A Research On Strategic Cost Management Of Construction Enterprises

China’s construction enterprises are facing tremendous economic and social environmentchanges, and the competition is increasingly fierce. How enterprises could get a competitivecost advantage and make a long-term development has become an urgent problem needed tobe addressed under this rapidly changing environment. Strategic cost management arises fromthe need of enterprises to implement strategic management when facing increasingly fiercemarket competition environment, the essence of which is for companies to seek long-termcompetitive cost advantage. China’s construction enterprises must implement strategic costmanagement by following the concept of strategic cost management which is based on thevalue chain analysis if they want to make a right competitive strategy to gain a sustainablecompetitive advantage according to the external environment and its changing trends,combined with their own internal resources.Based on the interpretation of the meaning of strategic cost management and somerelated theories, combined with the perspective of China’s construction enterprises operatingcharacteristics and the problems and limitations in the current management mode, this paperuse the basic theoretical framework of Shank mode, a classic strategic cost management modeto analysis strategic positioning, industries and enterprise value chain and strategic depth costdrivers of China’s construction enterprises. The value chain analysis is the basis of strategiccost management theoretical framework. First, the paper analysis the strategic positioning ofthe enterprise in the entire industry value chain and its connection with other aspects beyondenterprises’ own value chain. Second, each kind of internal value activities of enterprises isidentified through the elements of the strategic depth cost drivers. At last, three strategies ofstrategic cost management are proposed, which are establishing the strategic value chainalliances, developing enterprise information system and optimizing enterprise organization, respectively. A strategic management tool based on the Balanced Scorecard is proposedconsidering the requirements of construction companies in implementing strategic costmanagement, and appropriate adjustments in its structure and content are made according tothe characteristics of the construction industry. Finally, actual application of the theory iscarried on a case study, which is about a large state-owned construction enterprise named GLEngineering Company.According to the operating details of this company, some strategic costmanagement measures are proposed and a strategic cost management and evaluation systembased on BSC is constructed.Some practical optimization paths and management methods are put forward in thispaper based on the theoretical analysis of strategic cost management framework, combinedwith the characteristics and status quo of the cost management of China’s constructionenterprises, aiming at making some practically positive effects on the well-being of China’sconstruction enterprises.