The reason why the project cost exceeds the budget
In fact, the uncontrollable factors during the construction period are not the main reasons for the project cost exceeding the budget, and these uncontrollable factors are hard to avoid. If the cost management is effective, there will generally be no "three excesses" (budget exceeding budgetary estimate, budget exceeding budgetary estimate, settlement exceeding budgetary estimate). But "Three Supermarkets" are very common in China, and I think there are several reasons.
(1) The budget preparation is unreasonable. This is the most fundamental reason for exceeding the budget. On the one hand, it is often because of lack of understanding of the project, lack of investigation, analysis and risk assessment, and one-sided understanding of the actual project. At the same time, the personnel involved in budget preparation may lack professional quality, which leads to mistakes in budget preparation and superficial budget audit, which can not fully and truly reflect and predict the actual expenditure of the project. A typical example can refer to China Railway Construction's light rail project in Saudi Arabia, with a loss of 465,438+53 million, and Liu Jinlin, the chairman of China Railway 18th Bureau, was dismissed. According to experts' analysis, there are commercial reasons for the loss of the project, including winning the bid at a low price, labor costs, dismembering the contents of the design and procurement contract, design changes, and delays in the construction period. And political factors. On the whole, on the one hand, the cost budget is insufficient, and the contract is low-priced. On the other hand, the owners force frequent changes, and political goals override commercial goals. China Railway Construction can only meet the requirements of the owners as far as possible when it knows the losses.
(2) The project cost control in the construction stage is insufficient, and the cost control is relatively independent. Because there are many processes in the project, if it is not well managed in the construction process, the project situation will not be feedback in time, and it will be difficult for managers to effectively monitor and adjust the cost. Project cost control should run through the whole process of the whole project from preparation to completion acceptance, and its depth and breadth have high requirements. However, many construction units lack understanding of the project cost, and pay more attention to the cost control in the bidding stage and final settlement stage, but lack the dynamic control in the construction stage. Even some enterprises did not do a good job in construction management during the construction stage, the construction site was chaotic, materials were wasted, equipment was idling and so on. Or change it at will, the construction quality can not meet the acceptance standard, rework, etc., which will increase the cost. At the same time, it also shows that the project cost control is relatively independent, the importance of the project cost is not well understood, it is out of touch with other cost control work, the cost control scope is small, the data is insufficient, and many overlapping parts lack basis, so it is not surprising that there is over budget.
(3) Malicious competition, winning the bid at a low price. During the 13th Five-Year Plan period, China's economic growth slowed down. Facing the downward pressure of the economy, especially at this stage, all industries are vigorously promoting "destocking", especially the construction industry, but the bubble is getting bigger and bigger. On the contrary, the larger the participants in the construction industry, the fiercer the market competition. In order to take the lead in the project bidding stage, some enterprises take malicious competition and win the bid at a low price. Later, in order to increase profits, it was changed at will. In addition, the possible mistakes of the owner and the designer lead to the fact that the actual situation is inconsistent with the project expectation, resulting in changes, which will inevitably lead to an increase in costs. For example, the road reconstruction and expansion project in Africa is a project under China's Belt and Road strategy. A central enterprise led a subcontractor to win the bid for a road reconstruction and expansion project in an African country at a price of 58% (30 million euros), with a construction period of 40 months and a total length of 150km. However, this project took four and a half years to complete, and it lost 20%. Phoenix International Think Tank points out that you will lose yourself before winning the bid at a low price and starving your peers.
(4) Insufficient market forecast. After the 18th National Congress, China's economic development is facing new situations and new problems. In the process of supply-side structural reform, the market situation is changing rapidly. For engineering construction projects, the general construction period is long, the material consumption is large, and the personnel organization is huge. These characteristics determine that it is very difficult to accurately predict market trends and policy trends in the actual budget. Once the market fluctuates, over-budget will appear. In addition, unreasonable budget makes accurate prediction more difficult. Although the market and policy factors are uncontrollable, we need to take appropriate measures to avoid or reduce the risks brought by these factors.
