Study on Ways to Improve Economic Benefits by Strengthening Cost Management

摘要：工程項目管理是對工程建設全過程的管理，包括質量、工期、安全、成本、環保、創新等方面。施工企業要提高市場競爭力，最重要的是在項目施工中以少的資源消耗來降低企業成本，把影響企業成本的各項消耗控制在計劃范圍之內。Abstract: Engineering project management refers to the management through the whole process of engineering construction， including quality， time project time limit， safety， cost， environmental protection， and innovation， etc. The most important thing for construction enterprises to improve market competitiveness is to reduce enterprise costs by decreasing resource consumption in the construction， and control the consumptions within the project budget.關鍵詞：成本管理；工程項目管理；成本控制；風險控制；控制途徑Keywords: cost management， engineering project management， cost control， risk control， ways to control Project cost management refers to the scientific management activities including planning， organizing， control， coordinating and so on to achieve the set cost targets and to reduce costs， on the premise of meeting the quality， time limit and other contract requirements. It can realize the intended targets and profits via technical， economic and management activities.The article will have a discussion in two aspects of cost forecast and cost control， while focus on explaining the influence of engineering drawings on engineering cost control.I Cost forecast is the basis for cost controlCost forecast is the basis for cost control of an engineering project. Cost forecast mainly utilizes scientific methods to forecast the project costs based on construction condition， mechanical equipments， personnel quality， etc， in combination of the winning bid.a. forecasts on labor， materials， equipment feesFirst analyze the unit price for the labor fee of the project， and whether the labor fee in the contract prices includes accommodation and other costs based on the time limit and the number of employees to use.Material costs account for a large proportion， so we should analyze fees of principle materials， flooring materials， complementary materials， other materials respectively， check and ratify the delivery location， purchase price， type of transportation， and handling charges， and determine the differences in material specifications between contract provision and actual utilization.Machinery use fee: the machinery use fee in engineering costs is usually calculated based on experiences， and it differs in actual construction， and the working efficiency may also be different， so this fee should be measured and calculated based on actual use.II Changes in cost forecast due to differences between actual situation of construction site and design (difficulty)After winning the bid of the project， we should make accurate cost forecast， in combination of the economic， natural and geographical conditions at the place where project located， construction technology， equipment selection， time arrangement and so on.III Fee forecast for temporary facilities and site transferFees for temporary facilities include set-up costs for temporary facilities， and the size and standard for these facilities should be determined in accord with the time limit and the amount of personnel and equipments to use. Based on the actual quantity， and referencing on history data from construction contracts， the fees for temporary facilities should be calculated. Site transfer fee shall be forecasted according to the distance， personnel and equipments to be transferred.IV Cost risk forecastRisk analysis of project cost means to pre-analyze the factors that may influence on the target realizing in project implementation， which usually can be done as follows:a. understanding the technical features of the engineering project， such as structural， and geological characteristics， etc.b. Analysis on the credit， capital availableness， organizing and coordinating ability， etc. of the project ownerc. analysis on the design， resources and team quality of organizations under the project.d. analysis on transportation， energy and electric power at the place where the project located.e. analysis of the climate.V Cost control in project constructiona.Saving expenses in productionSavings on production expenses refers to savings of human resources， material and financial resources in project construction， and saving is the principle of the cost control. Saving can be realized through project plan optimization with pre-supervision， process control and frequent check during the implementation and improvement in project scientific management level.b. Improve the overall quality and sense of responsibility of project staffCost control involves all the departments， teams and employees of the project organizations， so we should motivate every department， team and employee to control cost， and to set up the concept of cost control.c. Enhance the consciousness of cost controlProject cost management and control not only involves management activities， but also requires comprehensive combination of economic， technical， legal and other knowledge. Enhance the overall sense of responsibility and cost consciousness， to realize effective cost control.d. Strengthening contract managementContract management is an important part of the management in construction enterprises. Project construction contract management should start from contract negotiations and terminate till the end of