Analysis of Cost Control Measures for Road and Bridge Engineering Construction Projects

Abstract: Based on the author's many years of practical experience in cost control of road and bridge engineering construction, this paper starts from the cost control content of road and bridge engineering construction projects, elaborates in detail on the cost control measures of the project, and analyzes and discusses in detail the cost control methods and improvement measures of the project from the perspective of cost control and management of road and bridge engineering construction projects, in order to achieve the overall goal of project cost control.

Key words: Road and Bridge engineering Construction project; Cost control

Since the 1990s, with the gradual establishment of China's socialist market economy system, enterprises have increasingly realized that cost management plays a crucial role in the competition for survival and development. This presents both opportunities and risks for the transportation industry, especially for road and bridge construction enterprises. A series of changes are taking place in road and bridge construction enterprises in terms of task acquisition, construction organization, construction methods, asset structure, fund application, and operation management. However, it is most worth mentioning that implementing cost control in construction projects is the foundation and core for the survival and development of enterprises. Doing a good job in cost control during the construction stage to achieve the goal of increasing income and reducing expenditure is the most important link in project operation activities.

The content of project cost control

The fundamental principle of cost control during the construction phase is to take the plan as the target value for project control, regularly compare the actual expenditure during the project progress with the target value, discover and identify the deviation between the actual expenditure and the investment control target value, analyze the causes of the deviation, and take corrective measures to control it, so as to ensure the implementation of the control target. The main contents of cost control are:

1.1 Implementation of cost planning

Break down the cost target or cost plan, propose limits for various expenses such as design, procurement, and construction plans, and implement them accordingly during the construction process.

1.2 Cost Supervision and Control

This includes cost control over various tasks, such as design, procurement, and commissioning. Review all expenses, determine the payment of project funds, supervise whether the paid projects have been completed, and ensure that payments are made regularly and quantitatively every month according to the actual project status. Obtain the actual cost report; Conduct auditing activities.

1.3 Cost Analysis

Make a detailed cost analysis report and provide reports of different requirements and levels of detail in all aspects. Including: ① Analysis of the amount of overspending and its causes. ② Cost budget for the remaining work and trend analysis of project costs.

1.4 Develop measures and adjust the cost plan

① Cooperate with relevant departments to provide analysis, consultation and coordination work, so that all parties take cost factors into account when making decisions or adjusting projects.

② Analyze the reasons for the cost overrun and the possibility of savings using technical and economic methods. Starting from the goal of optimizing the total cost, conduct comprehensive optimization in terms of technology, quality, construction period and progress.

③ Through detailed cost comparisons and trend analyses, obtain a quantitative diagnosis of the final project cost situation that takes into account the impacts of contracts, technologies, and organizations.

④ Predict and analyze the cost impact caused by changes in the project image, such as environmental changes and goal changes, adjust the cost plan, and assist in solving the problem of cost compensation.

2. Analysis of Cost Prediction and Control Measures for Road and Bridge Engineering Projects

2.1 Project Cost Prediction

The winning bid price of an engineering project is the upper limit of the project cost. Under normal circumstances, this limit shall not be exceeded. Construction enterprises should, within the winning bid price, analyze and study measures to reduce costs, list the predicted cost values for each unit project, and thereby control the expenditure of costs.

The construction cost of the project department is the cost directly related to the construction activities of the project. To predict the construction cost of a project department, it is generally based on the bill of quantities or the quotation of the project to calculate the quantity of labor, materials, machinery and on-site management fees required to complete the project. Therefore, the predicted unit price should be lower than the bid price.

2.1.1 Determine the labor cost: Labor cost = Unit price per actual working day × actual consumption quota.

2.1.2 Determine material costs: The prices of materials fluctuate with market supply and demand. The bidding unit price should promptly grasp the market price trends of materials and determine reasonable material prices. Material cost = current market price of materials × consumption of materials.

2.1.3 Determine the machinery cost: Machinery cost = Machinery shift cost × Machinery shift consumption.

2.1.4 On-site Management Fee: There is no fixed formula for calculating the on-site management fee. Its determination is related to the actual situation of the construction, such as the on-site environmental conditions, climate conditions, the difficulty of the construction process, and the level of construction management personnel, etc. Generally, it is 6% to 8% of the total of labor, materials and machinery. Under normal circumstances, it should not exceed this limit.

2.1.5 Project Department Management Cost: The project department management cost is mainly considered comprehensively based on the size of the engineering project and the composition of the project department's personnel. At present, the principle of "calculating based on actual costs and controlling the total price" is generally adopted, and the management cost is 2% to 3% of the total project cost. The project department should strictly review and approve the expenditure items and generally should not exceed them.

