Sunday 18 June 2023

Construction project management | Cost Control


Construction project


Construction project | Enterprise value depends on financial management to enhance the correct view of enterprise value, the relationship between financial management and enterprise value. 

All activities of enterprises are to enhance corporate value, financial management is also one of them, then from our Porter's resource allocation map. It can be seen that the activities that enhance corporate value and realize corporate value. 

First of all, is the transaction cycle, then this transaction cycle, sales, procurement, production, this is a transaction cycle, then we can also have some auxiliary activities, Then these auxiliary activities, strategy, human resources, research and development, then financial management is also one of them, then financial management expresses value stream, information flow, is the main force to enhance enterprise value.


According to the construction project management specifications, the content of construction project management includes: preparation of "project management planning outline" and "project management implementation plan", project progress control, project quality control, project safety control, project cost control, project material management, project machinery and equipment management, project technology management, project fund management, project contract management, project information management, project site management, project organization and coordination, project completion acceptance, project assessment and evaluation, project return visit warranty.

The contract management, understood in a broad sense, should include the bidding of projects and the signing of contracts.

1. Procedures for construction project management

Preparation of project management planning outline 

  1. Preparation of tenders for bidding 
  2. Signing of construction contract 
  3. Selection of project manager 
  4. Establishment of project manager department 
  5. Signing of project management target responsibility letter 
  6. Preparation of project management implementation plan 
  7. Preparation before project start 
  8. Management during construction 
  9. Completion settlement, liquidation of various claims and debts, transfer of materials and projects, 
  10. Economic analysis 
  11. Project management summary report 
  12. Project management work assessment and evaluation 
  13. Reward and punishment according to project management objectives responsibility letter
  14. Disintegration of project management department 
  15. Project return visit warranty.

2. Target control of construction projects

2.1 Progress Control


Construction project progress control refers to the implementation of specific work of the project on the basis of the confirmed schedule plan. Check the actual progress completion within a certain control period, compare it with the schedule, find out the deviation, analyze the causes and the degree of impact on the construction period, formulate adjustment measures, revise the original plan, and ensure that the construction project is completed and accepted as much as possible according to the original plan. The ultimate goal of project schedule control is the completion date agreed in the construction contract.


The progress control method of construction projects is mainly planning, control and coordination. Planning is to determine the overall schedule goal and various schedule control sub-objectives, and prepare the schedule. 

Control refers to the comparison of the actual progress and the planned progress in stages during the whole process of the implementation of the construction project, and timely measures are taken to adjust if there is a deviation. Coordination refers to the coordination of the work rhythm and progress relationship between the participating units, departments and task force groups of the construction project.



The main measures of progress control include organizational measures, technical measures, contract measures, economic measures and information management measures. 


The organizational measures are mainly responsible persons, specific tasks and work responsibilities for implementing the progress objectives at all levels of the construction project; Establish an organizational system for progress control. 

According to the characteristics, main stages and contracts of the construction project object system, the progress objectives are decomposed, and a control target system is established; Determine the progress control system of each participant. 

Analyze and predict the factors affecting the schedule: 

(<>) Technical measures mainly refer to the formulation of feasible construction deployment and technical plans; 

(<>) Contractual measures mean that the progress objectives between each contract in the entire contract network should be coordinated and consistent with each other; 

(<>) economic measures refer to financial guarantees for each participant to achieve the schedule and possible reward and punishment systems; 

(<>) Information management measures refer to continuously collecting relevant information on the actual progress of project implementation, collating statistics and comparing it with the planned progress, and regularly providing progress reports to decision makers.

2.2 Quality Control


The quality of construction projects is a comprehensive requirement for the safety, use, economy, aesthetics and other characteristics of the project in the current relevant laws, regulations, technical standards, design documents and engineering contracts. It is formed under the "contract environment", and the clear requirements for the function, use value, design and construction quality of the construction project in the contract conditions are the "needs" of the construction unit, and therefore the content of the quality of the construction project.


Quality control of construction projects is the operation technology and activities adopted to achieve the quality requirements of construction projects. In the process of construction projects, construction units and investors generally directly introduce the entire production process, participate in all links of the whole process and quality management of various elements. In order to achieve the goal of the construction project and build a high-quality project, it is necessary to implement strict quality control of the entire project process.


Project quality control should adhere to the policy of "quality first, prevention first" and the circular working method of "planning, execution, inspection and treatment", and continuously improve process control. The standards of project quality control are the technical standards of engineering construction and the requirements of the contractor.

