Cost control analysis of lighting construction enterprises

1. Problems existing in cost control of construction enterprises

(1) Problems in preparing budgets in advance.

First of all, there is no specific work location for construction projects. Bidding for projects will be carried out wherever they are. Therefore, the understanding of local construction policy basis will be incomplete and inaccurate, and the basic situation of the local area will not be grasped in detail, resulting in incomplete budget preparation. Rough, vague, lack of specific projects and detailed information. Secondly, due to the short period of construction project requirements and the short time to receive the bidding information, the budget preparation time is too hasty, lacks scientificity, is of low quality, and is very blind and hasty. In serious cases, it will lead to enterprises and this Projects are missed, reducing the chance of profit. Finally, due to the complexity of the construction process, on-site management will not be as good as expected. This makes it difficult to implement the construction in accordance with the budget requirements, and the binding force on costs will be greatly reduced.

(2) Problems in cost control. First, there are problems in business thinking. As the number of companies entering the construction industry continues to increase in recent years, the industry becomes increasingly mature, and market competition becomes increasingly fierce. Many construction companies feel the crisis, so they begin to focus on strengthening project cost control. However, a change in concept generally takes a long time. Time, in specific project management and control work, will still be affected by old ideas, resulting in a decline in corporate profit points.

The second is the problems existing in cost management. The theory and content of enterprise cost management are rigid and the methods are outdated. Most enterprises in the construction industry only focus on cost management during the construction process, but are relatively weak in cost management before construction. This will lead to cost management during and after the construction. Blindness; cost management relies too much on the cost accounting system, lacks flexibility, only focuses on financial accounting, and cannot provide other required non-financial information such as resources, raw materials, customers, etc., and the acquisition of cost information cannot reach Require.

Third, there are problems with cost control methods and means. First of all, because the current cost control work in our country is mainly formulated by the financial department, but the implementation results are not ideal. One of the reasons is the lack of a systematic cost control method. Cost control should be a perfect combination of pre-event, during-event and post-event control, not just control during the financial process. Therefore, cost control should not be entirely left to the financial department, as this will deviate from the original intention. The financial department can only control when it actually happens, only during the event. Secondly, without advanced cost control measures, a large amount of data information during the construction process is difficult to collect, transmit, process and store in a timely manner, making it impossible to grasp changes in project costs in a timely manner. Cost control has lost its basis, and effective measures cannot be taken to reduce costs and ensure the company’s profit maximization.

(3) Problems in other aspects.

First, there are problems arising from the construction plan. After winning the bid for an engineering project, a technically advanced, feasible and economically reasonable construction plan must be formulated based on the actual conditions of the construction site, such as considering the quality and quantity of project participants, the technical status and characteristics of mechanical equipment, and the economic and natural geographical conditions of the project location, Based on the design requirements and structural characteristics of the project, several construction methods and construction procedures are formulated for technical and economic comparison, and the most appropriate construction plan is finally determined.

The second is excessive emphasis on cost savings. Cost control is to control cost expenditures systematically and comprehensively, so that costs can be reduced to the lowest point as much as possible and profits can be maximized, rather than being frugal blindly. In the specific construction process, if the quality of materials is poor, the materials used are insufficient, and the acceptance fails, and the work is reworked, it will increase the cost and the gain will not be worth the loss.

2. Measures to improve cost control

First, measures to improve advance budgeting.

In the process of cost control, we must first ensure the accuracy and comprehensiveness of the budget. Only an accurate and comprehensive budget will have a real effect on cost control. In terms of improving the accuracy of pre-budgeting, the budget should consider the impact of uncertain factors on the future as much as possible and make reasonable estimates to achieve budget accuracy. First of all, we must formulate advanced, economical and reasonable construction plans to achieve the purpose of shortening the construction period, improving quality, and reducing costs. The correct choice of construction plan is the key to reducing costs. Secondly, we must strive to seek various cost-reducing technical measures such as new processes, new technologies, and new materials to reduce consumption and improve work efficiency during the construction process. In terms of improving the comprehensiveness of pre-budgeting, when determining goals, we must not only consider the requirements of the company’s internal goals, but also compare them with the advanced level of the same industry to make the company’s budget more strategic. Budget management cannot be static. When managing the budget and promoting budget implementation, budget executors can inspect, revise and adjust based on the actual situation at the time when necessary.

