On Cost Management of Construction Enterprises



1. China's construction enterprise cost management status quo

(I) construction enterprise management mode is not perfect. As an important part of enterprise management, cost management has a high dependence on the management mode of enterprises. Construction companies are no exception. The basic management of many construction enterprises in China still continues the model of the planned economy era, although it has improved under the wave of reform and opening up and economic development, and the management of enterprises has changed from production to operation, but the management mode of many construction enterprises still can not adapt to the changing and developing market competition environment.

(II) construction enterprise organization structure is not perfect. China's construction enterprises since its establishment has been the use of linear functional organizational structure, emphasizing the vertical control of the organization, and the lack of horizontal cooperation. There are two reasons: first, in the process of information transmission from bottom to top, it is bound to be constantly distorted. The more to the upper level, the more distortion, and the less valuable information that can support decision-making, so it is difficult to make correct decisions., Can't even make a decision; second, the management center is too high. Deciding whether and how to do everything requires layers of instructions, which reduces the efficiency of decision-making.

(III) construction enterprise business structure is not perfect. An efficient organization requires not only a vertical command system, but also a horizontal business operation system. China's construction enterprises are generally linear functional organizational structure, have developed a detailed functional responsibilities. The advantage of this kind of management is that it strictly divides the scope of work of each unit and individual, and clarifies the responsibilities and obligations of each person. The disadvantage is that it cannot solve the coordination problem in the gray area. It emphasizes responsibility, power, and profit, but it cannot solve the coordination problem. It cannot solve the operation problem of "power", and the incentive of "profit" to employees is also limited. This kind of management mode ignores the business connection and information communication between departments and posts, which makes it difficult to carry out daily work smoothly.

2. Solutions

(I) Establish the concept of cost management

1, the concept of scale determines benefits. In this era of low-profit operation, scale operation and scale production can reduce management costs and improve the economic efficiency of enterprises. Adhering to the concept of large-scale operation, China Railway Construction Co., Ltd. has laid a solid foundation for the growth of enterprise efficiency in the golden opportunity period of increasing infrastructure investment.

2. The construction period determines the cost concept. This concept refers to the actual situation of the increase in urgent, difficult and dangerous projects and the increase in costs caused by surprise battles. The construction period control is an important task of cost management. At the beginning of the project, actively cooperate with the design and drawing to break through the problem of land acquisition and demolition. Start work as soon as possible to prevent the phenomenon that the project is loose first and then tight. At the same time, in the construction process, it is necessary to rationally allocate production factors and scientifically arrange the construction schedule to reduce project costs in a continuous, balanced and orderly manner.

3. The concept of heroes based on benefits. Enterprises are profit-oriented, profit-oriented production and development goals. In this regard, China Railway Construction takes the rate of return as the most important index in the performance evaluation of enterprises, evaluates the achievements of management cadres with benefits, and successively carries out the activities of selecting and selecting meritorious officials. The analysis and comparison activities of five economic indicators with the content of rate of return, management rate, unit price of materials, unit price of labor services and employee income have created a cultural atmosphere of heroes based on benefits throughout China Railway Construction Group. However, this is not to say that "heroes are judged by output value", but to strengthen cost management in enterprises and continuously and solidly promote the management concept of "success or failure is determined by cost, and rewards and punishments are judged by benefits.

4, centralized management concept. Centralized management is very effective in coordinating the distribution of production factors, efficiently operating enterprise personnel and equipment, reducing enterprise costs and enhancing enterprise competitiveness. All large-scale machinery and equipment and command vehicles of the enterprise shall be subject to centralized examination and approval. Large-scale materials and materials shall be purchased through centralized bidding and supply. Turnover equipment shall be kept in pieces and allocated in a centralized way. The concept of centralized management can strengthen the control of the company's management, headquarters and engineering companies over the project, reduce the overall cost, while the unified allocation of funds can also promote the rational use of funds and reduce the cost of capital.

