A briefing report on Cost Management Systems within the SEG Ltd group and how it might be used to improve the Group.

Authors Avatar by calum_82 (student)

F108MAN - Managing Products and Finance– Assignment 1        0600532        

                

Strathgammon Estates Group (SEG) Ltd

Cost Management Systems (CMS)

A briefing report on Cost Management Systems within the SEG Ltd group and how it might be used to improve the Group.

For:

SEG Ltd

8 January 2013

By:

Stephen Redfearn

Personal Assistant

Chief Executive Secretaries Dept.

SEG Ltd

Contents

1.00        Introduction

2.00        Cost Management Systems

3.00        Management Advantages

4.00        Management Issues

5.00        Conclusions

6.00        Recommendations

7.00        Appendices

1.00        INTRODUCTION

  • The report is required to recognise key decisions and factors that contribute to any inefficiency of the current CMS within the SEG Ltd and investigate how cost management systems which are advantageous to improve the business efficiency by providing better clarity to the SEG Ltd Board.

  • I will provide a summary to the Board of the evaluation results. It will provide recommendations on improvements that can be made through new or improved Cost management systems in order to drive efficiencies throughout the business.

  • This report will look to address if there are problems of using traditional the CMS with the aim of generating greater competitiveness, business efficiency and result in growth on a continuing basis throughout SEG Ltd.

  • With looking into the structure of SEG Ltd, there appears to be no reason why newer Cost Management systems could not be implemented across the group.

  • Neville Construction Ltd can be split into these distinct departments who are responsible for numerous sub-departments. There are currently 120 full time members of staff with over 50% being based at head office with the rest being field based.

The main departments are: Procurement (Quantity surveying, Estimating and Costing.), Finance (Accounts) and Contracts (Contracts and Buying).

2.00        Cost Management Systems

Job Costing

Job costing involves tracking and recording costs incurred on a job against any revenue that has been generated in the job. The costs involved are recorded in a ledger during the program of works, costs of materials (indirect or direct), labour and any sub-contractor costs are recorded.

Before a job is set up a good control system will set up a budget, which can help facilitate comparisons of budgeted costs with actual costs as the project progresses.

Join now!

Job costing software programs are available to ensure that all costs involved in a job have been properly established. It can also facilitate various reports being generated which will help in effective decision making.

Activity Based Costing

As construction projects will involve various activities, these consume different resources (labour and materials) with the use of these resources it adds to the overhead costs. Activity based costing (ABC) determines the activities cost without alteration. ABC identifies cost of each activity and its resource which is determined by using receipts. A cost per unit of material can be determined, and then ...

This is a preview of the whole essay