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1、International Journal of Engineering Science Invention ISSN (Online): 2319 – 6734, ISSN (Print): 2319 – 6726 www.ijesi.org || Volume 2 Issue 12 || December. 2013 || PP.65-71 www.ijesi.org

2、 65 | Page Project Cost Control in the Nigerian Construction Industry C.I. Anyanwu Department of Project Management Technology School of Management Technology Federal University of Techno

3、logy, PMB 1526, Owerri ABSTRACT: The construction industry being solely responsible for economic growth of the nation will base on the government’s fiscal policy and budget the formulation of its own policy plan on how

4、to carry out development within that budget and equally give the nation a healthy developed environment. Besides, the overall aim of cost control and management is to make sure that scarce resources are utilized to the

5、 optimum benefits of the main parties to a construction contract. That means that design and execution of a project should produce maximum value for money. Given therefore, the high cost rate of money for construction

6、resources and high interest in this dwindling, deregulated and depressed economy, it is pertinent that efficient costing should be a very strong element in project design and implementation. The economic aspects of con

7、struction are complicated by the fact that the functions of design and production are generally separated. At the design stage, the designer will usually not know the methods and equipment available to the contractor wh

8、o may ultimately build the project, and who is directly responsible for the materials used, which for most buildings account for about two-thirds of the total cost of the project. This is not to suggest that the contra

9、ctor has no contribution to make, but since the labour which he controls, cost only about half that of the materials, his efforts can easily be nullified by any design which makes excessive or unnecessary use of mater

10、ials. This will have serious adverse effect on the project cost, its execution and completion date and may lead to delay and outright abandonment. The need to have cost data available from the earliest stages of the des

11、ign has encouraged the development of methods of “cost planning“ and the wider application of such techniques if cost is to become as it should be, an integral part of design. All these should be geared towards effectiv

12、e cost management and control as a solution to project abandonment. Management is a leading factor in any investment. Prosperity breeds mismanagement. Paradoxically, management is the single factor which forces an upt

13、urn in a recession. Management is the single factor which separates prosperity and recession. It is the resources well managed or mismanaged today that makes for tomorrow's prosperity or depression. The economic de

14、pression we are now facing is more out of mismanagement of resources than lack of resources. The key to the success of our construction investment industry is professional management. There is urgent need for innovatio

15、ns in the cost management of our construction resources for viable products. The vital question however is whether the Project Manager being the construction cost planner is economizing enough the variables that affect

16、 the cost of construction which are supposed to be under his control in other to bring down cost of construction to a tolerable level. This is the main focus of the study to unveil the management philosophy, practice a

17、nd inputs to be affixed in evaluating and monitoring construction cost in order to reduce project abortion and abandonment, which are caused by project cost overruns. Key Words: Project Cost, Cost control, Construct

18、ion Industry, Project abandonment, Cost over-run, Time over-run, Project delay, Project Management. I. THE PROBLEM In Nigeria, many construction Projects development have failed owing to the various technical and finan

19、cial pressures of cost limit, quality and value optimization. Jagboro and Banalola (2005) wrote that the interim report of the Presidential panel on contracts at the wake of the present democratic government in Nigeria

20、confirmed a staggering amount of over four hundred and fifty billion naira for project which can be classified as failed contracts, spanning from 1979 to 1998. The main reason for this is not far-fetched as many of the

21、 professional firms involved in project administration lack adequate management inputs in both quantitative and qualitative terms. Another reason for this high rate of projects abandonment and failed contracts in Nigeri

22、a, is that in most government projects, the mobilization fee which is given to the contractor is reimbursed to those who awarded the contract as “bribe“ usually of huge sums of money and this thereby increases the cost

23、of the project, affects the quality of job executed by the contractor and will also leave the project either unexecuted or abandoned. This is because the money meant for the project execution have been diverted into in

24、dividual pockets(Osemenam, 2004). Project Cost Control in the Nigerian Construction Industry www.ijesi.org 67 | Page Cost control is done by way of project p

25、lanning and scheduling using different types of qualitative techniques available to the industry. The logic of these planning is to enable the contractor to exercise an effective control over his resources. It is the du

26、ty of the management team to ensure that task are carried out in accordance with the planned line of action. Fresh plans are prepared when changes are necessary and unavoidable . It is the desire to achieve these planne

27、d line of action that a system of monitoring has to be initiated. IV. COST MONITORING AND CONTROL SYSTEM Controlling and monitoring of projects occurs when you establish ways to track the course of all activities and

28、events in the project. As project is always a dynamic entity since it must respond to changing conditions if it is to be completed successfully. It is carried out in an environment of ceaseless change and there is a con

29、tinual need for re - assessment and re-appraisal of the project plan. Among the factors liable to alter the course of a project includes such changes in: ? The technical specification of the project. ? The project

30、complete date. ? Budget considerations. ? Relative priorities of projects. ? Revision of activity duration estimates. ? Re-assessment of resource requirement for individual activities. ? Technical difficulties

31、or construction methods. ? Unexpected weather conditions. ? Working conditions ? The economy ? Resource availability ? Management and among others. However, some of these changes will have a pronounced impact on

32、 the project while others have a mere subtle one. Either way, the changes could affect the project in terms of quality, quantity of work, cost and time. To fully avoid this, a proper cost monitoring and control system m

33、ust be established. At the onset, there is an important difference between monitoring and control. Monitoring is finding out the state of play. It is has to do with reporting whether one is measuring money or time or an

34、y other property in which one is interested. It is a vital pre-requisite to control but it is a tool needed by control rather than a substitute for it. Control is taking whatever steps that are necessary to vary or alte

35、r a pattern of events. It is a positive and active operation which its success can be judged by subsequent events. Taking decisions in the exercise of control demands sound information which is the result of good monito

36、ring. V. SCHEDULE MONITORING When a project is monitored to determine if everything is proceeding as scheduled, data collection along the following lines is necessary in order to detect the type of problems one might l

37、ikely encounter: ? Collect information on any differences between estimated start dates and actual start dates for each activity. ? Determine any differences between estimated finish dates and actual finish dates for e

38、ach activity of the entire project. ? Any unexpected delays or other abnormalities that alter the project's completion date. ? Any activities performed out of network sequence. ? Any milestone activities that ap

39、pear unachievable. Once the above stated information is collected and analyzed, a series of actions to rectify any situation can be performed. For example, a schedule can be up dated by re-assessing the duration of speci

40、fic activities or one can re-sequence or eliminate activities reflected in the current version of his/her programme chart. VI. RESOURCE MONITORING To complete a project, three main resources are usually expanded: man,

41、materials and equipment. When left uncontrolled, the cost associated with utilizing these resources will likely escalate, so there is need to really track closely the use of these resources. Resources utilization could

42、be determined in basically three ways: meeting, inspections and forms. Meetings (especially site) provide one with the opportunity to acquire information rapidly. Inspections allow one to witness what and how certain re

43、sources are being used by staff and other subordinates. While forms allow one to quantitatively determine the amount of resources being used and the cost associated with using those resources. In addition, forms serve a

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