2. WHAT IS COST MANAGEMENT?
BASICALLY, AS A PART OF FINANCE AND ACCOUNTING, THIS IS A PROCESS OF
PLANNING, MONITORING AND CONTROLLING THE BUDGET AND EXPENSE OF A
BUSINESS. THIS HELPS TO PREDICT AND MANAGE COSTS SUCH AS TO HELP TO CURB
AND KEEP COSTS FROM GOING OVER THE BUDGET.
3. WHY IS IT IMPORTANT?
IN RECENT TIMES WE HAVE HEARD AND SEEN A LOT OF PROJECTS GETTING
SHUT DOWN OR BEING STOPPED DUE TO COST OVER RUN A.K.A POOR COST
MANAGEMENT.
THIS IS A MENACE IN THE CONSTRUCTION INDUSTRY AND THIS IS BRINGING
DOWN THE OVERALL OUTPUT OR EFFICIENCY OF THE CONSTRUCTION
INDUSTRY.
THE CONSTRUCTION INDUSTRY OF INDIA, HAVE SEEN GOVERNMENT PROJECTS
TO HAVE COST ESCALATION OF EVEN 2000%(MOSPI) IN 2017, DUE TO VARIOUS
REASONS, ONE OF THE PRIME FACTORS BEING DELAY.
4. • COST MANAGEMENT HAS BEEN ALWAYS A CRUCIAL PART OF THE
CONSTRUCTION INDUSTRY AND IT MUST EVOLVE ACCORDINGLY
WITH TIME AND TECHNOLOGY TO GIVE MORE PRECISE RESULTS
SO AS TO REDUCE THE LOSSES AND INCREASE THE OVERALL
EFFICIENCY OF THE CONSTRUCTION INDUSTRY.
5. COST MANAGEMENT AS OUR PROJECT
BEING ONE OF THE BASIC AND DOMINANT FACTORS OF PROJECT MANAGEMENT,
WE TRIED TO ACQUIRE MORE AND MORE KNOWLEDGE ABOUT THIS, WITH
PURPOSE OF FINDING ANY FLAWS IN THE PROCESSES AND THUS STRIVE TO
BRING DOWN ERRORS AND FIND OUT MORE APPROPRIATE WAYS TO GET THE
JOB DONE.
WE ARE ALSO PLANNING TO ANALYSE A LIVE PROJECT, THUS TO HAVE A
DETAILED KNOWLEDGE OF PROS AND CONS OF PRACTICAL WAYS THAT ARE
FOLLOWED ON THE GROUND.
6. DEVELOPMENT THROUGH..
WE HAVE ALREADY STUDIED BASICS ABOUT COST MANAGEMENT IN OUR ACADEMICS. WE NOW ARE
TRYING TO EXPLORE OTHER ASPECTS AND FEATURES OF COST MANAGEMENT.
STUDYING PAPERS BY DIFFERENT SCHOLARS FROM AROUND THE WORLD AND FINDING OUT
VARIOUS APPROACHES OF COST MANAGEMENT IN DIFFERENT COUNTRIES.
WE HAVE LEARNT ABOUT VARIOUS TOOLS AND TECHNIQUES AND HOW TO IMPLEMENT THEM AS OF
NOW.
7. TOOLS AND TECHNIQUES
WE HAVE LEARNT ABOUT SOME TOOLS AND TECHNIQUES OF COST MANAGEMENT.
LET’S HAVE A BRIEFING ABOUT SOME OF THEM:
Just-In-Time (JIT) System: The main aim of JIT is to produce the required
items, at the required quality and quantity, at the precise time they are
required. JIT purchasing requires for the items where too much carrying costs
associated with holding high inventory levels. purchasing system reduces the
investment in inventories because of frequent order of small quantities.
Activity Based Management(ABM): Activity based management is the use of
activity based costing to improve operations and to eliminate non-value
added cost. The main goal of ABM is to identify and eliminate non-value
added activities and costs.
8. Kaizen Costing: Kaizen costing is the process of cost reduction during the manufacturing phase
of an existing product. The Japanese word 'Kaizen' refers to continual and gradual improvement
through small activities, rather than large or radical improvement through innovation or large
investment technology.