Second, improve cost control measures during the process.

The key for construction companies in bidding quotations is to determine the ideal bid price that can not only enable the company to win the bid but also ensure the company’s profitability. Therefore, when formulating the bid price, on the one hand, the direct costs of the project must be calculated, and on the other hand, the indirect costs of the project must be calculated, so as to ensure that there is no miscalculation, no omission of calculations, and no recalculation. On the other hand, the cost prediction must be comprehensively based on the overall strategy of the company’s own business objectives, changes in the national capital construction plan and economic policies in the construction market, and past bidding and quotation experience, and based on the information feedback from the cost management information system , after repeated research and comparison of alternative options, a reasonable bidding price was formulated.

Determine the reasonable cost target of the project by preparing the construction budget. Attention should be paid to cost control during the construction preparation stage. The project manager should prepare a responsibility budget based on the budget costs issued by the enterprise. To prepare target responsibility costs and responsibility budgets, scientific predictions must be made for the engineering projects to be implemented. Before preparation, local market conditions, supply conditions and other information must be collected and analyzed carefully and in detail to ensure the accuracy and feasibility of the target responsibility cost and responsibility budget. Pay attention to cost management during the construction process. The project finance department must collect and organize original cost data on a monthly basis. At the same time, in accordance with the requirements of the responsible budget assessment, the difference between the actual cost and the budgeted cost must be analyzed by sub-projects and take measures to correct it. deviations to prevent adverse effects on subsequent construction; before settlement, the quantity of completed work must be carefully checked, and projects that have not yet undergone change claim procedures must be signed by the owner to ensure that sufficient settlement income is obtained.

Third, measures to reduce budget and cost differences.

(1) Reduce material costs. Material cost accounts for &'(above in the project cost, and the control of material cost is of great significance to the entire project. To reduce the material cost difference, the main attention should be paid to the price and quantity of materials. First, investigate the local market conditions before the project budget, and customize the procurement Plan to achieve high quality, low price, and perfect procurement. The second is the quantity of materials. Based on the size of the project and the experience of previous projects, the consumption of materials can be estimated to avoid material waste.

(2) Reduce labor costs. The control of labor costs can also implement the separation of volume and price. The number of labor hours is calculated based on the internal construction drawing budget, steel bar sample sheet or formwork quantity to calculate the fixed labor days. In this way, the labor demand can be estimated, thereby reducing the difference. Enterprises can also train and equip technical workers with one specialty and multiple abilities, and rationally adjust the number of people in each process to speed up the project progress and save labor costs.

(3) Reduce other costs. Machinery costs are very important to construction companies. When purchasing large machinery, we must proceed from long-term interests, fully estimate the development of the construction market, avoid a large amount of idleness and waste of machinery after the completion of the project, resulting in poor cash flow, make reasonable arrangements to increase the utilization rate of machinery, and strictly implement mechanical maintenance. Maintenance system to ensure the integrity and normal operation of machinery.

Fourth, choose appropriate cost control methods.

Because cost control methods are diverse, there are traditional value control methods through difference analysis, and non-value control methods that utilize technological innovation and the collaborative control function of organizational structures. There is no fixed paradigm for strategically selecting cost control methods based on cost laws. It must be entirely based on the actual foundation of the enterprise, taking into account the organizational structure, corporate culture, production methods, etc. Of course, according to the needs of implementing cost control methods, companies can also reform the actual basis, such as transforming organizational structures and building new corporate cultures. At the same time, we should also realize that traditional cost control methods such as responsibility costing, standard costing, and budget control are not mutually exclusive with modern activity-based costing management and cost planning methods. On the contrary, they can often be fused together under certain conditions.

For example, Thorne Lighting Company combines the standard cost method with the cost planning method. Thorne Lighting Company divides cost control into cost control for current products and cost control for new products. The goal of cost control of existing products is to maintain the cost of existing goods and the absolute reduction of costs, while the goal of cost control of new products is to achieve cost savings in line with market needs.

Fifth, the institutionalization and legalization of cost information management.

