Are contractors' cost accounting practices up to the job of establishing improvement in site operations?

Robson, Abigail, Boyd, David and Thurairajah, Niraj (2015) Are contractors' cost accounting practices up to the job of establishing improvement in site operations? In: ARCOM 2015 - 31st Annual Association of Researchers in Construction Management Conference, 7th - 9th September 2015, Lincoln, UK.

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Abstract

Construction industry clients and regulators repeatedly call for the industry to reduce the cost of construction projects. Real cost reduction requires improvement in site operations. However, much of the industry expends effort in merely buying more cheaply. If a main contractor is looking to a subcontractor to undertake improvement for the sake of the supply chain, they need to be able to assess this and motivate it by a payment process that passes on the reward. Research is described that explores whether current costing methods could account for improvements in work processes. It considers cost as information and explores how contractors derive and use it. A case study of a major main contractor and two subcontractors is described that involved semi-structured interviews and document reviews. The results show that firms recognised that the costing practices they were using had unintended negative strategic and operational consequences. The research concludes that information about cost, that would be useful in a programme that seeks to improve site operations, is hidden in layers of commercial assumptions and lost when it does not cross the boundaries between organisations. A key finding is that automation of current cost management methods in BIM will not improve construction site operations. It will only produce more convoluted details that do not reflect what people actually do.

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