Cost Control Techniques in the Construction Industry

toll get word Techniques in the Construction patience1.1 Objectives redact price chasteness weaken the common problem. Strengthen toll assure, form the efficiency of enterprises is fundamental the survival and development views in a foodstuff economy. Many companies bewilder recognize the importance live take for, some(a) companies development of relevant cost encounter system, some enterprises in implementing cost interpret responsibility, and made valuable experience of cost control. However, from the overall perspective, puke cost control related to the success or failure of origin cost control. From the perspective of cost control mode, the majority of companies still using up traditional cost control methods, develop construction budget, cost control based on this budget, as eagle-eyed as it does not turn over the cost of the budget is the effective control of be, rough, simple control cost, no so that the send cost to achieve optimum control. Therefore, the adopt to raise improve the method of cost control, improve the economic efficiency companies. ex computer programation of the come out costProject costs argon occurring the vagabond of resources more or less the money reflects the cost, including the resource-consuming stage of the invent animateness cycle. Project costs atomic number 18 usually measured in monetary units. Project costs are divided into direct costs, indirect costs in two shipway. now costs from labor costs, materials, mechanised royalties and other direct costs contri thoion1.2 Different types of project in Hong KongThe project type was deemed appropriate for categorizing .The categories constituteing of bridge, avenue construction, resurfacing, maintenance, traffic and traffic maintenance are characterized by notable differences in way practices due to the nature of the categories. Managing costs on a big variety of new building projects and structures, such(prenominal) as residential devel opments, sports stadiums, roads and bridges, schools, hospitals, offices and factories.To quotation For the Major Infrastructure Projects the progress in the past year. In prison term, many of these have entered the construction phase they includingHong Kong-Zhuhai-Macao BridgeHong Kong section of the Guangzhou-Shenzhen-Hong Kong enunciate Rail Link,South Island Line (East)Sha Tin to Central Linkadvance plant life of the Tuen Mun-Chek wash out Kok LinkXiqu Centre of the West Kowloon Cultural District, and so onApart from the major infrastructure projects, the DEVB allow continue planning other national works to improve peoples quality of life. The projects including slope safety, fresh water supply, prevention flood, discolour and heritage conservation work.Development Bureau, Press Releases/Wednesday, April 2, 2014 http//www.devb.gov.hk/en/sdev/press/index_id_8215.htmlChapter 2 Common Project Sources of Founds2.1 giving medication, Developer, ContractorTo quote Sources and forms of finance a blood plan is fundamental to satisfactory financial planning and ultimately the plan will need to be formulated in financial terms. When the whole way and adopted, the affair plan forms a basis for control and comparison. When it is set up, afterward approval and adoption, consideration of its financing must take place. This may be short term, such as a bank overdraft or long term as debt finance. A business plan must be inventioned so that it provides the answers to all the question likely to be raised(a) by prospective lenders.The main sources of finance for a business are the followinga) Banksb) Share issuesc) Internal company financed) Hire grease ones palms and leasinge) FactoringThe most common forms of organizationThe role trader from of business which one person owns and operates for his /she sole benefitThe partnership must consist of at least two and not more than twenty partners trammel liability companies force out be either private or ea rthly concernPublic sector ownership organization by the government and accountableUnincorporated association usually social organization who may or may not have objective of making a profit.1Roy Plicher (1985, 1994) Project Cost control in Construction P.15, 17, 18, Blackwell scientific PublicationThe Hong Kong presidency basic on the construction self-financing sources, including the financial and extra budgetary places mobility superfluous fund such as fiscal taxes the Fund.To quote (Baumal 3), for example ,argues that managers of firms run in markets with very few rivals will seek to maximize tax revenue rather than profit. Nevertheless they are constrained by the need to nourish a minimum level of profit as demanded by shareholders. other writers such as (Marris 4) and (Williamson 5) take different approach to growth. Nevertheless, what they have in common is that mangers are seen to pursue their own self-interest at the write down of the shareholder. This is in complete contrast with the neoclassical theory.3. BAUMAL W.J (1967) BUSINESS BEHAVIOUR, protect AND GROWTH. Harcourt Brace Jovanovich.4. MARRIS R.L.(1964) The economic theory of managerial capitalism. Macmillan.5. WILLLIAMSON J .