warranty. Strengthen contract management especially the management during the construction， pay close attention to the contract execution， to prevent claims.e. Direct costs control in constructionDirect engineering costs mainly refer to labor fee， material fee and machinery use fee that directly constitute project entity during the formation of project cost.Construction material makes up 60% ~ 70% of the total project cost， and plays a decisive role in the whole project cost control. Material cost control can be realized in two aspects， namely the quantity control and price control.Quantity controlUnder the condition of proper use， carry out material quota mechanism. Each team can only receive materials in batches within the specified limit. If more materials than the limit are taken， analyze the reason， and take timely corrective actions. Keep on improving and optimizing the construction organization design， construction plan and construction deployment. Strictly control the inflow materials， material purchase must be strictly in accord with handing over procedures. Contact the supplier immediately to replace or return unqualified materials during the quality check or damaged materials in the transportation， to prevent quality issues. Strengthen site management， and properly store and keep the materials， to avoid a second move and wastes. Use administrative and economic management activities， and improve and perfect material management mechanism， and unify purchase and supply to reduce the purchase prices.Price controlControl the purchase price， pay close attention to the building material market， and utilize “double control”principle to get the price of raw materials within the budget price. Meanwhile technicians should also do technical analysis on material specification and performance indexes and insist on the principle of “better quality， lower price and shorter distance”， in order to reduce costs; Consider the time value of capital， try direct material allocation as much as possible， reduce material transfer times， calculate economic inventory for a reasonable material purchase arrangement， speed up cycling of materials and fund flow， and reduce material reserves to the best.Labor cost is an important part of engineering project manufacturing cost control. Based on its own characteristic and the actual situation of projects， the enterprises should develop a series of measures and standards to control and reduce labor costs. Calculate quota of labor use according to work quota， ration and control safety production， civilized construction and sporadic labor use at a certain proportion (usually 5% ~ 10%)， to prevent labor cost exceeding the budget. Improve production workers’ technical level and the management， arrange the quantity of workers of various professions， reduce and avoid invalid labor work and waste of labor hours. Take all possible measures to improve labor productivity.Reasonably organizing the machinery， giving full play to the function， and lifting production efficiency， are major ways to reduce project cost and to improve the economic benefits. Make full use of the existing equipment by rational internal coordination， improving the utilization ratio of main equipments， and selecting multi-functional equipments. If self- owned mechanical equipments can not meet demand， we should determine reasonable lease prices by taking references on construction market. Choose experienced operators， and implement mechanical equipment responsibility system， to minimize fuel consumption and artificial losses and to improve machine-team attendance. Record the maintenances for main components and parts， to discover problems as soon as possible， distinguish the responsibility， and find a solution.f. Control project quality， reduce or avoid re-workingDuring the construction， implement strict quality control system， and take precautions， to eliminate common quality issues and to ensure the project to pass quality inspection one time， therefore avoiding reworking， or unnecessary labor， capital or material inputs that lead to increases in project costs.g. Seek ways for more effective constructionTaking technical measures in construction phase is an effective way to give full play of technicians’ subjective initiative in looking for ways to lower cost:In the preparation phase， develop several construction plans， do technical and economic comparison， and then select the plan with shorter construction period， better quality and lower costs;In the construction phase， research and implement various new technologies， new processes and new materials and technical measures that can reduce consumption， improve efficiency and the mechanized operation level;In the project completion acceptance phase， pay attention to economic and technical process， shorten the time for project acceptance， and improve the delivery efficiency.SummaryProject cost management is a comprehensive activity， and needs cooperation of departments including engineering， materials， financial， labor and so on. Failure of any link will cause increases in project costs. So we should strengthen cost management and make reasonable budgets to control and reduce costs of engineering projects， and to improve the economic benefits of enterprises.( Author: from China Railway Construction Engineering Group)