From a macro perspective, we must first focus on the scope of cost expenditures and implement economic legislation. Those who arbitrarily adjust or compile cost data that do not comply with the scope and standards of cost expenditures will be criticized and educated at the least, and disciplinary sanctions or investigation will be given at the most serious cases. civil liability. Secondly, we must reform the accounting personnel management system. Problems in compiling cost information occur, except for a few cases where accounting personnel do not adhere to principles. Most of them are caused by the instructions of the person in charge or manager of the enterprise, and the accounting personnel can only follow them. Therefore, it is necessary to reform the current financial management system and envisage the establishment of an accounting bureau. The chief financial officer implements two-tier leadership, that is, personnel transfers, appointments and removals, and promotions are managed by the Accounting Bureau, while other aspects are managed by the enterprise. Third, strengthen law enforcement. The formulation of the system only provides the basis for its implementation. The key lies in implementation. Only by complying with laws, enforcing the law strictly, and punishing violations can we create a good social atmosphere.

From a micro perspective, enterprises should establish and improve internal cashier expenditure systems to ensure the authenticity and integrity of property. Ensure the accuracy and reliability of accounting data, improve the operating efficiency of enterprises and promote the implementation of established business policies. Internal control under the modern enterprise system is no longer the traditional fraud detection and error correction. Its content involves all aspects and levels of corporate governance institutions, and ensuring the authenticity of accounting information runs through the main line of internal control development.

Sixth, strengthen cost management safeguard measures.

Cost management safeguard measures are various specifications established to ensure the effectiveness of cost management methods and measures and to ensure the smooth implementation of cost management methods and measures. Establishing cost management safeguards mainly involves establishing a series of procedures and specifications that should be followed for business processing and reporting, as well as setting up the organizational structure, dividing functions and division of labor, etc., to ensure that various activities within the organization are carried out in a manner that is beneficial to To reduce costs and facilitate cost management. The function of these measures does not directly affect the cost generation process itself, but to advocate or restrict the behavior of business processing according to the needs of cost management. Their role is basic and preventive. In addition, in a fiercely competitive environment, in order to timely understand the opportunities and threats that may be brought about by changes in the environment, internal conditions, and competitors, a cost early warning analysis system should also be established to conduct changes in the external environment, competitors, and the company’s own conditions. Long-term observation, timely forecasting of possible major changes, opportunities and threats that may be faced, allows enterprises to have sufficient time to respond. With the continuous improvement of management level and the continuous updating of technical means, the enterprise cost management model is also constantly evolving and introducing new ones. Therefore, we must constantly innovate the cost management model so that the enterprise can remain invincible in the market competition. .

(1) Understanding the effectiveness of cost control. In the face of fierce market competition, if construction companies want to survive or seek development, in addition to having advanced technology and strong capital, project cost control will play an increasingly important role. The direct result of project cost control is to reduce target costs, increase target profits, enhance corporate value, enhance core competitiveness, and promote sustainable, harmonious, and healthy development of enterprises. At present, the business of construction companies in my country is obtained through bidding. However, “winning the bid at the reasonable lowest bid” is a method commonly adopted by domestic contracting parties. Low quotations have become an inevitable trend in corporate competition. The construction market has entered the “meager profit era” and the competition between construction companies has become more cruel. The competition between construction companies and operators is, in the final analysis, price competition. In the process of “winning the bid without a minimum bid”, whoever bids the lowest price will win the bid. However, every price reduction by a construction company is based on cost reduction, and the bottom line of cost reduction must be established within the effectiveness of project cost control. Otherwise, construction companies will face losses or even bankruptcy.

• Current project cost control is confusing. At present, the project cost control of construction enterprises is not ideal, and there are many confusions.

The main manifestations are:

