitive force is of great significance for construction enterprises.This paper creatively control engineering project cost and project schedulesynchronously through the application earned value analysis and work breakdownstructure to unify the measurement caliber of project cost and schedule, based on theearned value method, completely changing the cost control situation of cost andschedule separation, cost responsibility being not implemented in the past. This paperfirstly introduces the basic theory of project cost control and earned value method,which are the theoretic basis for the application of earned value method. Then thisstudy analyses the current status and regulation of project cost control in HunanConstruction Engineering Group, stating the weakness in project cost control in HunanConstruction Engineering Group. Based on the above analysis, this paper states theapplication principles, steps and significance of earned value method. Finally itconcludes the possible problems in the application of earned value method because ofthe poor management and the limits of the method itself. Therefore, this paper makessome suggestions for the application of earned value method in Hunan ConstructionEngineering Group to solve the possible problems.At present, the cost control status of China’s construction enterprises is far behindthe international advanced project management level. With the internationalization ofour state-owned construction and engineering enterprises, there is no doubt that project cost control competence will be the core competitiveness in the global engineering andconstruction market. However, the application of earned value method, as the one ofthe most advanced project management method, which is the internationally accepted,will significantly help our construction enterprises promote project cost control methodand cost-schedule synchronous control. Meanwhile, the application of earned valuemethod can effectively measure and analyze the cost-schedule variance, providingscientific and rational basis for cost decision and correction measure.