Research On Cost Of Constructiong And Installation Of Real Estate Corporates

Ever since the central government abolished the Housing distribution system in1998, China’sreal estate industry which is gradually becoming the pillar industry of the national economy andwhose profit margin is climbing to scale has seen its prosperity. However, after a series of controlpolicies coming on in2008, the industry has suffered huge impact and the profit margin has beencompressed, forcing real estate companies to change management concept and reduce projectdevelopment cost.Project development cost is mainly consisted of five parts, which are land cost, constructioncost, indirect cost, financing cost and marketing cost. In first-tier cities, land cost has the highestproportion of around60%. Construction cost is generally accounted for about40%. While only20%of the totally cost is attributed to land cost in small and medium cities, with construction costreaching approximately75%. The two costs, land cost and construction cost, constitute the mainexpense of real estate enterprises. The land cost depends largely on market demand, leaving realestate companies nearly no chance to take the initiative. While the construction cost is affected bymany factors, depending on the internal management and policy. In other words, in order toincrease corporate profits in circumstances where sale price is still, the essence is to controlconstruction cost for real estate enterprises, which is the main content of this paper.This paper first analyzes the current situation of the real estate business, noting that thecompany has to control the construction cost in order to obtain long-term development. Thenbased on the actual project development process, we divide the whole process of cost control intothe design phase, tendering phase, construction phase and settlement phase. The paper alsoproposes to give timely project evaluation and database management when the project completes.The cost control in design phase includes the time determination of the program, the programbidding, quota design and standardized design analysis, which mainly uses the value engineeringtheory and case analysis method. Cost control in tendering phase is consisted of vendor selection,production of tender documents, evaluation and work essentials. A successful case of tender inBeijing is analyzed in the case study. Construction phase includes negotiation-changing, schedulemanagement, dynamic cost study, which uses earned value management to analyze progress anddynamic cost. The settlement phase is mainly based on the control of the settlement, the workamount, unit price control and claims matters. After the completion of the four-stage cost controlsystem analysis, we propose to give evaluation and establish the appropriate cost database after project completion in order to provide relevant experience and data support for follow-up projects.Finally, the paper presents the main way to achieve the cost control goal of each stage is thefront loading of cost management, the establishment of system and improvement of the quality ofmanagement group.