Proposed cost control system

Proposed cost control system

an introduction -

Due to the development of the company's work both quantitatively and qualitatively and in view of the great development in the project management systems, whether time management or cost comes the importance of a real effective system to manage the costs of projects.

Overview: -

Before going into any details about the subject of this study comes to mind an urgent question ..

 What is the need for such a system?

 However, with the increase in the number of projects, their size, the diversity of their nature, and the variety of project resources (materials of all types, costs, specifications and suppliers), various types of labor and their costs and costs, different kinds of equipment and their models, suppliers and subcontractors in their various activities and different ways of dealing with them. General - the desire of the owners of the company to know the financial situation of each project individually and for each item in detail and at different periods of time and even predict the status of projects in terms of future gain and loss based on actual facts ................ ... etc) with all this tuna P and more need to control costs in the system (  COST CONTROL SYSTEM   ) Is in line with this great diversity.

But what is required of the cost control system  - 

 The required of this system is to calculate the cost of items effectively and realistically through the reality of implementation and compared periodically continuously estimated cost of the project, which was on the basis of pricing with cost control and monitoring at each point of the project points , whether at the level of activities ( ACTIVITIES) Or at the milestones level ( MILESTONES)) Or project level ( PROJECT)) In general and also follow up purchase orders, purchase orders, stock movement ............ etc. In addition to coordination with the Planning Department to develop the best time to implement items to achieve the lowest possible cost and not inconsistent with the project schedule - This role is not limited to follow-up and monitoring only, but also addresses the development of perceptions and solutions to overcome the problems faced by projects in terms of costs        

Project life cycle:

Before entering into explaining the requirements and elements of the system and tools and clarify the system of work through it to take a realistic look at the life cycle of a project from the moment it exists as an advertisement on a newspaper or website, which appears on the scheme No. (1) -  As is evident mainly through the scheme must The course of the project is a closed session in the sense that it will end in any case by saving the project file. Of course, it is obvious from the file preservation of the project that all the technical, financial and administrative belongings of the project have been completed and we are talking about the cost control system. The financial aspect of the project Commented on that side technically and administratively.

                                                                               

System requirements -

The general requirements of the system can be summarized as follows:

        Full and actual belief in the need for this system.

 

It is one of the first requirements of this system   to feel the importance of the company's senior management and the actual need for it because the system will Always needs the actual support of the company management.

       Flexibility in dealing with the system.

    It is known that such a system will be seen by some as a complex means and will be charged until it   completely ends the management of the costs of one integrated project and successfully so as not to collide with the wishes of the establishment of such a system to be developed within a company actually built and working without it must be The system is flexible enough to accommodate the ideas of company employees who will interfere with their work to become a means of success rather than a failure.

        Standard resource code system.

 First, RESOURCES) All that is implicit in the completion of the project and the resources are divided into five main sections

     Materials     -M 

     Employment L      Equipment E

    Subcontractors S

     General expenses O

It is intended coded ( CODES) Each component of these resources has   its own code, which is created in a professional manner based on the foundations, so that a very large number of these codes can be created in a very simple manner, ensuring that the code does not repeat more than once. There are many methods and systems in  which the resources are used For example:-

6-digit code The first box is permanently reserved for the family followed by the supplier  English letters to the left of the five main sections of the above resources. The other five are divided into subdivisions. For example, the second and third boxes are reserved for the sub-family and then the fourth, fifth and sixth digits to number this element within the sub-family. For example,

Family followed by          articles           - MATERIALS M-       

Family Subsidiary            Structural Materials  CO – CONSTRUCTION -

Figure within the sub-family Suppose it is 005-                                5 

Thus it becomes the code (ordinary Portland cement   MCO005 and so on

This system of coding does not allow the repetition of the code and thus become a unified language because if we take the same item as an example of ordinary portland cement, we find that we can differ in the name and therefore there is a conflict in quantities because we can call several names are all correct (cement - Portland - Ordinary Portland Cement ......... etc.)

        Cost Centers

  Each project consists of a set of items   whether you have increased or decreased.

 There are items can be priced directly , such as item buildings black concrete thickness of 20 cm and the unit square meter pricing this item with the utmost simplicity is calculating the cost of resources involved in it (Mwad- labor - equipment - contractors soles - other expenses) and as this item includes one type of business It can be considered a COST CENTER ).

But if we look at another item and not an item to create a water tank ground, including all civil, mechanical and electrical works and item unit meter flat or stint we find that this item contains works by several can not be priced until after the components analyzed and thus are grouped each business group of the same type in One cost center and the tank item is a aggregative item for these items and its cost center is not a single cost center but a cost centers group and so on.

        Events and actions

We humans have a complete mask that computers do not make mistakes and if the results are mistaken, this error is caused by human error (Human ERROR) This is true.

 But what is the main reason for the failure of the error of the computer ???? !!!

The answer is simple: that the computer has for every user action a reaction that is called the EVENT ( EVENT)) And the computer reaction is called PROCEDURE) Has benefited all bodies

With the distinct reputation of this system in action, meaning that each event has a procedure to be taken in accordance with this event and these events and procedures are specified in the most precise and detailed and in our system proposed the use of such a method will be the magic wand for its success.

