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An activity-based cost controlling model for improving the management of construction project overheads

The construction industry was considered very important as it contributed a significant part of the Gross Domestic Product (GDP) for the economic development of any country. Construction projects appeared to have high expenditures and complex processes that involved a wide range of participants, stakeholders, investments, and technologies. This continued to increase construction project overheads considerably. Project overheads were common to multiple cost objects, but cannot readily be allocated directly to particular construction activities. The traditional costing system added project overheads to construction cost on a percentage basis, which often provided inaccurate distributions for most of the activities. The current cost accounting management approach focused too much on satisfying external standard requirements, consequently paying little attention to internal cost management improvements. This research proposed an Activity-Based Cost Controlling (ABCC) model through the identification of overheads in construction projects, the analysis of Critical Success Factors (CSFs), and application of the Activity-Based Costing (ABC) system for improving the Cost Management and Controlling Practices (CMCPs) of construction project overheads. The critical realist philosophical stance with multiple case studies was adopted for this research. Data collection used questionnaire survey, project documentation, observations, and interviews. Data analysis utilised descriptive statistics, Analytic Hierarchy Process (AHP), the ABC system and Earned Value Measurement System (EVMS), content analysis and cognitive mapping. Forty seven generic overheads were identified, however, eight overheads were eliminated for construction projects. The remaining 39 overheads were the most often present in construction projects and were categorised into Unit, Batch, Project, and Facility levels. 40 CSFs were identified and grouped into eight, out of which three were identified as priority areas (requirement of a robust method and tool - METOOL, understanding the market condition - MARCON, and managing project complexity - PROCOM). The ABCC model was developed using three themes: the construction project overheads, the ABC system, and the CMCPs. The top three priority CSFs were incorporated into the CMCPs’ tools and techniques for implementation of the ABCC model. The opinions of experts (senior and operational management levels) were used to validate the ABCC model, which generated 36 concepts that were incorporated into the model during the refinement stage. Therefore, the ABCC model was developed for improving the management of construction project overheads to increase the body of knowledge.
Date January 2014
CreatorsJaya, N. M.
PublisherUniversity of Salford
Source SetsEthos UK
Detected LanguageEnglish
TypeElectronic Thesis or Dissertation

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