Study On Cost Control Of Real Estate Development Project

Costs are necessary and fundamental for running and developing enterprises, so enterprise need to manage and control their costs. Cost management and control are essential for all enterprises, including real estate enterprises. As real estate industry is developing fast in China, it is impossible to survive through fierce market competition and make considerable profits without absolute advantages. All of these are inseparable from cost control for all parts of projects during corporate internal management. To increase real estate enterprises’ revenues, it is necessary to strictly control and manage their costs, so as to maximize their profits.In this paper, Project A developed by Gezhouba Real Estate Co., Ltd is examined by case analysis. Its costs are theoretically analyzed based on cost control and real estate development costs. Meanwhile, models of development management, organizational forms and value chain are deeply studied according to theories about business management, in order to find out this real estate company’s strengths and weaknesses in cost management and control. Firstly, background and status quo of this project are described. Next, this real estate company’s approaches to manage and control its costs in specific projects are briefly introduced, so as to analyze innovative cost management and control in practices. Pursuant to development life cycle of a real estate project, current management of Project A is examined and cost control in all stages is deeply explored.In the decision-making stage, it is necessary to clarify marketing strategies of a project, in order that the enterprise can preliminarily occupy an advantageous position with low-cost strategies through fierce competition. In the preparatory phase, there is a need to investigate geological situation of project location and improve elementary design proposal on the premise of advantageous geological conditions, in order to further reduce engineering costs. Budget shall be designed for steel content required by engineering materials, so that the engineering costs may be kept within predetermined scope. In the bidding phase, constructor shall be selected with expert evaluation method. Priority shall be given to technologically sophisticated constructors requiring low construction costs and skilled at project management, to reduce engineering costs on the premise of not sacrificing engineering quality. Rules of contract shall be properly coordinated and construction costs need to be decreased. In the phase of settlement, efforts shall be made to develop reasonable schedules, optimize construction proposals and enhance engineering logistics management and project audit. Besides, costs shall be controlled in the whole process of construction to effectively control construction costs. In the selling phase, costs shall be controlled in combination with preliminary marketing strategies by optimizing selling procedures, constructing organizational framework for sales department, using marketing props and materials, and making effective use of project marketing expenses.In this paper, Project A is intensively studied by integrating theories with practices, to pertinently solve problems with corporate cost management. Corporate costs will be minimized to make greater profits for the enterprise only if they are managed and controlled scientifically and effectively. The topic is examined in this paper, in hope of exploring the most effective cost management and control method for real estate enterprises.