1. Cost control ideas and concepts are backward. Objectively speaking, although construction companies in various industries have introduced a number of cost control measures, if the company is not closely linked to the cost control of each project, their implementation will be greatly attenuated. Due to the insufficient effectiveness of cost control derived from the influence of the planned economy and the obvious characteristics of extensive management, financial personnel of construction companies only focus on direct cost control of the project, but do not fully consider the cost control of project design, project quotas, material procurement and other links. This kind of cost control idea with too narrow control scope is far from meeting the needs of the current construction market. In addition, project cost indicators are not refined and quantified properly, and cost control responsibilities are not implemented by anyone. There is serious localism between vertical levels and horizontal departments, and the lack of overall synergy is also an important reason for the lack of effectiveness of cost control. .
2. Deviation in the establishment of internal cost control entities. For a long time, there has been a bias within construction companies, which regards cost control as the exclusive preserve of financial personnel and a small number of managers. It is believed that project cost control benefits should be the responsibility of construction company leaders and financial departments, while project managers and project department personnel are only considered responsible. As a producer, those who manage costs do not understand technology, and those who understand technology do not understand finance. Construction workers have almost no ability to ask questions about which project costs should be controlled, why they should be controlled, and how they should be controlled. Their cost control concepts and awareness are weak. If employees cannot feel the pressure of the market, they will not be able to mobilize their enthusiasm for cost control, leading to serious waste. The cost control of construction companies will lose a large management group and will be difficult to be effective. In addition, it may be due to the fact that for a period of time, we have only paid attention to the contracting of projects, but not enough attention to cost control. Even if we pay attention to it, it can only be said to pay attention to the final results calculated and analyzed in the cost report.
3. The relationship between cost control and accounting cannot be handled objectively. Financial personnel of construction companies pay less attention to accounting matters due to cognitive reasons or because they are busy with affairs all day long. In addition, the characteristics of accounting work are limited by full workload and accounting time. Daily accounting despises value management; attaches great importance to the operation and safety of funds, and despises the analysis of multi-year profit and loss activities of accounting data. Over time, the core position and advisory decision-making role of cost control in corporate management is diluted.
4. The phenomenon of imperfect competition among construction enterprises restricts the development of cost management. Although my country’s construction enterprises entered the market economy late, they have developed rapidly. The current construction and construction market has obvious imperfect competition phenomena, such as unreasonable bid evaluation, relational bid negotiation, flexible cost and other phenomena. It is difficult for construction companies to gain competitiveness through their own cost advantages, because customers do not mainly use price leverage. To choose construction companies, at the same time, customers are also very limited in their sensitivity to the differences of construction companies. These factors have restricted the determination and specific implementation of construction cost management by construction companies.
5. Project cost control responsibilities, rights, and interests are not fully implemented, and the lack of timely fulfillment results in a weak sense of responsibility for cost control. Due to the long construction period of the project, even after the project is completed, the owner often delays the settlement time or is in arrears with the project payment for a long time, resulting in the failure to cash out the cost-saving awards and seriously dampening the enthusiasm of the project management personnel. In addition, sometimes cost statistics inevitably lag behind, resulting in a lack of basis for checking costs, causing costs to get out of control.
6. The procurement of engineering materials is diverse, with too many links and many materials cannot be purchased directly from manufacturers, and new materials emerge in an endless stream, which makes it difficult to control material prices and the effectiveness of material cost control is insufficient.
7. The promotion and use of the bill of quantities pricing model has put forward new requirements for project cost control of construction companies. The bill of quantities valuation is to fill in the unit price item by item based on the technical conditions and management level of the enterprise and the principle of independent quotation, and calculate the bidding quotation for the entire project. Bill of Quantities valuation belongs to the comprehensive unit price method, which eliminates the error factors in the measurement process and creates an open and fair competition condition, so that the project bidding competition can truly implement the price competition. The level of the quotation depends entirely on the comprehensive management quality of the construction enterprise itself. . Therefore, the promotion and use of the bill of quantities pricing model has put forward new requirements for project cost control of construction companies.
8. Cost effectiveness of construction enterprise project control

Crack Methods and Problems The importance of the effectiveness of cost control for construction companies to enhance their value is self-evident. As a construction company, project cost control should be used as a weapon of competition, a lever of profitability, and a basis for decision-making. It must focus on the following issues:

