Cost Control And Reduction Techniques In A Public Sector (A Case Study Of Kwara State Property Development Cooperation)
Table of Content
- Title Page
- Table of Content
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Significance of the Study
- 1.5 Research Question
- 1.6 Scope of the Study
- 1.7 Organization and Plan of the Study
- 1.8 Definition of the Key Terms
- 2.1 Cost Control Techniques
- 2.2 Cost reduction Techniques
- 2.3 Effective Cost Control
- 2.4 Value Analysis and Engineering
- 2.5 Appraisal of Literature Review
Research Methodology and Data Analysis Procedure
- 3.1 Population and Sample Size
- 3.2 Sampling Techniques
- 3.3 Method of Data Analysis
- 3.4 Limitation of the Study
Data Presentation and Data Analysis
- 4.1 Data Presentation
- 4.2 Data Analysis
- 4.3 Findings
Summary Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background to the Study
One of the means of measuring the performance of an organization management is its efficiency. Efficiency relates to the optimum utilization of inputs to derive the best achievable output. An efficient manager executes his responsibilities with the last resources and maximum output to accomplish the organizational goals.
An important goal at a profit oriented organization is to operate at a profit. However, if now effort to generate maximum revenue is not cost efficient, it will only be more difficult to achieve the goal. As strategies are employed to maximum returns on one hand, it is of equal importance for the management to institute conscious and methodical programmes that would assist in controlling and reducing the resources input in order the revenue will not be totally consumed by astronomical expenses.
We thus discussed the two techniques that could assist management to maximize cost namely: Cost Control and reduction techniques for the purpose of this study. We shall call them Cost Management techniques (CMS).
We viewed Cost Control to be an application of costing to enable management to compare actual cost with planned cost and to take any necessary corrective action before it is too late.
Before any control can be affected, standard or target of performance must be set against with actual cost can be measured through this method inefficiency will be revealed.
Cost Control can also be viewed to be an exercise in good house keeping that is avoiding a wasteful use of valuable resources and encouraging efficiency and cost consciousness.
In contrast, coat reduction programmer start with an assumption that cost levels are too high, through coat control might be good.
Cost reduction, therefore is a planned and positive approach to reduce expenditure. These cost management techniques (C.M.T) could be utilized extensive by profit oriented organization producing goods and services provided that the economic and political climate is stable for growth.
1.2 Statement of the Research Problem
This topic for this project is cost Control and Reduction techniques. Due to lack of enough time the research work is average. In this case, the various researches problem formulated are in question forms. These are
- What is the historical background of Cost Control and reduction techniques?
- What are the reasons for recent cost control and reduction
- Does the recent cost control and reduction have any prospect for Kwara Property development Corporation KWPC?
- What are the likely problem facing cost control and reduction direction to KWPC?
1.3 Objective of the Study
The research objectives of the Study, therefore to:-
- Identify, I any Cost managements techniques currently employed in property development Corporation.
- Apply Cost management techniques to the area of interest.
- Determine the optimal level of Construction Cost Nigeria.
- Give an overview of Construction Cost factors in Nigeria.
- Examine the effects of constitution Cost information on Cost Management techniques C.M.T.
- Evaluate the effects of delayed payment on the Construction Study.
1.4 Significance of the Study
The study will give more light on or be beneficial to the professionals like architects engineers, Quantity Surveyors and Accountants. It will enlighten and bring about improvements.
The study will enlighten so many institutions to improve and not close down because this is an era of sky rocketing prices and inputs and unlike in the past, many commercial organization and finance houses have Closed down, below acceptable capabilities due to high Cost of inputs.
To survive therefore, it is not enough to deal with revenue aspect alone but also to keep Cost an expense as minimal as possible.
The study will also give us more insight on invaluable assistance of the research work to Kwara State Property Development Corporation and other Commercial Organization involved in construction work. Human wants are unlimited and resource available are both disproportionately scarce and also have alter native and competing uses.
The situation is aggravated for a Corporated body whose native now depend on the unstable and highly inflationary Nigeria economy to compute with complex situation, the best use has to of scarce resources available
1.5 Research Question
The research questions are basically derived from the purpose of the Study. Hence, they are formulated from relationship between variable or effect of one variable upon another. The focus of this study by research work is to identify Cost Control and reduction techniques in Kwara State property Development Corporation. Hence, in the course of the study effort has been made to find solution to the following research problem.
- What is the impact of Cost Control and reduction in Kwara State Property development Corporation.
- What are the various Cost Control and reduction techniques used in the Kwara State Property Development Corporation?
- What are the various problem associated with Cost Control towards Cost reduction?