2.1.6 Cost of the superior institution of the Project Department: The cost of the superior institution of the project department refers to the expenses incurred by the superior institution in organizing construction production and operation activities. Generally, it is determined based on the establishment of the superior institution and the composition of personnel, and the principle of "calculating based on actual expenses and controlling the total price" is adopted to control the expenditure.

2.1.7 Taxes: Taxes are calculated based on the total project cost. The projected project cost will be used as an indicator for cost assessment, and efforts should be made to be as accurate, detailed and reasonable as possible.

2.2 Project Cost Control Measures

2.2.1 Enhance the cost control awareness of staff and involve all personnel in cost control

Under the conditions of a market economy, if enterprises want to remain invincible in the market, they must reduce costs as much as possible. Therefore, road and bridge construction enterprises must not neglect cost control. They should base themselves on their own characteristics, establish appropriate management models, and enhance their awareness of cost control.

2.2.2 Conduct cost analysis throughout the entire construction process to achieve the goal of cost control

Throughout the entire project construction process, through cost prediction, planned cost preparation, and actual cost accounting, based on the data provided by statistical accounting, business accounting, and accounting accounting, the formation process of project costs and the factors influencing cost fluctuations are analyzed to determine whether the project costs are overspent or saved. Therefore, during the implementation of road and bridge enterprise projects, it is essential to collect the original data well. Each department must be able to provide relevant data accurately so that cost analysis has a basis and comparison has an object. Data should be used to speak, and solutions to problems should be found in a timely manner to improve operations, reduce costs, and achieve the goal of cost control.

2.2.3 Emphasize the role of contract control

Contract control should be an important aspect for enterprises to implement cost control. The quality and progress control of construction projects are closely related to it. It is a binding control method generated on the basis of voluntary negotiation between the two cooperating parties.

The strict contract system centered on the project manager covers all levels of project management, from the decision-makers of the enterprise to the various work teams of the project, and involves all professional functional departments of the enterprise. They are all responsible for the cost control of the construction project, forming a complete project cost responsibility network, fully embodying the principle of comprehensiveness in cost control.

2.2.4 Grasp the optimal construction period cost point and seek the lowest cost

Properly handle the relationship between construction period and cost, identify the optimal construction period cost point, and keep the construction period cost at the lowest point. Under special construction conditions, the additional costs incurred by measures taken to ensure the construction period and the losses caused by construction period delays should be repeatedly weighed. After the final settlement of the project is completed, the project funds should be recovered in a timely manner in accordance with the provisions of the contract. Similarly, through technological innovation, construction efficiency and project quality can be enhanced, the construction period can be shortened, and waste caused by delayed work, rework and repair can be prevented. After the overall construction plan is determined, the technical plans and process designs for sub-projects with high technical difficulty and significant cost impact are argued and optimized under the premise that safety, quality and construction period are effectively controlled, with the aim of minimizing costs. In terms of quality, we promote the concept of "honesty", aim for "win-win", improve project quality and prevent accidents from happening.

3. Thoughts on Improving Cost Control Methods for Road and Bridge Engineering Construction Projects

3.1 Establish a responsibility assessment system that combines responsibility and rights

The cost management model and system that combines responsibility, rights and interests should be established in accordance with the principles of democratic centralism and standardization and normalization.

The construction project manager's department is a relatively independent economic entity with the project manager at its core. The main body of cost management in construction enterprises is the construction project manager's department, and the main body of cost management in the construction project manager's department consists of all project management personnel and all construction workers of the construction operation team. The project manager is the core leader of the project cost management main body This has formed a cost management system centered on the project manager. The construction cost, management fee, profit and other expenses of the project should be fully detailed and quantified respectively, and decomposed layer by layer to each project, each stage, each link and each process of management and construction. The job responsibilities and scope of each department and each person in the cost management system should be clearly defined. Grant corresponding rights to fully and effectively perform duties; After completing the work tasks under the guidance of responsibility, certain material rewards should be used to stimulate, completely breaking the past situation where it made no difference whether the work was done well or poorly, or how much or how little was done. It is truly achieved that everyone has a responsibility to take, everything has someone to be responsible for, targets are assigned to individuals, and control is in place, thereby forming a cost control network and cost group management pattern that involves all staff and all aspects.

3.2 Control costs from the aspects of technology and procedures

The management of project costs largely depends on the management intensity at the operation level, which is the key to project cost control. In light of the actual situation of the engineering tasks, taking the construction quota as the standard and the construction team or work group as the most basic accounting unit, the internal quota working days and process unit price contracting system are implemented. Each process in the construction process is strictly controlled, and the personal economic income of employees is linked to the completed workload, so as to mobilize the enthusiasm for tapping potential and reducing consumption. By rationally organizing construction teams, actively proposing reasonable suggestions, and optimizing construction plans, the goal of controlling and reducing costs can be achieved.

