Study on Construction Cost of Construction Projects

Abstract

China is a country which has the largest investment amount in engineering construction in the world and which has the most construction projects. It is a significant subject for the extensive engineering managers to have effective engineering cost management in construction project management and to reasonably determine and control construction cost on the condition of ensuring construction quality and time limit. On the basis of the status quo of losing control in Chinese construction investment and of separation of technique and economy in engineering, and guided by basic theories of construction cost control, the author discusses control methods and application of construction cost, sets forth existing issues in construction cost control and influences of these issues on determination and control of construction cost, puts forward that construction cost control should reflect cost control of the entire construction process at the earlier stage of construction, and then introduces some procedures and methods of applying value project cost control at all stages of construction projects. 1. Significance of the study The existing construction cost management system in China was formulated in 1950s, and improved in 1980s. Traditional construction cost managerial approach was one method brought in from the former Soviet Union based on unified quota of the country. It is characterized by the managerial approach of construction cost in the planned economy, which determines that it cannot adapt to requirements of the current market economy. Traditional construction cost managerial approach in China mainly includes two aspects, namely, determination approach of construction cost and control approach of construction cost. The traditional determination approach of construction cost mainly applied mechanically national or local unified quantity quota to determine the cost of a construction project. Although this approach has undergone reform of over 20 years, until now, influences of planned economy management mode have still been in existence in many regions. Control approach of our traditional construction cost is mainly to control settlement and alteration of construction cost, which is merely an approach to settle accounts after the event, and which cannot satisfy the purpose of saving resources and improving work. In recent years, requirements of developed countries on project investment have been to plan to control in advance and to control in the middle of an event, whose effects have proved to be effective. An actually scientific approach should be that construction cost control approach beforehand and after the event can eliminate or diminish labour in vain or poor efficiency and unnecessary resource degradation and methods applied in implementation of construction projects before or after the event. Considering the above situation, the academic circles put forward concept of cost management and control of the overall process as early as 1980s. They began to attach importance to prophase management of construction projects and take the initiative to conduct cost management. Afterwards, on July 1, 2003, implementation of <<Cost Estimate Norm for Bill of Quantity of Construction Works>> symbolized that cost estimate of China had entered a brand-new era that complied with development rules of market economy. From then on, concepts and approaches of Chinese cost management were really integrated with the international society. Losing control of construction project investment is a universal phenomenon in fixed investment field in China. A construction project consumes quite a lot of manpower, materials and machines, with large investment, long construction cycle, and strong synthesis, so it is related with economic interests of all construction parties and means a lot to national economy. Currently, in the field of Chinese project construction, there exists the status quo of separation of technique and economy. Most of engineers and technicians tend to regard construction cost as duty of financing and