Research Of The Application Of Activity Based Costing In Power Grid Project

Since power grid project has a close bearing on the national prosperity and the people’s livelihood, the construction unit usually demands strict quality requirement and precise construction schedule; while the project cost control is relatively ignored. After the electric power system reform, the electric utilities change from civil administration to national state-owned enterprise, meanwhile, to adapt to market economic structure the construction unit of power grid project gradually begin to put more emphasis on project cost control. Then, the most important and urgent thing to improve economic benefits of power grid project is to find the key point of project cost control. Also, Cost Analysis of Power Grid Projects in Twelfth Five Year Plan Period published in May 2014 illustrates that unable to find the key point of project cost control has become the weakness of power grid project cost accounting system.Inspired by the value chain in the framework of strategic cost management, the writer believes that traditional cost accounting methods should be improved by allocating the cost to specific construction process so that to find exact object responsible for excessive resource consumption. This paper applies activity-based costing, mainly used in the area of manufacturing, to power grid project. Firstly, introduce the basic theory of activity-based costing, and reveal the disadvantages of traditional cost analysis methods including cost measurement behind time etc, by comparing with activity-based costing. Secondly, analyze the feasibility of applying activity-based costing method in power grid project with considering the characteristics of the power grid project. Furthermore, build the model of activity-based costing application in power grid project cost analysis, and discuss the developing principles and methods of activity set, resource pool, cost objects and cost drivers in depth. Finally, apply activity-based costing method in cost analysis based on JSY 220 kV substation project, and find out the over length buried pipe is the main reason for excess budget of the comprehensive unit price. Therefore applying activity-based costing method in power grid project that can improve and perfect power grid project cost accounting system is verified, and also it can find the specific construction process that causes excess budget, which is beneficial for project cost control.