2.3 Security Controls

Project safety is the fundamental guarantee for the smooth progress of the project, without perfect security measures, project management can not achieve the expected purpose. The project manager department must put safety control in the first place of management to fully ensure the safety of the project. Safety control must adhere to the policy of "safety first, prevention first". 


The project manager department shall establish a safety management system and a safety production responsibility system. Project safety control should follow the following procedures: determine construction safety objectives, prepare project safety assurance plan, project safety plan implementation, project safety assurance plan verification, continuous improvement, and fulfill contract commitments.

2.4 Cost Control

Cost control of construction projects refers to the guidance, supervision, regulation and restriction of human resources, material resources and expenses consumed by production and operation in the process of project formation, timely correction of deviations that will occur and have occurred, and control of various production expenses within the planned cost range to ensure the implementation of cost targets. Construction project cost control mainly refers to the contractor's implementation of cost control according to the contract price for the contract task object, in order to obtain as much profit as possible. 


Due to the one-time project management, the construction project construction period is long, the construction process is complex, the amount of various resources is huge, the cost information is large, and the various statistical calibers are inconsistent, so the cost control task of the construction project is very complex and arduous.

3. Management of production factors of construction projects

The production factors of a construction project refer to the labor, materials, machinery and equipment, technology and capital invested in the construction project:

3.1 Construction Project Workforce Management


There are two main sources of project labor: first, the existing employees of the enterprise; The second is to subcontract to labor service companies. Regardless of the source, skilled workers must be licensed.


The labor service method within the enterprise shall implement the labor service contracting responsibility system, and the labor management department of the enterprise and the project manager department shall complete the contracting task by signing a labor service contract. Labor subcontracting must also sign a labor subcontract with the labor service company, clarifying the responsibilities and rights of both parties. According to the regulations on the qualification management of construction enterprises in USA, construction enterprises are divided into three major sequences. Among them, labor contracting includes L3 category. 

The construction project department can select the corresponding construction team according to the specific situation. The key to the selection of construction teams is whether the technical work can meet the needs of the project.


The dynamic management of labor refers to the dynamic process of tracking, balancing and coordinating labor according to changes in production tasks and construction conditions to solve labor imbalance and disconnection between labor and production requirements. The aim is to achieve an optimal combination of workforce dynamics.

3.2 Material management of construction projects

The content of material management of construction projects mainly includes: 

(1) Since material costs account for the largest proportion of working capital and project costs, strengthening material management is the most important way to improve the economic efficiency of construction enterprises. 

(2) Material supply is the first link of material management. At present, the materials mainly include centralized supply by enterprises, self-procurement of projects and joint supply of enterprises and projects. 

(3) On-site material management includes the establishment of material management responsibility system, material plan management, site acceptance, storage and storage, distribution, use supervision, recycling and accounting.

3.3 Management of machinery and equipment for construction projects


The management of machinery and equipment of construction projects refers to the management of the whole process of operation of machinery and equipment of construction projects. Including construction machinery and equipment, reasonable use of equipment, maintenance and repair of equipment and update of equipment.


Construction project machinery and equipment refers to the process of reasonably selecting mechanical equipment according to the requirements of mechanized construction in the construction process. Machinery and equipment mainly include purchase, leasing and self-made.


The rational use of machinery and equipment should pay attention to the establishment of the use system of mechanical equipment, strictly implement the technical regulations in the use of mechanical equipment, and establish technical files of mechanical equipment.


Maintenance of mechanical equipment is a measure to maintain the good technical condition of mechanical equipment and carry out preventive technical care of the equipment. Mechanical equipment repair is the repair and elimination of tangible wear of mechanical equipment, and the replacement and repair of damaged and aging parts.

3.4 Construction project fund management

Fund management is of great significance for the smooth implementation of construction projects. It mainly includes: capital income forecast, capital expenditure forecast, capital income and expenditure comparison, fund raising and fund use management.

3.5 Construction project information management

Information management is the basic work of project management and the guarantee of achieving project goal control. The main task is to provide the leaders at all levels of project management and the personnel of the participating units with the required comprehensive information in a timely and accurate manner, so as to dynamically carry out project planning, quickly and correctly make various decisions, timely check the implementation results of decision-making, reflect various problems exposed in the implementation of the project, and serve the overall goal control of the project.


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