Analysis on the Measures to Increase the Economic Profit of Construction Project

摘要：施工企业要在市场经济的大潮中寻求时机，敢于竞争，以自身的优势占领大市场中的一席之地，在激烈的市场竞争中求生存，求发展。所以，提高施工项目的成本控制水平是转换企业经营机制的关键。施工项目成本控制的目的，主要是降低项目成本，提高企业的经济效益。

Abstract: construction companies should look for opportunities in the market economy, be ready to compete, establish themselves by competitive edges, survive and develop amidst fierce market competition. Therefore, to improve the control of construction cost is crucial to the transformation of the operating mechanism of construction companies. The control of the cost of construction projects aims to reduce project cost and increase the economic profit.

关键词：建筑施工；经济；效益

Keywords: construction; economy; profit To control the cost of construc- tion projects is to guide, supervise, regulate and control the consumption of human resources, materials and expenditures incurred during the whole process of construction, correct the discrepancies between the actual cost and the planned cost, and put all the expenditures within the limit of the planned cost, so as to meet the targets for cost.

Construction companies should look for opportunities in the market economy, be ready to compete, establish themselves by competitive edges, survive and develop amidst fierce market competition. Therefore, to improve the control of construction cost is crucial to the transformation of the operating mechanism of companies. The control of the cost of construction projects aims to reduce project costs and increase the economic profit.

I Principles to be observed

1. Revenue-expenditure ratio

Before the occurrence any huge expenditure, check whether there is corresponding budgetary revenue, and whether the expenditure is more than the revenue. In the cost accounting for each phase and each sub-project and monthly cost accounting, estimate the ratio between the actual cost and the budgetary revenue, so as to find out reasons for discrepancies between the actual cost and planned cost, correct negative deviations of the project cost and reduce the cost as much as possible.

2. The principle of all-round control

All-round control means the overall control of the project cost during the whole process. Project cost is a comprehensive indicator that involves the performance of all departments and teams and the immediate interests of the staff. All the staff should pay attention to cost control. The cost of each economic activity should be controlled from the very beginning of the project to the expiration of the warranty after the de- livery of the project. Some construction companies often urge all departments and teams to maintain solidarity and collaborate to reduce the cost of construction projects and increase the profit of the companies, but in vain, resulting in low revenue.

3. Give priority to the cost control during construction

Cost control during the construction period is the most important. Cost control before the start of construction is a preparation for the cost control during construction, and it is too late to conduct cost control after the project is completed. Therefore control cost during construction determines the economic return of a project.

4. Manage by objectives

To manage by objectives is a method to implement plans that breaks down the plan into guidelines, objectives, and measures, makes further specific requirements, and assigns the tasks to each department, team and individual. Before the start of construction, thorough plans need to be made for the whole construction process. Tasks should be assigned to each department, construction corps and team, so that every participant in the construction process has a goal and plan while working.

5. The principle of conservation To conserve human, material and financial resources is to the key to improving the economic profit and an important part of cost control. First, strictly follow the rules on the scope and amount of expenditure and applicable fiscal rules, limit and supervise all expenditures during the construction process. Second, improve the

scientific management of construction projects, optimize construction plans, and enhance productivity. Third, take technical and organizational measures to prevent the cost from running out of control, and prohibit any kind of profligacy. To reduce the consumption of human, material and financial resources is the top priority during cost control, for construction projects of all kinds.

6. Management of exceptions

An exceptional problem is one that does not often happen. Hydraulic projects define it as “unexpected problem”. For example, during construction, the material prices were expected to be within the limit of the planning and the cost. However, sudden price hikes exceeding the CPI would drag the actual use of funds out of control. To prevent this from happening, scientific and systematic methods of cost estimation should be taken, and as many materials as possible should be prepared before the material prices go wild, based on researches on the fluctuations of the market so as to prevent more economic losses.

7. Integrate responsibilities, rights, and interests

In order for the cost control to be effective, we must follow the principle of integrating responsibilities, rights and interests, as required by the economic responsibility mechanism. During the construction, project managers, engineers, business managers, construction corps and production teams should all bear responsibilities for cost control, so as to form a net work of responsibilities for project cost. Besides responsibilities for cost control, all administrative departments, construction units and teams should also be entitled to the rights to control the cost, that is, limited rights to determine independently the use of funds. Finally, project managers should regularly check and assess the expenditures of all departments, construction corps and teams, and connect their performance on cost control with their salary under a reward and punishment system. Cost control based on the integration of responsibilities, rights and interests is true project cost control, and is the only way to achieve good economic profit.

II Measures to be taken

1. Control the materials

It has been practically proven that raw materials account for the largest percent of the cost of a project, 60% to 70% generally. Therefore, saving on the cost of materials is the most important part of reducing the cost of a project. Before the start of construction, the amount of materials needed should be calculated based on the work amount of the project and mix proportions. The consumption rate of raw materials should be made to the lowest. Reliable and experienced personnel should be appointed to receive the materials. They should check the quality and quantity of the materials. There are some difficulties in receiving the materials, as the materials are delivered by different kinds of vehicles such as automobiles, tractors, and motor tricycles. Some deliverymen often try to cheat and play some tricks over the quantity. Second, stop using deliverers who keep cheating after being warned. Third, personnel should be assigned to supervise the site to detect and solve problems, and to prevent the same problems from happening again. Under the premise of guaranteeing quality, source materials of the lowest prices, shortest distance, and best location, so as to save on the cost of materials. To make the best use of the templates, components, and other materials, classify, move and store them according to the progress the project. Materials no longer in need should be put at a designated place, so as to keep the site clean. These measures would be effective in reducing the cost of the materials.

2. Control the consumption of human resources

The following measures should be taken during construction. First, control the number of construction workers. Try to hire all-rounder production personnel, so as to enhance production efficiency. Second, hire more multiskilled temporary workers and less fulltime workers, since the sum of salary, construction subsidies, bonus for night shifts and payment for over-time work is larger than the payment for temporary workers. This is one way to reduce the cost. Third, execute the reward and punishment mechanism based on work performance, so as to stimulate the enthusiasm of the staff. Those who take initiatives, do well at work and have made big contributions should be commended at conferences, rewarded and put on the record, as the basis for future assessment and promotion. Those who are not responsible and can’t fulfill the tasks, should be criticized, educated and punished. Four, try to reduce the number of the management personnel, encourage them to take on more roles and responsibilities, assign them more tasks, so as to cut the cost by improving the management and productivity.

3. Control the machinery cost

The following measures should be taken in the use of machines during construction. First, according to the construction plan and the time order of the projects, bring the machined to the site three days in advance, so as to make the best of the machines, increase the working time of the machines, reduce the down time of the machines, and arrange the site. Meanwhile, use as less machines as possible according to the progress of the project, in order to make full use of the machines, and save on machine transport and use costs. Second, rent machines. It is cheaper to rent than to be buy machines. It is practical and economical to rent machines. Third, according to the conditions of the construction site, try to use local electricity network for the construction instead of power-generating units (but there must be power-generating unites on site for contingency), as local electricity is cheaper than self-generated power. Fourth, provide training for all the machine operators before the start of the construction, so they can operate more fluently and professionally. This prevents the reduction of the efficiency of the machines. Ask the operators to keep good maintenance of the machines and prepare wearing parts before the start of the construction, maintain the integrity of the machines and make full use of the machines during construction.

(Author: from Anrui Engineering Consultancy Limited Hefei, Anhui Province 230000)