1. Close the source of cost control and solve the problem of disconnected project cost control. In the actual production and operation process of enterprises in recent years, there often occurs the problem of “doing” regardless of cost and “calculating” regardless of work, which is commonly known as The result of the “two skins” problem is that when the project is completed, the cost greatly exceeds the budget, causing the company’s losses to increase. Therefore, “doing” and “calculation” should be organically combined in project cost budget control. Combining the two skins of “doing and calculating” into one skin is the core point of improving the cost budget management mechanism and controlling the source of costs. This requires that in cost budget management, the extensive management model must be abandoned, and in the subdivided cost projects, vertical and horizontal connections should be closely linked to form a joint force.
2. Build a responsible cost control platform to solve the problem of cost control mechanism. In order to enable project cost control to operate spontaneously and effectively, construction companies should focus on building project management systems, accounting methods, operating procedures, inspection systems, basic work, etc. The basic platform for responsible cost control.
3. Establish detailed project cost targets and solve the problem of cost control decomposition. Project cost control is guided by the construction drawing budget, and the project cost control targets are implemented throughout the entire process of construction enterprise operation and management. To this end, the financial department of the construction enterprise should decompose and implement the target control costs layer by layer based on the principle of cost occurrence and aggregation of each project, forming various project departments, individual projects, unit projects, division projects, sub-projects and responsible persons Target cost control must be carried out, and corresponding control measures and assessment systems must be formulated.
4. Implement the “Two Links” of project cost control to solve the problem of reasonable allocation between enterprises and employees. The first link of the “Two Links” of project cost control is that the company collects the payment from the project department and prepares the project department’s responsibility budget. This link The leading idea of ​​is to “calculate first and then do it”, abandoning the old concept of “what is left after spending the money is the enterprise’s”, but determines the proportion of enterprise expenses to be handed over in advance, thereby controlling the total project cost, and thus defining the relationship between the enterprise and the enterprise. Economic relations and financial responsibilities of the project department. The enterprise is responsible for the winning bid price of the project, and the project department is responsible for the responsibility budget. The second link is the link between employee income and the effectiveness of responsible budget execution. The leading idea of this link is “you will get paid according to your responsibilities, and you will get paid according to the amount of work you do.” It completely breaks the previous distribution mechanism of “the more you do, the less you do, the more you do, the less you do”, and the income lever is used to fully mobilize employees. Actively participate in cost management to define the interest relationship between the company and its employees. Enterprises provide employees with job wages, and employees create benefit wages through their own efforts.
5. Strengthen the research on the effectiveness of project cost control and solve the problem of project control efficiency and effect. On the one hand, through the application of new technologies and new achievements, the project technical benefits will be enhanced, and the operation and management work will be improved simultaneously to expand the benefit fluctuation effect; on the other hand, Fully carry out the comparison and selection of construction plans at all stages of the construction project. There is a problem of construction plan comparison and selection at every stage and link of project construction. Through plan comparison and selection, the goal of lowest cost and highest benefit can be achieved. For example, the construction of temporary facilities will be involved in the early stages of project construction. Temporary facilities can be self-built, rented, or a combination of self-built and rented. The cost of each plan is different. For projects with a long construction period and a large number of manpower, self-construction is generally the main method; for projects with a short construction period and few manpower, leasing is the main method. In the selection of construction machinery and equipment, there is a need to compare and select solutions. The cost of machinery is large, and purchase or leasing must be fully justified. Use your brains on project change claims and find ways to do a good job in engineering claims in a timely manner. During the construction process, every single project that may be changed is not missed, and the original data is accumulated regularly to create conditions for change claims. Find out the pulse of the construction market and skillfully use the peaks and valleys of price fluctuations to reduce material procurement costs.
6. Strictly implement the project contract and solve the basic problems of project cost control. Construction companies must carefully study in advance what goals are to be achieved for each project. In addition to establishing the brand and expanding the reputation, the requirements of the contract must be carefully studied and the critical points of the contract requirements must be properly grasped. In specific work, for projects that exceed standards and create excellence, we must grasp the company’s macro environment and its own strength through careful demonstration, and do not make unrealistic promises easily. The cost of the project increased by one-sided pursuit of false reputation is considerable. Strengthening safety management work will inevitably increase investment in safety protection measures or expend a certain amount of management energy. Otherwise, once an accident occurs, human life is at stake. The accidental losses and sequelae caused by the enterprise will be outweighed by the gain and cannot be quantified.
7. Optimize the allocation of project resources and solve the problem of project cost control interval. First, we must pay attention to cultivating excellent and qualified cost control professionals to ensure the supply of human resources for cost control work. Second, we need to reduce the number of middle management layers, implement a labor recruitment system, and implement a project management department-level management organization. This will not only reduce management costs, but also reduce work links and improve work efficiency. For the various types of work required, an appointment system is implemented according to the arrangements of the construction organization, and the labor consumption is reduced to the minimum level according to the progress of the project, which reduces a lot of troubles in management and avoids labor disputes between both parties. The frequent occurrence has improved the efficiency of construction and management.