(1996) Profit, growth anf sales maximisation. Econcmica, FebruartTo quote Harris and McCaffer 12, Fine and other agree with this view by placing true statement in estimating as the key variable in determining the palmy outcome of crusades Construction ecomomics is there such a thinf? by D.K Rutter MBA atomic number 62 MCIOB MBIM CDipAFHARRIS F and McCAFFER( R.1997) Modern construction solicitude. Granada createTo quote A project potentiometernot proceed without adequate financing, and the cost of providing adequate financing can be quite large.by Chris Hendrickson, Department of Civil and Environmental Engineering, Carnegie Mellon University, Pittsburgh, PA l52l3 secure C. Hendrickson 1998First Edition originally printed by Prentice Hall, ISBN 0-13-731266- 0, 1989 with co-author tung tree Au.Second Edition prepared for world wide web number in 2000.http//pmbook.ce.cmu.edu/07_Financing_of_Constructed_Facilities.htmlChapter 3 Construction Cost Control PrinciplesThe cost control is include the Time-Cost RelationshipTo quoteChitkara (2005) verbalise the relationship between time and cost is a very important aspect in the control of costs on site as any variation in time has automatic implication on cost. It is important to report and eternalize all the works involving materials, plant and labour on sites. This enables the affirmer be able to know the costs and expenses of the resources employ on site and differentiate with the initial cost budget. Various report techniques used include day-by-day or weekly and periodical recording, schedule control, site daily diary report and the project budget.Chitkara, K, K., 2005. Construction Project Management Planning, Scheduling, and Controlling. Tata McGraw Hill Publishing Company Ltd.Po or Project ManagementAccording to Users Guide, (2005), a poor project counseling structure will have an impact at all stages of the construction process channelizeing to want of planning and coordinationPoor communication between members of the project team and the project sponsorFailure to identify problems and institute necessary and timely design and programming changes wishing of control over time and cost inputsLack of end user involvementA good project wariness manages costs by estimating, scheduling, accumulating and analyzing cost data, and finally implementing measures to correct problems related to cost.BY FETENE NEGA (2008)CAUSES AND EFFECTS OF COST OVERRUN ON PUBLIC BUILDING grammatical construction PROJECTS ,IN ETHIOPIAA S line curveFigure .1 To quote in http//www.cpmtutor.com/c02/earned entertain.htmlConstruction Poject Cost Control Method Construction cost control method of many, this highlights deviation analysis. Deviationrefers to the certain value of the con struction costs with the planned value of thedifference. Deviation analysis may be used to a bar chart method, form method, curve method stoop is a total construction cost curve (S line curve) for the partial(p) construction costs differential analysis methods. A figure which indicates the actual value of the construction cost curve, p. construction cost of the scheme said the value curve, the curve between two vertical distances between construction cost deviations. The method used is the same image analysis, and visual characteristics, still this is very difficult to direct for quantitative analysis of quantitative analysis can play a role.During the execution phase of your project, you will need to monitor the status of the activities. Any deviation to schedule, quality, or scope for an military action will most likely have a cost impact. For this reason, project cost control requires you to check the overall status of each activity3.1 Budget estimating based on a clients, co ntractorsTo quote The Government cost visualizes should be prepared like the Government more timid and full-equipped contractor estimating the project. Therefore, all costs, which a prudent, experienced contractor would expect to bear, should be included in the cost estimate. This philosophy widespread throughout the consummate project cycle from programming through completion of construction. Each estimate should be developed as accurately as possible, as period as possible be assumed, and be based upon the best randomness available. This objective is to be maintained so that, at all stages of the project programming, design, and during construction, the cost estimate in each aspects representation the fair and level-headed cost to the Government.UNIFIED FACILITIES CRITERIA (UFC) HANDBOOK CONSTRUCTION COST ESTIMATING http//www.wbdg.org/ccb/DOD/UFC/ufc_3_740_05.pdfTo quote Clients will usually identify their needs in terms of commercial-grade or social pressureSpace requiremen ts the need to improve drudgery levels, add to employment capacity, accommo find new processes or provide domestic or social accommodationInvestment to exploit opportunities to invest in buildingsIdentity to enhance the individual s or organization s standing in its market or societyLocation could lead to a better use of resources, capture a new market or improve amenityPolitics mainly in the public sector.Fourth edition (2008)Martin Brook BEng (Tech) FCIOB,ESTIMATING AND TENDERING FOR CONSTRUCTION WORK3.2 Analysis circumscribed construct methodConstruction Enterprise Project Cost Control AnalysisLabour black marketers can be to the production and operation, but the monthly wages, allowances, and bonuses can spend less. Artificially expand the expenditure of funds.Material solicitude Some kind of engineering materials and book a difference to thousands of dollars, tens of thousands or even hundredsConstruction machinery -efficiency is not high for example, Monthly leasing machinery and equipment.To quote The deal of such a control system for use by contractor or subcontractor on site are toProvide a clear definition of the products to be producedDetermine the method and activity to productWork package activitiesAssign responsibilities for work Plan and schedule the work mug up resource budgets to agree with the programmeMeasure the work completed pull together cost and resource expenditure date Analyses data and take therapeutic action if necessaryProvide an historical input to a date baseBy A T Baxendale (1992), Integrations of time and cost control,BSc (Hons), MPhil, MCIOB taste the economic worth of independent projectsIf a budget holder has proposals for several(prenominal) independent projects, thenwhole-life be analysis can help shape the order in which projectsshould be given the go-ahead to guarantee the uttermost level of savingsin operation, maintenance and repair costs.3.3 A life cycle beTo quote A life cycle be approach ,that is an approach that takes explicit account of the life cycle cost of assets, is essential to effective decision making in the following ways a whole or total .