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ACCT 301: Cost Planning
Archiverr Resource Center
Accounting Practice Essay

Advantages and disadvantages of Elemental Cost Planning
The estimate can then be compared with subsequent estimates or actual
costs as the project moves forward using an elemental cost plan since the
calculation is first broken down into several pieces
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It is common practice to consider each
component a separate cost center; nevertheless, moving money from one
element to another is permissible so long as a suitable equilibrium is maintained
between components and the overall budgetary goal is not surpassed
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The project manager maintains control by comparing cost projections for
each cost center to the budgetary allocations they represent
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After that, decisions are made on whether or not the cost of that

component may be allowed to grow, which would necessitate a decrease in cost
somewhere else, or whether or not the component has to be redesigned to
remain within the allotted spending limit
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An adaptable system that can be used with suitable
adjustment at all stages of the design process is an advantage that can be a
real advantage
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Because it
is such a straightforward procedure, it is easy for all participating
participants to understand it
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 Quick comparisons between elements and projects may be performed, and
specific customization of each piece is possible
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 The design team members can obtain elemental costs and establish the
cost implication in the early phases of the project, thanks to the use of
elemental cost plans
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Disadvantages of Elemental Cost Planning
 The construction of an elemental cost plan requires more time and effort;
nevertheless, this investment ought to provide higher benefits in facilitating
decision-making
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 It is necessary to maintain extensive cost databases to guarantee the
accuracy of expenses; as a result, this might result in significant
expenditures for software and training
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Finding and
hiring employees who are qualified and have the required amount of
expertise to manage cost management may be a costly endeavor
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” Pros & Cons of a Construction
to Permanent Loan, www
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com,
https://www
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com/constructionpermanentloan
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Accessed 25
July 2022
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(November 2018)
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Retrieved from
https://www
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com/essays/accounting/different-methods-of-costplanning-during-construction-accounting-essay

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