-         For example, an increase in the price of iron by a certain value followed by the introduction of this new value on the estimated cost of the items that will be in the establishment of iron during the coming period to estimate the value of iron purchases during the coming period.

-         Another example is a delayed project or a certain machine for the project, resulting in delayed work (increased work days loaded on a particular activity) followed by a procedure to load the cost of all idle resources on the item with the proposal to manage planning to reduce this loss.

  There are countless examples of this type of work that we can call automatic work.

        The relationship between the system and the company's departments

The more this system is deployed in the department or management of the company's departments the more accurate and successful work and we can imagine that to go back to the project life cycle that we mentioned at the beginning and will note that the system will deal with the following:

  The senior management of the company or its representative who will inform the system officials of the existence of a new project purchased to open a new file on behalf of the project.

    Financial management in order to give the system the cost of study and pricing of the project and the value of project documents and costs charged to the project first hand ... etc.

    Studies and tenders to know the bases on which the study was built and all the data of bids and the calculation of quantities ... etc.

    Project Management, which will provide the system with interim performance reports.

    Procurement to follow orders and purchase orders.

    Stores to follow stock movement and estimate the cost and value of stock of each item.

   Administrative Affairs to provide the system with the cost of each employee project.

    Workshop equipment for the calculation of the cost of equipment.

    Contract management to follow up the cost of subcontractors.

    . Legal affairs in the event of a dispute or delay in the project.

    The more smoothly and orderly the deal, the more certain the results will be.

System Tools

Each system has its tools and what interests us here in this area is the human element in addition to the paper models Computer system:

Because of the accuracy of the work on such a system and its interdependence and overlap in all sections of the company should pay attention to the importance of professionalism of officials of this system not only wishes and sincere intentions only to make the success of this work, but preceded by knowledge of how to manage such a system.

With advance knowledge of the cost control system, I noticed that some companies believe that this work is only geometrical and thus recruit the competencies of professional engineers and ignore the financial aspect, while others include them under financial management, ignoring the engineering side, both of which are wrong. The work of this system requires the competencies of engineers along with cost accounting so that the hiring of a needs engineer and cost accountant in each project their task of collecting information and classification according to a specific system and models prepared for this purpose with an integrated management of engineers and cost accounting tasked to collect data from project officials and analyze and feed The system and out of the results and then put suggestions and perceptions either to solve the problem or to avoid the problem and raise the results and suggestions to the senior management to take the necessary.

Then comes the importance of having printed paper forms ( FORMS) Provincial Ensure that the form of information received from the sites or the different sections that define the cost description, unit, quantity and cost center to which this cost will be charged.

It is also very important to have computers that fit their capabilities with the accuracy of the information that will be dealt with in addition to the importance of the availability of computer-to-portable devices  .

The way the system works

 The work of this system depends on three basic sources:

1. Data received from the site by (Engineer Requirements + Project Cost Accountant)
2. Data received from different departments of the company.
3. The data that the team analyzes and deduces.

Let us start together by imagining a project whose documents have been purchased for study, where COST CONTROL has been informed) Followed by opening a folder for the project contains the following files: -

• General description file ( GENERAL BRIEF) Includes   (name of project - owner - type - duration of implementation - description of project components and nature ... etc)
• The cost of the value of the project documents - the cost of study and pricing (visiting the site - the salaries of the contributors in the study - photocopying of drawings, drawings, etc.) - cost Letters of guarantee - project insurance costs - project management team salaries (which functions as a whole and difficult to load on a particular item) - project equipment or vehicles that work for the project as a whole and also difficult to load on an individual item such as a bus transporting workers - On the project in general).
• The cost of implementation file includes all the items of the project after being placed in the form of cost centers. As explained above,   within each cost center there are four elements (materials - labor - equipment - subcontractors), which are loaded in a sequential manner according to the development of the business. for example:-

- Supply and installation of ceramic pipes diameter 200 mm    and unit MT    and quantity 5000 All costs are loaded in place with a description of the completion to date and therefore it is known that this cost for a specific amount and so it is known the cost of the meter long at each stage.

• The aggregate cost profile is the general view of the total of the previous files and is mainly used in the presentation of tabular reports. It can also include diagrams to illustrate ideas. This can be a multiple file meaning that there is a report for each time period added to the general report.
• The estimated cost of the project, which was prepared in coordination with studies and tenders.
• The general schedule of the project and any amendments thereto, prepared in coordination with the planning and follow-up department.
• A file containing the constraints of the project whether it is time, financial or administrative constraints to take into account during work.

With the development of the system and the number of projects it manages, it is possible to devise files containing a medium cost for each project item and also for each resource to obtain an actual database that facilitates the pricing process for new projects.

Conclusion..

 As is clear from the above, the importance of such a system and its ease of work and the value gained from it, however, it must be addressed in a gradual manner until the completion of its components and proof of its capabilities and as we mentioned in the description of the characteristics of the system, flexibility that must be covered by the system can accommodate all the views and aspirations to reach the desired end .

Finally, I can not help in this area, but I pray to God Almighty to have succeeded in this brief presentation, but if it is better than God and if it is not so, it is myself and I ask forgiveness, lack of human nature and this is the success of God and our last call to praise God the Lord of the Worlds.