A Study On Project Cost Management For Electric Power Survey And Design Enterprises

As China’s economic growth continues to slow down, reform to the national power grid system moves forward and great improvement is made to nationwide power grid infrastructure, domestic electric power survey and design companies are facing ever increasing competition. At the same time, risks and cost pressures for electric power survey and design projects keep rising. Currently, most of the electric power survey and design companies, especially state-owned enterprises (SOE), still approach cost management in an extensive manner and from a macro perspective, which is often "more formal than substantial". In terms of objects of accounting, focus is often placed on cost elements rather than projects per se, making it difficult for corporate decision-makers to identify costs pertaining to individual projects from accounting reports. The reports prepared in this way always fail to provide accurate project cost data to support decision-making processes and enable knowledge of corporate competitive advantages. Under such circumstances, it is very difficult for the decision-makers to accurately determine how profitable a project may turn out to be while making decisions, particularly when competition is involved. This may result in increased risks in project implementation. It is well known that the power survey and design companies make profits on a project-by-project basis, which is at the micro level. This leads to the argument that a pure macro approach to cost management and control in the electric power survey and design projects will not only bring no benefits to project operations, but will also undermine corporate development in the long-term unless enough attention is paid to project-by-project cost management and control.This paper identifies and analyzes potential problems in project cost management practices adopted by domestic electric power survey and design companies with a view to finding a proper solution. Based on a substation survey and design project case of Company A, the paper puts forward a systematic 6-step solution to the problems by using modern project cost management methods. These steps include project cost estimating, budgeting, controlling, analyzing, accounting and assessing. It is to provide a valuable reference for electric power survey and design companies in full implementation of project cost management.