The Implement Of Target-Activity Cost Management In Construction Enterprises

Cost management is the core of enterprise management. With economic globalization and economic integration, construction enterprises are facing tremendous challenge and competition from all over the world. Acquiring and maintaining long-tem competitive advantage is the key to survive in the market competition. In order to acquire price advantage, Construction enterprises demands several advanced cost management methods.Target cost management and activity cost management are mainstream cost management methods which is widely used in many enterprises all over the world. However, both of them have limitations in some respects. Target cost management is the final cost of the product with clearly requirements, which lack of appropriate means of implementation. Cost is controlled from the micro level by Activity-based costing which lack of advanced planning to the total cost. Cost drivers aren't taken into account in the level of corporate strategy.Using source control theory of target cost management and analysis of activity-based cost, Target-Activity Cost Management has ability to forecast and certain accounting cost that will be occurred, optimize the business processed of certain project, and accurate constructing cost. Considering the composition of construction cost and the characteristics of construction production, Target Activity Cost Management in the level of construction project is a method which reduce construction cost to achieve intend goal through planning, organizing, controlling and coordinating. And, in the same time, the quality and schedule is satisfied.This study aimed at improving and deepening Target-Activity Cost Management in construction enterprises, which is a case study in Chengdu Metro Line 1 South Railway Station Project. Using qualitative and quantitative analysis, this paper acquire data through interview and field observation, thus arrive at accurate conclusion. Furthermore, some recommendations is proposed. This paper is divided into seven chapters.Chapter I. Introduction. In this part, basic data recent years is analyzed that from Chinese construction industry. We find that construction cost is more important then before under the influence of the opportunities industry. It is necessary to explore the feasibility of integration of target cost management and activity-based management embedded and detailed. This part review literature of construction cost management, target cost management, activity-based management and Target-Activity Cost Management. Both domestic and foreign literatures is included.ChapterⅡ. The framework of Target-Activity Cost Management in construction project. Considering the features of construction project, this part clarify that the characteristics in application and management process both in target cost management and activity-based management. The advantage and drawback of those cost method has been found in this part. Furthermore, the author found that target cost management and activity-based management are inherently complementary relationship that can be integrated, which has the possibility to use in construction enterprises. Thus, this part is formed the framework of Target Activity Cost Management.ChapterⅢ. Target cost formulation of construction project. This part is divided into target cost estimate and target cost plan. Prior to bidding, according to the features of certain project and the advantage and the strategies of the whole company, the individual project target cost and the total target cost must be developed. After acquire the project, according to the project construction magnitude, the company found appropriate project team. Considering the potential and homothetic project in the company, the project team have to develop cost plan of the project detailed.ChapterⅣ. Target-Activity cost break-down of construction project. According to general procedure of Activity-Based Management, the project cost must be gathered the cost of resource base and activity base. And based on consumed resources of activity and consumed activity of products efficiently, total project cost must be allocated to unit project.ChapterⅤ. Cost calculations and cost control of construction project. According to the composition of construction project, direct costs and indirect costs that deduct management fees and financial expenses are reckoned into the cost of the project. Except for direct cost, indirect cost must be allocated and collected into cost accounting object. Furthermore, calculate the actual costs of each construction project.In the occurrence of project cost, the resource consumed and expenditure paid must be guided, supervised and regulated. In order to ensuring cost object, the cost deviation must be corrected in the process of cost control.Chapter VI. The analysis and evaluation of Activity-Based Management. The cost analysis of Activity-Based Management is developed into three aspects, which include cost problems, construction schedule and cost elements. Individual analysis and comprehensive analysis must be developed for construction project. The evaluation of Activity-Based Management can be divided into two levels:first, the assessment of project manager; second is the departments, construction teams, construction groups and individuals in the project.Chapter VII. Conclusions. Through above inference, I conclude that:As a advanced cost management, Target-Activity Cost Management has the perspective to apply to construction enterprise; Considering the characteristic of construction project, accounting conclusion and control idea based on activity maybe penetrate into target cost management; Target-Activity Cost Management is a system.In the process of implementation, inter-sector and inter-post cooperation must be strengthened. And cost control points must be excavated deeply.