(Flanagan et al.,1983) life history cycle costing is a whole or total cost approach undertaken in the acquisition of any capital -cost project or asset, rather than simply concentrating on the initial capital costs alone.Life cycle costing allows for an effective choice to be made between competing proposals of a stated objective the method will take into account the capital, repair cut and replacement cost and express these in consistent and comparable terms. It can allow for different solutions of the different variables involved and setup hypotheses to test the impudence of the results achieved.Life cycle costing is an asset worry tool that will allow the operating cost of premises to evaluated at frequent intervals.Life cycle costing will enable those areas of building to be set as a result of changes in working practices , such as hours of operation, introduction of new plant or machinery ,use of maintenance analysis etc.John W.Bull (1993) Life cycle costing for construction, BLACKIE ACADEMIC PROFESSIONALChapter 4 Relationship of Building Contract and CostingContract and information attentionThe contract are clear rights the agreement of both parties obligations, the two sides is evacuation the fundamental basis on the project personnel cost control baseline. After the signing of the contract should be organized project management staff contract analysis, contract report, contract implementation. Especially clear claims and counter-claims conditions in a timely manner to change the file. The contract information management into cost control.The Construction projects Lump summarize Contract has become wide used in the world of the pricing method, the Construction project are recommended or required in the form of bill sticker of quantities Characteristics of Lump Sum Contract with quantity Lump Sum Contract with quantity contention rating to truly realize the quantity, price principle of separation. For bidders to bid Bill of quantities provided as a platform, based on their technical, financial and management mental ability to carry out the tender offer so that bidders can full take into account many other factors, such as process construction scheme for its own schedule, risks, resource scheduling, and so on. So the bidder can be flexible adjustments for these quotes, so quotes can accurately coincide with the project. This valuation method of engineering construction risk and reasonable distribution of tendering caller quantity risk bidders bear the price of risk. While traditional quick-frozen pricing method, which no bidders technical advantage and price advantage. Engineering change management is the key of construction contract management of engineering changes in process engineering is inevitable, but construction should try to reduce engineering change, bec ause change is often in addition to the costs of the project itself, but also will bring a lot of machines or the date of a claim.Cost in real settlement contract (Cost Reimbursement Contract)Cost plus honoraria contract (Prime Cost and Fee) cost plus honoraria contract is bid people by tender file provides early estimated project of artificial, and material, and mechanical of cost price, and by requirements (consultations) take early estimated cost of percentage value or fixed costs as bid people of honoraria (contains costs and profit), constitute tentative contract price, stay engineering completed sh, by actual occurred of cost settlement, but honoraria proportions or total not variable.Such contracts retain to tight deadlines, emergency rescue and disaster relief work. No such contract in Hong Kong standard contract forms.Reasons of Projects over Budget rawness of Project LeaderPoor Communication/Management of Personnel exit Through Damage or MalfunctionHuman ErrorEmployee Ab senteeism trafficker Relationship IssuesEnvironmental FactorsPoor WorkmanshipLack of Foresight finishingConstruction project cost control is complicate system engineering. real(a) operation an application and flexibility of needed to adapt applications under the local anaesthetic conditions, various sizes, different construction company and different administrative systems are different, However in under any circumstances the construction of production and operations of amount of human resources and materials resources and costs, guidance, supervision, monitoring and restrictions. Therefore, the to append production and conservation, increase revenue and reduce expenditures, is a common building construction enterprise, which requires unbroken practice in reviewing and improving cost control, methods and means to ensure that the project costs. As a business that only deepen the financial management system, advanced cost management center, to further strengthen cost management an d stringent cost negative, complete implementation of, the whole process of cost control and constantly adapt to the overall market competition, to overcome of chastisement to achieve target of cost control