The Application Of Activity Based Cost In The Construction Enterprise

With the high-speed information technology development and the establishment of modern enterprise institution, many enterprises have set up their own long-term strategic targets. In the respect of the financial management of modern enterprises, the pursuit of sustainable value creation becomes the new theme of modern enterprises. Faced with fierce competition, advanced cost management approach is an effective means of creating value. The construction industry, served as a salient pillar of the national economy, would also has the choice to change the enterprise cost management methods to improve the competitiveness of enterprises and further to continue to create value for the enterprises constantly. In August 2004, Rong Rong Li, the director of the SASAC, expressed at the central conference for enterprises heads that: "It is the price competition that listed on the first item of the competition among enterprises, and the essence of the price competition is mainly the cost competition", and pointed out that cost index objectively reflects the management level of the enterprises. Obviously, this shows that the importance of cost management in the construction enterprises. The success of a construction project depends largely on whether or not an effective cost management is carried out. The issues of poor cost control, low management level, the high cost and poor economic performance are assumed as important factors that have been restricting the survival, development and profitability of the construction industry.The domestic and foreign scholars have approved the advanced nature and feasibility of operation-based costing though research and practice in the construction industry. The application of the operation-based costing in construction industry would establish a more advanced cost management system, establish a more standardized process management, more scientific organizational structure, to enhance cost control, improve enterprise profitability and strengthen cost management of construction enterprises , production management, product pricing, new product development. It can also help the construction companies to develop the right strategy and tactics to achieve sustainable development.The first part of this paper is the introduction, which demonstrates the background of the research, the latest research achievements home and abroad and summarizes the viewpoint of related scholars on the operation-based costing. The second part of the paper presents specially the related theory, including the basic concepts of operation-based costing, theoretical basis, the principles of calculation and the operation procedures. The third part mainly sets out the composition of the construction industry cost, the current problems with cost management, the analysis on necessity and feasibility of the application of operation-based costing on the areas and the implementation steps and methods The fourth part of the architectural context of the specific case of BOQ for engineering construction enterprises under application of Operation-based Costing empirical proof. The fifth part pointed out that the conclusions of this article, as well as strengths and weaknesses.This paper presents the comprehensive and systematic analysis of the operation-based costing system, and put forward the analysis methods and research hints of the operation-based costing in the construction business management. Emphasis on linking theory with practice, closely related to the current situation of construction business management, with an expectation of the guiding the theory research of current construction enterprise management and practical application.