Why do construction projects lose money?


Finally, the task is completed, but the material cost exceeds the expenditure, the performance of equipment is reduced, and the whole project is at a loss.

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However, due to the shortage of funds, or the purchasing personnel can not calculate the capital cost in the process of purchasing materials, the project department finally purchased high-priced materials, thus increasing the cost of the project.

In addition, due to the reduction of credit rating of some enterprises and the need of cash turnover, sellers are very concerned about whether to buy materials in cash, so that the price of materials purchased in cash and non cash varies greatly, with a maximum difference of more than 10%.

After the commencement of the project, a project department predicted the cost of the project, and determined the sub project cost, classified cost and total project cost objectives.

They purchase materials very casually and are used to buying beyond the quota.

Although some project departments have specified the material and machinery costs included in the unit quantities in the contracting scheme, the material price is higher than that in the contracting scheme, resulting in the abortion of the contract; Although the contracting scheme of some project departments is reasonable, the pricing is not timely or cannot be cashed according to the contracting scheme, so that the contracting cannot be carried out..

Moreover, because some purchasers know little about the quality standard of materials, they buy some materials that fail to meet the quality standard, which increases the quantity of materials actually consumed, resulting in cost overrun.

The key influencing factors are mainly reflected in the following 11 aspects: 1.

Even if the factors that increase the cost of changing the design are considered and all the budget expenses increased by the change are calculated as the cost, the actual cost is more than 30% higher than the estimated cost.

Due to the development of market economy and the ever-changing price of materials, it is difficult for any experienced material personnel to grasp the relatively reasonable price information.

The most important one is the overspending of materials and accessories, and its actual cost is more than 50% higher than the estimated cost.

2.

In addition to the impact of the objective environment, the subjective reasons of the project management are the most important factors.

In addition, the unit selling materials (hereinafter referred to as the seller) uses rebates and commissions to attract purchasing personnel, which makes it difficult for the project department to purchase materials with relatively reasonable price and increases the material cost of the project.

If individual purchasers deliberately cheat and deliberately raise the material price to make a profit, the loss of the project department will be greater.

When the project is completed, all variable costs such as labor, materials, fuel, accessories and indirect costs of the project department will be overspent, except that the fixed costs (including management fees handed in, depreciation fees of fixed assets withdrawn and overhaul costs) do not exceed the calculated costs.

As a result, the frequently issued materials are either wasted on the construction site or secretly sold by the personnel on the construction site, and many recyclable wastes are unmanaged.

(2) Artificial price manipulation in the material procurement stage, the high price and the quality of some materials can not meet the standard are another factor in the loss of the project.

Why can fixed costs be controlled while variable costs are not? The problem is that the general goal of cost control is not strictly implemented, and the control of subdivisional project cost and classified cost is not implemented, resulting in total cost overrun.

(5) In the material consumption stage, most of the loss making project departments do not issue materials according to the quota, and the construction personnel give as much as they want.

(3) The quality is not up to the standard.

Unreasonable system of materials, components and accessories (I) over purchase in the loss making project department, unplanned purchase of materials and accessories (hereinafter referred to as materials) can be found everywhere.

Some project departments stipulate in the contracting scheme how many tasks are completed and how much wages are paid, but there are no clear requirements for the consumption of materials and the use and maintenance of equipment, resulting in contracting labor without materials, profit without loss.

The result must be the overstock and overspending of materials.

The amount of procurement depends on the project leader or even the material personnel.

The project department without cost control objectives or simply does not implement most of the losses has no overall goal of cost control at all, and some have but are not strictly implemented, so the cost of the project department is out of control.

In recent years, the domestic and international economy has been depressed, the domestic debt has been strictly controlled, the infrastructure investment has been compressed, and the engineering construction projects have suffered more losses.

If experienced material personnel carry out the procurement task, the procurement quantity of materials will not exceed too much and will not cause too much loss and waste.

Some project departments have no receiving and dispatching system at all.

(4) The receiving and dispatching system is in vain at the stage of material acceptance, storage and delivery.

The materials purchased by material purchasers are not accepted, let alone physical accounts, so it is impossible to talk about storage and delivery; Or although there is a receiving and dispatching system, but the acceptance is not timely and careful, the custody is in vain, the accounts and materials are inconsistent, who takes it and who uses it, and the last account is written off.

In particular, some project departments do not have special departments to manage the ground materials such as sand, stone, brick and tile from beginning to end, so as to replace consumption with purchase; Serious cases even use false material invoices for reimbursement, but do not buy materials at all.

If the remaining steel and steel formwork on the construction site are disposed of without authorization, and the recovered material funds shall be distributed privately.

The contracting measures are not matched.

The material personnel of some project departments, especially the loss making project department, have no experience to talk about.

3.

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