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ACCT 301: Cost Planning
Archiverr Resource Center
Accounting Practice Essay

Different Methods of Cost Planning during Construction
Since constructing a home is very expensive and any errors might cost the
customer much money, the construction industry primarily depends on cost
planning
...
It would help if you considered everything
that might affect your financial situation to maximize it
...

What is Cost Planning?
The customer must be able to use the many cost-planning alternatives
available to guarantee that the budget is not exceeded
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One method is to
look at recently built buildings structurally similar to those considered since
construction expenses in the same area don't change much from one to the next
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A comparison strategy is a tool for cost planning throughout the building
phase
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The dimensions of the customer's next building
project are being changed
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Several cost planning methods have been created recently; however, no
one approach can be effectively used for all projects
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Both of these strategies are referred regarded as systems
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Any activity that uses human labor generates an
economic return, and this return is known as a profit in conventional economics
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It doesn't matter what the outcome is; an
entrepreneur or group of entrepreneurs will make money from their investment
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An investor's profit is
the amount of money they get from an investment, considering the expenditures
involved with the transaction and the opportunity cost of alternative investments
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What is a budget?
A budget normally contains a summary of all anticipated costs and
income
...
The idea of a budget,
which employs a budget line to show the potential trade-offs between two or
more different goods, is one of the most important concepts in microeconomics
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One more thought on the subject: The main objective
of budgeting is to forecast the economic success of our firm in the case that
certain strategies, events, and plans are carried out
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A crucial step in this process is
the capacity to contrast the business's actual financial operations with its
expectations
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A net operating income after taxes is calculated by taking
the total assets minus cash and investments (save for those in strategic
partnerships) and subtracting non-interest-bearing liabilities
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Compared to
the Weighted Average Cost of Capital, the Return on Invested Capital must be
higher for the firm to create value
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Its main goal is to
ensure that the profits reported in the company's books are true and
appropriately represent the business's financial situation at the current time
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First and foremost,

statutory accounts must be provided, which is a legal need to present certain
financial information
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9
(SSAP9) provided accounting guidelines and regulations for the construction
business
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This
is a good thing if the information is conveyed and analyzed in a suitable way and
with the required precision
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What is Cost Value Engineering?
Before the advent of lean manufacturing, value engineering was
considered a cost-validation exercise that did not impact product quality
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The mere removal of a feature or a coating as a cost-cutting
strategy is not included in value engineering
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For example, a cost that does not provide the following: utilization, life
expectancy, or customer features is considered excessive
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It has to be acknowledged that there is
no amount of documentation that will accomplish this level of control over
building costs
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This is how the actual control is accomplished
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The following are the components that make
up a system for cost control:
1
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Evaluation of the findings in light of a predetermined benchmark
3
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A system for controlling construction costs should enable management to
monitor the present cost levels, evaluate those levels about a standard plan or
norm, and take corrective action to maintain costs within acceptable boundaries
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Even the most advanced method of controlling costs would only be able to
offer information on events that occurred during the last week or month
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In recent years, several approaches to cost planning have been
developed; nevertheless, there is not yet a universal system that can be applied
to every kind of project in a manner that is considered successful
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Both of these approaches are known as "systems
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(November 2018)
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