Cost-control procedures are used to create cost-efficient projects. Cost-control procedures are only useful if they are based on an up-to-date and accurate accounting of the costs incurred by the company with greater insight into potential risk areas. Despite the availability of various project cost control software and cost control techniques, many of the construction projects still do not achieve their cost and time objectives. EFFECTIVE CONTROL SYSTEM CHARACTERISTICS Cost Control in every level focuses on input, process and output of a project. At each level of these three stages, it’s very important to have an effective control system.
Cost accounting Cost Accounting is a process of collecting, summarizing and evaluating various alternative courses of action. Its objective is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future. Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, information must be relevant for a particular environment.
Additionally, other cost saving methods can be lease of office equipment, purchasing reconditioned devices instead of new ones, and learning to negotiate effectively with stakeholders such as suppliers and vendors of material and equipment, Cutting traditional advertising costs and opting for social media advertising, employer branding through its employees and CSR projects and reviewing all expenses including the little ones. In planning a Cost Saving Strategy, Companies must evaluate the types of Costs. These include Fixed Costs, Variable Costs, Direct Costs, Indirect Costs, and Operating Costs. Fixed cost- A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced. These are expenses that have to be paid by a company, independent of any business activity, thus they are standard.
Written Assignment Unit 2 3 Process costing system is usually implemented in the companies whose production is characterized by the pattern and continuity, and producing a standard product with same specifications. Actually, the importance of process costing system emerged with the technological development of machinery and equipment, which doubled the productivity of factories to satisfy the needs of consumers of standard products that are widely consumed. It has become difficult and unproductive to track the costs of each production order as large-scale production is built primarily for the market as a whole and not for each individual customer. Hence, it is necessary to obtain a cost system that provides information in a quick and practical manner and if it is relatively less accurate than the job order system. “Many companies use some type of system to determine the minimum value of produced products.
The nature of the construction is one that is surrounded by unforeseen circumstances, this unforeseen circumstances has made man-agement and control of cost uneasy thereby causing time and cost overrun. Several researchers like Ayodele & Alabi (2016) has carried out research to investigate into the effect of cost control on project delivery, but researchers have not carry out a comparative analysis of the project cost control techniques adopted by the small and medium contracting firms, the various constituents for the effective use of these techniques, what are the features of the control techniques that has yielded good result employed by the small and medium contracting firms, what ways can these firms improve to give them better chances like the large contracting firms i.e. their contenders. The indication of cost overrun might be a factor contributing to failure of project or delay (Van, Der, Westhuizen and Fitzgerald, 2005). But this was objected by researchers like (Chan, et al., 2004) they opined that there are lots of factors to be considered before concluding that a project is delivered successfully or has
Or it may be defined as, the monetary value (or cash equivalent) given up to get an asset. 2.2 THE ROLE OF COST ACCOUNTING Since cost accounting provides the detailed information about the cost so it helps management in various steps such as make or buy decision, retain or replace an existing machine decision, setting the selling price, inventory control, measure’s the operation’s efficiency, controlling the current operation, taking corrective actions and also it helps in making future plans. In short, it helps managers in decision making. 2.3 CONTRIBUTION OF COST ACCOUNTING As we all know, cost accounting was introduced initially to serve for manufacturing concerns but now a days it is also used by many service providers for instance, hospitals were amid the first service providers that adopt cost accounting also it has been used by banks and other financial service providers. In addition, it also helps government in management processes i.e.
Cost control is essential in both design stage and construction stage, particularly the latter. The phase where a lot of cost reduction can be accomplished is the design stage as it is still in the early period of construction and no crucial cost expenditure has been made. On the other hand, changes occurred during the construction stage is the most critical as it can cause project delay which will instigate unavoidable price inflation (Bahaudin et al., 2012). Furthermore, the researcher will highlight the measures implemented by medium-sized contractors in Malaysia. Large organizations in Malaysia have comprehensive cost control guidelines and strategies and uses more advanced software where they even employ experts (Bahaudin et al., 2012).
Cost accounting Methods of pricing material issue Objectives of materials pricing The main objectives of material pricing are:- 1. To charge cost of materials used on a realistic and consistent basis. 2. To measure the cost of production and the cost of sales. 3.
So the cost control objective can be easily achieved by careful implementation of material management process of the organization. And to achieve the cost control objective they must have a new quality and systems management which will retain their service quality and in return will make a significant increment in their profitability (Micheal, 2001). So the strategic plans regarding the cost control objective will be to find ways where jetBlue can decrease the amount of money invested in their maintenance and operational activities without having any
Through budgetary control the company obtain the chance to make changes and adjust or amend the current strategic plan on the right way to be successful. Every company cannot always be lucky when they adopt their budget into real activities, they need change or adjust it based on the cost and the profits it generated. Budgetary control make the financial officials much easier to make corrective decisions before the issue of the budget grow and become hard to change. 2. Budget can coordinate different departments into same or different activities as a whole.