- What are the benefits that accrues to Kwara State Property Development Corporation through the adoption of Cost Control and reduction techniques
1.6 Scope of the Study
Firstly, the Scope of this research work is limited to Kwara State property development Corporation due to time constrain and unwillingness of the respondent in Kwara State Property Development Corporation.
More so, literature was reviewed on Cost Control and Cost reduction technique and it was covered by the scope of the research work, despite of not going beyond the limit.
1.7 Organization and Plan of the Study
The research work will be divided into five chapters.
- Chapter one will have the background of the study. Statement of the research problem. Objective of the study significance of the study. Research Question, Scope of the Study, Study Plan and Definitions of key.
- Chapter two will treat Cost Control, Cost reduction, Effective Cost Control, Value analysis and Engineering and appraisal of literature review.
- Chapter three will discuss brief history of the case study modes of Data Collection and Data Analysis techniques.
- While chapter four will contain Introduction, Data Presentation, Data Analysis and Findings.
- Finally, Chapter five will discuss the Summary, Conclusion and Recommendation.
1.8 Definition of Key Terms
It is the techniques or a process of ascertain cost. Controlling Cost this is due cost which can be influenced by the action of a member of an organization and it is relevant to decision making and very important is measuring operational efficiency.
Is a financial and quantitative statement prepared and approved prior to a defined period of time of the policy to be pursued during the period for the purpose of attaining a given objective.
In relation to volume of activities is a measure of degree of response of a cost item to a small charge in the level of activity.
It is a location person or item of equipment in respect of which cost may be ascertained and related to cost unit for control purpose.
Summary, Conclusion and Recommendation
Kwara State Property Development Corporation is the principal state agency charged with the responsibility for stimulating residential and industrial housing development as well as in adequate finance arising from the fact that has been capitalized enough to operate as a viable entity. Its financial problems is further compounded by the stoppage of the State Government monthly subvarrion earlier enjoyed.
Therefore, with the shortage of fund and the constraint posed to its activities by the rapidly rising cost of building material, it becomes imperatives to improve upon it current standard of Cost Control and Cost reduction programmes. Cost of material and fluctuation in prices and rates the two most cost in Nigeria. Also the main importance in the regard are delays in payment which lead to cost overrun, there are compensable, non excusable and exercisable delays and specification, change in a scope of wone leading to suspension of projects, failure of disposed vital information to contraction, late delivery of material and failure to finish contractor, with appropriates sites by agreed data.
Information is the basis for making business decision and the degree of its accuracy affect the level of confidence that will be attached to the subsequent decision. The need to forecast and control construction activities necessitates efficient cost information management especially in this time of economic recession.
Privatization and commercialization of Nigeria economy has been in progress to improve the efficiency of the industry and utilize private sector managerial techniques to achieve growth and development of the public sector. This has not been possible at the construction industry because of the following reasons.
- Nigeria Economy is just aspiring towards acquisition of technological know no. therefore rolling back supervision of major parameters.
- The economy is mono-product based which depend on the importation of both capital good and raw materials need in the construction industry. These are input that depend on foreign exchange rate and its availability.
It is rather unfortunate that these one virtually instable, the exchange rate is rather high, bringing down the purchasing power of the naira by the day.
Having studied the cost management techniques of the corporation with the background of an unstable Nigeria economy, we may conclude as follows
- There was no Cost Control and Cost reduction techniques that could be appreciated in the light of the magnitude of its operations.
- The determination of an optimal level of Construction Cost was not considered to be important by the management.
- Budgeting discipline was existed.
- The legal aspect of drawing contractual agreement as it related to delayed payment, extension of project time and contract price variance were not considered properly.
- The method of Classification Cost could not enhance an effective Cost management programme and the value of Cost information processing was not appreciated.
- Formulation of standard was done in such a way to allow sudden changes in economic environment to derail whatever cost control programme might be existing.
The issues addressed in this research work have been the identification and evaluation of Cost management techniques that are useful in the Construction Industry and analysis of cost techniques and professional problem confronting the efficiency of our techniques.
In the light of the study, the following recommendation are made
- Construction Cost may be greatly reduced when specification for each project are well written.
- Source of relevant and accurate Cost Information should be identified and considered properly by the professionals in the industry, who should also understand that the principal of Information dissemination and storage for sound Cost Management programme formulation are important.
- Corruption Clause should be inserted in Contract Certificate empowering the client to terminate the contract on grounds if proven corruption this will minimize the Nigeria factor which has disoriented the citizens to honestly and integrity.
- Cost index approach to settling standard could enhance realistic cost estimate for the purpose of budgeting and also enhance an efficient budgeting Control System.
Finally, a memorandum of performance could enhance better understanding between government and Corporation in order that the Commercial objective of the Corporation be place in proper perspective.
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