Ch. 15 COST CONTROL

Ch. 15 COST CONTROL - CHAPTER 15 COST CONTROL Click to edit...

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Click to edit Master subtitle style CHAPTER 15 COST CONTROL
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The mobile unit and a hardhat Digital Hardhat Using a whiteboard Multimedia Information or MFR
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COST CONTROL l Digital Hardhat System: The digital Hardhat (DHH) technology enables dispersed users to capture and communicate multimedia field data to collaboratively solve problem, and collect and share information l The technology: DHH is a pen-based personal computer (PC) running a windows operating system, which is used to collect multimedia information such as text, sound, video and images
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COST CONTROL AS A MANAGEMENT TOOL l The early detection of actual or potential cost overruns in field construction activities is vital to management. It provides the opportunity to initiate remedial action and increases the chance of eliminating such overruns or minimize their impact l An important byproduct of an effective cost reporting system is the information that it can generate for management on the general cost performance of field construction activities l The determination of current project status, effectiveness of work progress, and preparation of progress payment request requires data generated by both project planning and cost control reporting system l Project cost control data are important not only to project management in decision making processes but also to the company’s estimating and planning departments because this data provides feedback information essential for effective estimates and bids on new projects
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PROJECT COST CONTROL SYSTEMS l The design, implementation and maintenance of a project cost control system can be considered a multi-step process l The five steps, shown schematically in fig. 15-1, form the basis for establishing and maintaining a cost control system l The following questions regarding each step in the implementation of the cost control system must be addressed; Chart of Cost Accounts: what will be the basis adopted for developing estimated project expenditures and how will this basis be related to the firm’s general accounts and accounting functions? What will be the level of detailed adopted to defining the project cost accounts and how will they interface with other financial accounts? Project Cost Plan: How will the cost accounts be utilized to allow comparisons between the project estimate and cost plan with actual cost as recorded in the field? How will the project budget estimate be related to the construction plan and schedule in the formation of a project cost control frame work? Cost Data Collection: How will cost data be collected and integrated into the cost reporting system? Project Cost Reporting: What project cost reports are relevant and required by
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Figure 15-1 Steps in Cost Control
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COST ACCOUNTS l The first step in establishing a cost control system for a construction job is the definition of project level cost centers l The primary function of the cost account section of a chart of accounts is to divide the total project into significant control units,
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This note was uploaded on 11/11/2009 for the course CEIE 463 taught by Professor Bhargava during the Spring '09 term at George Mason.

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Ch. 15 COST CONTROL - CHAPTER 15 COST CONTROL Click to edit...

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