Sunday 19 December 2021

Project contract management and responsibility cost control

As a first-level economic organization, winning profit-making benefits is the essential performance of enterprise management, taking the enterprise as the profit center, taking the project manager department as the cost center, and taking the contract responsibility contract as the link, clarifying their respective "responsibility", "right" and "benefit" relationship, carrying out the project cost management responsibility system and project cost accounting system as the main content of the project management, is the construction enterprise in the fierce market competition, seeking economic benefits, expand the living space of the effective management model. the main management carrier of this model is responsibility cost management, and contract management is the breakthrough of deepening liability cost management.

No # 1

The cost of liability and its management principle the project liability cost refers to the cost that should be borne by the responsible person according to the controllable degree of the project responsible person, and the responsible person of the specific responsibility center can measure and grasp the development and change of the responsibility cost in a certain period, and can adjust the liability cost accordingly in time. the elements that make up the bead of responsibility are direct costs (labour, materials, machinery, transportation, other direct charges) and indirect costs. 


The consumption of the material machine in the direct fee is controllable by the construction organization, which is responsible for the construction work guide, and the unit price of the workday, the unit price of the materials, the machinery desk shift fee, the freight charge, and other direct expenses are uncontrollable and are the responsibility of the project management (project manager department). the project overhead shall be used by the higher authorities of the project department to organize the relevant departments to determine the criteria or total cost according to the composition of the overhead cost.

The project manager department as the cost center of construction enterprises, management, especially cost management, directly related to the survival

And development of enterprises, in the process of responsible cost management should follow the following principles: 



Comprehensive and dynamic management according to the contract of responsibility cost and the actual situation of the project, the project department carries out comprehensive dynamic management of the project. the project department decomposes the target cost of the project layer by layer, signs the economic risk contract, carries out the responsibility target cost risk mortgage contract, mobilizes the enthusiasm of full participation, responsibility sharing and benefit sharing. the first manager of project liability cost should analyze the urgent requirement of responsibility cost, make the cost reduction index linked with the economic benefits of project personnel, and make all the staff do their due diligence for the responsibility cost management.


"Responsibility", "right" and "benefit" combined cost responsibility system responsibility cost management must comply with the "who controls, who is responsible, who bears, who benefits" principle of responsibility decomposition and "benefit and cost linkage, distribution and surrender link" control and supervision mechanism, the signing of the project responsibility cost contract, is the beginning of responsibility cost management, the essence of the responsibility cost control process is the contract performance process. the higher authorities of the project manager's department shall carry out macro-management on the performance and fulfillment of the contract, micro-manage and control the contract by the first person responsible for the project, and establish a cost analysis and appraisal system with the aim of implementing the responsibility cost responsibility system with the aim of reducing costs and improving efficiency.


The scientific and reasonable effectiveness of the project cost target to issue indicators, formulate measures, inspection and supervision and other economic and legal means is an important way to ensure the effectiveness of the truth of responsibility cost management. 


In order to ensure the effective truth of responsibility cost management, in the process of cost management, we should make full use of the target management method, the quantitative profit analysis method and the value engineering method, so that the responsibility budget of each management level must ensure the completion of the profit index at the next level, and the responsibility budget should be based on the construction content undertaken at different levels, the preparation of detailed material machine consumption and responsibility unit price, to have strong operability, transparency, easy accounting and so on.


Unified leadership, hierarchical responsibility, management responsibility cost management should have the project manager department, the competent manager of the higher authorities unified leadership project responsibility cost management, the project manager as the first responsible person for the responsible cost, on behalf of the project manager department (responsible cost management center), the implementation of the whole process of project management to achieve responsibility costs, paid profits, payment costs and other analysis and calculation and responsibility cost performance, perform process analysis and other work unified management.

No #2

Contract management is a breakthrough in deepening the management of liability cost project liability cost management should take "quality-effective management" as the fundamental, according to the composition of responsibility cost and the responsibility of project cost responsibility, the degree of cost control.  


The formation of contract management as the center of the responsibility cost management system. through contract management to contact and constrain the economic relationship between inside and outside the project, the process of contract performance is actually the process of cost occurrence and responsibility cost control. 


Signing and transformation of contracts at all levels must meet the general requirements of responsibility cost control, and strengthen and improve the management of liability cost by strengthening contract management.

The management of liability cost contract is to confirm the contract document of "responsibility", "right" and "benefit" relationship between enterprise and project manager and cost responsibility, and it should clarify the composition of responsibility cost, the "responsibility", "right" relationship and appraisal factors of both parties to the contract and the corresponding incentive mechanism. the signing of the contract of liability cost should be based on the full prediction and pre-control of the project cost, and the cost forecast and risk analysis are the primary work of the responsibility cost management.

The performance management of the contract of liability cost contract is the embodiment of the management and control of the liability cost. through contract management, we can improve the quality of liability cost management, so that the pre-control of liability cost, prediction into practice. 


To this end, according to different projects and various types of liability cost contract reflected in the cost forecast results and their own management level, the preparation of detailed cost plans and practical cost reduction measures, detailed cost accounting personnel-oriented, full participation, each responsible for the cost management and supervision and control network, establish and improve the cost management of the basic management. 


The same time, from the first cost responsible person to the cost of the specific controller to establish a cost analysis and assessment system to implement the responsibility system as a means to reduce costs and improve economic efficiency, cost-responsible people at all levels should have their own economic responsibility, find problems to correct in a timely manner. 


At the same time, the examination and analysis of economic liability contract is also an important means to strengthen contract management and effectively control cost.


Strengthening cost management is the only way for construction enterprises to create economic benefits, and strengthening contract management is the necessary means to promote cost management. 


To strengthen the management of responsible cost with the management of the liability cost contract as the breakthrough is not only beneficial to the self-action, self-management and self-restraint of the project manager department, but also beneficial to the long-term development of the construction enterprise and the improvement of the overall economic benefits, and more convenient for the enterprise to supervise, inspect, coordinate, control and service the project manager department.

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