5, Budget-led efficiency management concept. The benefit management concept of budget guidance refers to the organic combination of responsibility cost management and overall budget management, establishing and perfecting the responsibility cost budget management system of China Railway Construction Group Corporation, its subordinate units and construction projects, and upgrading the previous single cost budget control to all levels of overall budget control of preparation, implementation, adjustment, analysis and assessment, it enables the head office to achieve real-time and dynamic monitoring of the cost budget of each subordinate unit and project.

6, big cost management concept. "Big cost management" is full, all-round, the whole process of cost management. Every employee should participate in cost management, so that every employee realizes that cost management is a common work, which requires the target cost to be decomposed layer by layer and implemented to each department and each person. All functional departments and accounting links of the enterprise (project) should carry out cost analysis, control and comparison. The whole process of production and operation of construction projects, including project bidding, construction design, construction process, completion settlement, etc. should be strictly cost control and management.

(II) improve the organizational structure. Cost management is a whole staff, the whole process of management work. It is necessary to establish a leading organization and a sound organization in order to form a complete project cost management system within the enterprise. First of all, a cost management team should be set up. For the enterprise, the chairman and general manager of the enterprise should serve as the team leader, the chief accountant and chief engineer should serve as the deputy team leader, and the leaders of other relevant departments should serve as the team members. For the construction project department, the project manager serves as the team leader, the project deputy manager and chief engineer serve as the deputy team leader, and other departments are the project team members. All departments should cooperate with each other and cooperate with each other to jointly complete the important task of cost management.

(III) establish a standardized and orderly cost management model. Construction project cost management can implement the project internal responsibility contracting and project full risk responsibility contracting two management models. Project internal responsibility contracting refers to the construction operation mode in which the company designates the project management department after undertaking the project, and the project management department signs a contract with the company or a branch company, with all the staff taking responsibility, taking the reduction of project cost as the benefit evaluation index of project contracting, taking the project quality, construction period, safety, science and technology, innovation, spiritual civilization construction as the target assessment, and the project operating benefit in full; the project full risk responsibility contracting refers to the contracting method in which the relatively fixed contracting collective carries out full responsibility contracting to the company or branch company. The contractor completes the responsibility target within the agreed period in the form of risk mortgage, and pays the funds according to the specified proportion of the completed output value. The rest of the expenses are allocated and used by the project contractor independently.

(IV) focus on responsibility cost budgeting. The responsibility cost budget refers to the responsibility center in accordance with the average advanced level of the enterprise and industry standards. Responsibility cost budget management must abide by the principles of controllability, rationality, systematicness and the combination of responsibility and rights. Controllability means that the cost of a certain responsibility center can be controlled by the center and is affected by the control of work ability and work effect. Rationality means that when preparing the responsibility budget of each responsibility center, the quota quantity and unit price of each responsibility center should be determined fairly and reasonably, and at the same time, the contents included should be clearly defined so as to be realistic. Systematic, it means that the complete cost management of an enterprise must be full-staff, full-process, all-round, horizontal to the edge, vertical to the end, from bidding, winning the bid, organizing construction, to delivery and use, etc., is a systematic project; the combination of responsibility and rights is to clarify the responsibilities that each responsibility center should bear, and at the same time give them the power within the scope of responsibility, and can get corresponding benefits. Responsibility is the core and the subject. Power is the condition and guarantee. Profits are incentives and motivators.

3. conclusion

In short, in the fierce market competition environment, how to strengthen and improve the cost management level of construction enterprises, how to ensure that construction enterprises can ensure the construction quality, construction progress and construction safety, promote the standardization and scientization of construction project cost management, improve the operating efficiency of construction enterprises, and continuously improve the survival and development ability of construction enterprises, it is a long-term and arduous task. In this process, there are still many problems worth exploring and solving.

Main References:

[1] Li Yujun. Research on cost control of construction projects in China [J]. Cooperative Economy and Technology, 2009.2.

[2] Hu Renfu. Research on project cost control management of construction enterprises [D]. Nanchang: School of Economics and Management, Nanchang University, 2010.6.

[3] Zhang Li. Research on project cost management of construction enterprises [J]. Economic Research Guide, 2010.

[4] Guo Handing. Construction Project Management [M]. Beijing. Chemical Industry Press, 2010.