3.3 Control costs in terms of quality and progress

During the construction process, attention should be paid to the management of quality and construction period, and the interrelationship among quality control, construction period control and cost control should be properly handled.

Construction should be carried out in accordance with standards, with meticulous craftsmanship to prevent rework and scrapping, achieving an organic unity of high quality and low cost. It is well known that the shorter the construction period, the lower the construction period cost. However, the construction period is not the shorter the better. When the construction period is too short to a certain extent, the construction period cost will rise sharply. The construction period cost is manifested in two aspects. One is the cost of measures taken to ensure the construction period. The second is the owner's claim due to the delay in the construction period. This situation might be caused by the construction environment and natural conditions, or it could be due to internal factors. Not blindly rushing to catch up with the construction period and progress, but arranging the project schedule in a balanced way, minimizing the cost loss caused by human stop-work, and making the comprehensive construction period cost reach the lowest value will play a positive role in improving the economic benefits of the enterprise.

3.4 Strengthen cost control in terms of the composition of expenses

According to the concept of cost control, it is known that the key to implementing cost control lies in formulating cost control standards. Therefore, the methods for implementing cost control are mainly control methods based on different standards. Generally speaking, there are quota control and budget control. Whether it is quota control or budget control, according to the economic nature of the cost, it can basically be divided into the control of material and machinery costs, the control of labor costs, and the control of other costs, etc.

3.4.1 Control of material and machinery costs

It mainly includes major materials, components, other materials, low-value consumables, turnover materials, machinery, etc. Its consumption in construction, production and operation accounts for a large proportion of the total cost and is a major component of the cost of construction enterprises. Therefore, machinery should be used reasonably in accordance with the construction schedule. Material costs, which account for 60% to 70% of the total cost of an engineering project, play a crucial role in cost control and are also regarded as a relatively difficult link to achieve control. In addition to the factor of rising material prices, we must strictly control the six key points of material procurement, quality, transportation, acceptance, issuance and settlement. First, compare prices among different suppliers and choose the best materials to prevent shortchanging and inferior quality at high prices. Secondly, purchase materials nearby to reduce transportation costs and minimize secondary handling. Determine the quantity and batch of goods to be purchased reasonably based on the construction period to lower material reserves and reduce capital occupation. Secondly, it is necessary to strengthen the management of material receipt, dispatch, storage and return, limit the issuance of materials, prevent loss, over-consumption and waste, especially control the three major materials of steel, cement and asphalt, and effectively reduce material loss by relying on technical strength and clear rewards and punishments.

3.4.2 Control of labor cost expenditure

For the control of labor costs, the principle of meeting construction needs while routinely saving expenses should be followed. Budget quotas and fee standards should be used as the basis for control, and the market-oriented mechanism of labor services and the market access system for labor teams should be introduced. Establish an internal self-employment mechanism featuring competitive recruitment, mutual selection, flexible entry and exit, and work efficiency linkage, ensuring that everything has someone to do it and everyone has something to do. Strictly control the proportion of non-production personnel, and arrange personnel entry and exit in a timely manner to reduce sporadic and auxiliary employment.

3.4.3 Control over other expense expenditures

The general expenses mentioned here, in terms of their nature, are fixed or semi-variable expenses, and in terms of their uses, most of them are period expenses. It is necessary to control the expenditure of management expenses well and implement the project manager approval system and financial review system effectively. In addition, the project management department should do a good job in internal competition and formulate corresponding reward and punishment systems, strengthen the management of construction contracts, be well-prepared for any eventuality, and avoid additional losses caused by the owner's claims.

4. Conclusion

In conclusion, the significance of exploring the cost control and management of road and bridge construction projects lies in the rational use of human, material and financial resources to achieve the greatest business benefits. As long as the principle of value is followed, scientific decisions are made, dynamic control is carried out, and strict, thorough and effective cost control management measures are adopted, the construction cost of road and bridge projects can be controlled within a reasonable target range.

References

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[2] Yuan Jianxin, Chi Xiaoming, Engineering Cost Control, China Architecture & Building Press, 2004.

[3] Deng Shujuan, Wang Yueming, A Brief Discussion on Project Cost Management, Shanxi Architecture, 2006.

[4] Qi Anbang, Sun Xianwei, Management and Methods of the Whole Process Cost of Construction Projects, Tianjin People's Publishing House, 2004.