Value chain: Value chain analysis is a means of achieving higher customer satisfaction and
managing costs more effectively. The value chain is the linked set of value creating activities all
the way from basic raw materials' sources, component suppliers, to the ultimate end-use
product or service delivered to the customer.
Total Quality Management(TQM): Under the TQM approach, all business functions are involved
in a process of continuous quality improvement.
9. AND THEN?
WELL ALONG WITH LEARNING ABOUT THE EVOLUTION OF TOOLS AND
TECHNIQUES WE ALSO HAVE LEARNT ABOUT VARIOUS ADVANTAGES AND
DISADVANTAGES OF THE BUDGETORY CONTROL PROCEDURES TAKING PLACE IN
CONSTRUCTION INDUSTRY AT THE PRESENT.
WE FURTHER PLAN TO STUDY ABOUT THE COST MANAGEMENT TECHNIQUES
USED AT NICMAR(DELHI-NCR) IF POSSIBLE, AS THIS PROBABLY IS THE BEST LIVE
PROJECT TO STUDY ABOUT, CONSIDERING PREVAILING CIRCUMSTANCES.
10. VARIOUS STANDARDS AND CODES
WELL AS A FACT, COST MANANGEMENT IS MORE OF USING ONES LEARNING AND
EXPERIENCE TO COMBINE VARIOUS TOOLS AND TECHNIQUES TO CURB THE
PROBLEM THAN USING CODES. BUT STILL THOUGH, WE NEED TO FOLLOW CERTAIN
RULES TO MAKE THE PROCESS EASIER. THE TWO BOOKS MENTIONED BELOW ARE
HELPING US IN THE PROCESS:
GUIDANCE NOTE ON MAINTENANCE OFCOST ACCOUNTING RECORDS FOR
CONSTRUCTION INDUSTRY INCLUDING REAL ESTATE AND PROPERTY
DEVELOPMENT ACTIVITY- INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA.
CONSTRUCTION PROJECT MANAGEMENT: GUIDELINES (PART 3: COST
MANAGEMENT)- BUREAU OF INDIAN STANDARDS
12. CONCLUSION
AS OF NOW WE HAVEN’T FOUND OUT ANY FLAWS IN THE PROCESS. WE ARE
STUDYING FURTHER TO ACQUIRE MORE POINTS TO HELP US FURTHER WITH
OUR PROJECT.
13. REFERENCES
[1]Cooper, R. The Rise of Activity-Based Costing-Part One: What Is an Activity-Based Cost
System? Journal of Cost Management, 1(2),pp.45-54,1988.
[2]Rui Zhan, BinRao, Wei Wu, The Application Study on Activity based costing in Cigarette
Manufacturing Industry, Accounting Research,(6), pp.59-65,July2006.
[3] Liang-HaiLei, Yu Zhang, The Application of Activity-based Costing in the Mortgage and
Valuation Company of Real Estate, Friends of Accounting, (5), pp.52-53,2010.
[4]Gui-WenLiu, Yan-Juan Liang, The Application of Activity-based Costing in the Field of Real
Estate Development. Co-Operative Economy & Science, (384),pp.30-31,2010.
[5]Yi-JianSun, Ru-Fu Huang, Dai-Lin Chen, Hong-Nan Li, Gang Liu. Design and development
of dynamic real state cost management system, China Civil Engineering Journal, 42(6), pp.121-
125,2009.
[6]Wang Ai-dong. Enterprise logistic cost budget based on operation cost, Journal of Chang’an
University (Social Science Edition), 10(1), pp.20-24, 2008.
[7] Cooper, R. The Rise of Activity-Based Costing–Part Two: When Do I Need an Activity-Based
Cost System? Journal of Cost Management, 1(3), pp.41-58, 1988.
[8] Cooper, R. The Rise of Activity-Based Costing–Part Three: How Many Cost Drivers Do You
Need and How Do You Select Them. Journal of Cost Management, 1(4), pp.34-46,1988.
EFFECT OF CONSTRUCTION DELAYS ON PROJECT TIME OVERRUN: INDIAN SCENARIO by Ashwini
Arun Salunkhe &Rahul S. Patil (IJRET)
