The Research On The Design Of The Activity-based Costing Management Framework In The Construction And Installation Enterprises

In recent years, construction projects are always regarded as a unit to carry out project cost management in the construction industry in our country. Thus, it can improve the quality of the project, ensure its progress, reduce the cost and enhance the company’s economic efficiency. But in the process of implementation of the project management, the industry has a lot of accounting and cost problems. One is that most of the construction and installation enterprises are still using traditional costing and management methods. Prevalently in the enterprises there are cost issues such as cost accounting is not timely, the actual cost is difficult to precisely control, internal resources is difficult to optimize and integrate. In order to avoid the drawbacks of traditional costing methods, there is an urgent need for the enterprises to introduce a new and rational cost accounting system.By tracking and reflecting all operating activities dynamically, the activity-based costing (ABC) is a means to measure the cost of activities and objects, thus giving an evaluation of job performance and resource utilization. Its center principle is "products consume activities and activities consume resources." It takes the activities as the center, allocates the resources cost to the activities on the basis of the situation of resource consumption, then according to the activity requirement that the products and service consume, assigns the cost to the products and service finally. Comparing with traditional cost accounting methods, ABC is a fundamental change of corporate accounting for it placing the key point on activities.The structural framework of the essay is as follows:the first part is a preface, mainly presenting the background of the research and the significance of the topic, the paper’s content, innovations as well as inadequacies. The second part is a review of literatures. The third part introduces the characteristics and contents of cost management in the construction and installation companies. The forth part holds a discussion on the theoretical application of activity-based cost (ABC) in construction and installation companies. The fifth takes an example to elaborate the application of ABC in the actual projects. The last part of the essay tries to explore the implication and processes of activity-based cost management in the construction and installation companies.At the beginning, the essay briefly reviews the historical development of activity-based costing, and gives a basic overview on the domestic and foreign theory research. In the light of cost management content and industry characteristic of construction and installation enterprises, it expounds the basic theory of activity-based costing and its implementation steps, and elaborates on the feasibility analysis of strengths and weaknesses on its application in the construction and installation enterprises. Then taking the actual installation project as an example, by considering the structure characteristics of residential building, the essay defines construction products, analyzes activities, identifies the cost drivers, and collects the cost library. It tries to establish a complete activity system to calculate project cost. At the same time, by comparing the results of ABC with that of the traditional cost accounting methods, it finds that the use of the ABC can be much more effective in saving the cost, thus proving the integrity and accuracy of the method. The computation and analysis of the case further summarizes the feasibility and necessity of the application of ABC in construction and installation enterprises.Regarding ABC as a new cost management system, the essay discusses the implementation of activity-based cost management (ABCM) in the enterprises. It points out not only the basic procedures that the companies should abide by, but also the way to improve the management efficiency from ABCM. In addition, according to the discussed case and the actual situation, the essay puts forward the problems and resolutions that should be considered in the implementation of ABC.The paper contributes to some innovations. From the theoretical point of view, there is relatively few application research of ABC in construction and installation industry, and the theory system has not yet formed. The discussion of cost management mode is still in a premature and groping stage. So this study is a first exploration and tries on the specific implementation of ABC in the construction and installation companies. From the practical point of view, ABC could overcome the drawbacks of the traditional cost accounting methods; help the enterprises to acquire more accurate cost information. In this way, it enables the enterprises to cost savings, optimizes decisions-makings and improves management levels to achieve the purpose of maximizing production and profits. Therefore, the results of the study can provide enterprises with practical and significant guidance.The lacks of the essay lay in that the station of the relative ABC theory is not yet deep and completed. It needs to be further strengthened. At the same time, there are still some fuzzy problems in the actual operating processes in the case. For example, the study does not compute the activity cost in each case when there are various methods to determine the activities, resulting in the incomprehensive analysis of the case as well as a lack of comparison within a certain range.