Control measures of project cost
Engineering cost can be said to be one of the cores in the field of engineering construction. In the national vocational qualification catalogue, cost engineers are directly listed in the access category. And relevant educational institutions also have perfect engineering cost training. If the accurate budget quota is determined in strict accordance with the project cost process, supplemented by some appropriate measures, the occurrence of over-budget can be effectively controlled. Combined with the above analysis, in addition to uncontrollable factors such as market and policy, human factors are the main reasons for exceeding the budget. Therefore, when formulating control measures, human factors are mainly excluded.
(1) Strengthen the professional ability of employees and improve their comprehensive quality. Engineering cost practitioners are the key executors of cost management, and their professional quality and ability are important factors affecting the effectiveness of cost management. Therefore, as employees, on the one hand, we should constantly enrich ourselves, strengthen the study of cost management related knowledge and laws and regulations, fully understand the knowledge of investment, design, procurement, construction and technology of engineering projects, and constantly accept new knowledge to adapt to the continuous innovation of new technologies, new processes and new materials in the field of engineering construction. On the other hand, relevant enterprises should also establish a long-term training mechanism, vigorously train cost engineers and cost engineers, and at the same time implement a strict access mechanism, requiring employees to have nationally recognized professional qualification certificates. The key to competition in the new era, in the final analysis, is talent. As one of the cores in the field of engineering construction, engineering cost is the key.
(2) Improve the budget preparation. Budget is the key to prevent over-budget from the source. On the one hand, cost management personnel must fully grasp the actual situation of the project, understand the construction organization design, go deep into the construction site investigation, master the construction points, and understand the policies of the project location. And strictly implement the relevant pricing standards, understand the local material prices, and prepare the budget quota in strict accordance with the project cost execution process and engineering quantity calculation method to ensure that there are no omissions and errors and avoid mistakes. At the same time, it is necessary to implement a dynamic management mechanism, comprehensively consider various influencing factors, and conduct adequate risk assessment to avoid losses caused by enterprises such as China Railway Construction exceeding their budgets.
(3) Strengthen supervision and management. On the one hand, because the market and policies are uncontrollable factors, it is hard to avoid them, but as employees, we must strengthen supervision and management, strictly control the expenses of materials, labor and equipment, put an end to waste and cut corners, and actively recommend adopting green construction technology to save energy and reduce consumption. And make emergency plans to control costs to the greatest extent. On the other hand, the relevant supervision institutions should also play their functions to supervise the project cost. For example, the Housing and Construction Department of Anhui Province issued the "Regulations on the Management of Construction Project Cost in Anhui Province" in the face of the "Three Supermarkets", and based on the whole process control, standardized the whole process of project cost. At the same time, the government should strictly control malicious competition and crack down on the behavior of winning the bid at a low price. Phoenix Finance, China Environmental News, Polaris Energy Conservation and Environmental Protection Network, Netease and many other online media reported that vicious competition harms others and does not benefit others.
(4) Establish a dynamic cost management system and forecast the market strictly. Although the market factors are uncontrollable, sufficient market research can provide the most effective basis for the project cost. Therefore, we should establish a dynamic cost management system, predict the market strictly, and fully understand the market situation and the trend of government policies. It is also an effective measure to reserve materials before the project starts.
(5) Strengthen the cost control in the construction stage to avoid unnecessary changes. On the one hand, construction enterprises should compete fairly and put an end to winning the bid at low prices. At the same time, the green construction technology will be integrated into the enterprise gene, so as to improve its own technical level, cooperate with the supervisor and the owner to make technical disclosure and improve construction management. On the other hand, supervision should also play a role in effectively controlling the project cost and avoiding unnecessary project changes.
Engineering cost is one of the cores in the field of engineering construction. Due to various reasons, it is very common that the project cost exceeds the third grade in China. Exceeding the budget will cause economic losses to the construction unit, investors and other project participants. Therefore, effective measures must be taken to control over budget. To implement project cost management, we should control the project cost from the aspects of budget preparation, personnel quality, supervision and management, market research and so on.
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