Publication History
Published: March 01, 2023
Identification
D-0037
Citation
Bismark Abankwah, Amfo Vincent, & Mohammed Usamah, (2023). A review of construction economic cost management based on ghana market economy. Dinkum Journal of Economics and Managerial Innovations, 2(03):144-150.
Copyright
© 2023 DJEMI. All rights reserved
144-150
A Review of Construction Economic Cost Management Based on Ghana Market EconomyReview Article
Bismark Abankwah1, Amfo Vincent2, and Mohammed Usamah3,*
- University of Ghana, Ghana; babankwah21@gmail.com
- University of Ghana, Ghana; amfov9832@gmail.com
- University of Ghana, Ghana; mdusamah2019@gmail.com
* Correspondence: mdusamah2019@gmail.com
Abstract: Under the background of the development of Ghana’s market economy, the rationality of the entire project construction can be guaranteed through the cost management of construction companies. The continuous development of the market economy provides effective help for the cost management of enterprises but also puts forward higher requirements for the cost management of enterprises. Ghana’s population and land capital are relatively sufficient, and with the continuous improvement of people’s quality of life, people’s demand for buildings is increasing. In the current construction materials market of Ghana, some construction companies have certain problems when purchasing construction materials, and even the overall procurement process and behavior of the construction industry need further regulation. This review mainly analyzes the current situation of construction economic cost management under the current market economy of Ghana, explores the significance of economic cost management, and puts forward specific optimization measures. The material technology used in construction engineering is an important basic technology part of Ghana’s construction engineering enterprises, and it is also the core technology part of the enterprise. The cost occupies about half of the cost of construction engineering materials. The safety of all aspects of material equipment purchase is the most important link that directly affects the application of special materials and equipment for construction projects in the country. As the construction industry is a pillar in the economic growth of Ghana, the construction industry needs to be linked with other industries in the process of national development. In this regard, the development of the construction industry has become the primary task of developing countries like Ghana. Construction companies need to actively explore and establish sound economic management measures to form a good management system so as to be able to come out on top in the fierce market competition and continue to grow.
Keywords: market economy; construction economy; cost management
- INTRODUCTION
The concept of construction economic cost management is regressive, but it is a very important pillar industry to promote the national economic growth of Ghana. The construction engineering industry has relatively complete system guarantees [1], but some construction companies have not realized the importance of economic cost management and lack the correct concept of construction economic cost management and awareness. While driving economic development, it can also increase national GDP [2]. Under the market economy, the current construction industry has achieved certain development only by continuously optimizing the internal management of the construction industry, especially the management of economic construction costs [3]. Judging from the current actual situation, the cost management personnel of construction enterprises lack the basic concept of construction cost risk management and lack the advanced professional and scientific cost management technical knowledge of the cost managers of Construction companies in Ghana [4]. Some risk problems in the construction process are not conducive to improving the core competitiveness of Construction companies in the market. The leaders and managers of companies have weak awareness of economic management [5], which has led to the fact that the managers of the enterprises cannot proceed from the overall situation of enterprise development, lack strategic thinking, and can only pay attention to a few immediate interests so that the use of unqualified [6]. The building materials, the failure to do a good job in the pre-construction design work, and caused by substandard construction technology caused not only serious harm to the social image and reputation of the construction company but also brought great economic benefits to the company. Losses have even made construction companies unable to stand up forever, submerged in the torrent of the market [7].
2- THE STATUS QUO OF CONSTRUCTION ECONOMIC COST MANAGEMENT
2.1 Unreasonable Cost Management Methods
In the economic market, construction companies need to plan cost management and clarify cost management methods. However, in the current market development, there is a lack of choices for cost management methods, and the cost management methods chosen by construction companies do not conform to enterprise development and future planning [8]. The unreasonable cost management method leads to the unreasonable development of the overall business and also has a certain impact on other management activities of the enterprise [9]. In the context of the rapid development of the Internet, in order to ensure the overall development of engineering projects, cost management expenditures will increase. In this phenomenon, integration between companies is required to reduce the impact of environmental factors and human factors [10]. Maintain network information security issues in a timely manner, find a way suitable for the economic development of Ghana enterprises, and reduce costs by introducing advanced technologies [11]. In a market economy system, environmental factors or human factors need to be studied to ensure the security of network information [12].
2.2 The Procurement Process of Building Materials is Not Standard
In the current construction materials market of Ghana, some construction companies have certain problems when purchasing construction materials, and even the overall procurement process and behavior of the construction industry need further regulation [13]. Proceeding from the actual situation, there are some construction companies who only consider the current self-interest in the selection and procurement of building materials and do not conduct a comprehensive and in-depth investigation of the actual procurement situation of building material suppliers [14], and sign various contracts with manufacturers [15]. This not only seriously violates fair competition with other building material suppliers but also undermines the stable development of the building material market [16]. The positive regulatory effect of the system cannot be effectively and fully utilized. Undoubtedly, this will greatly reduce the production and management level of Ghana’s construction enterprises [17]. In addition, in the management process of commodity procurement, some large-scale construction companies only pay attention to the actual situation of the production service quality of commodity suppliers and the performance of the commodity services provided, but they do not analyze and seriously study the relationship between production costs and service quality [18]. This may lead to a major deviation in the decision-making direction of the project operating cost management of construction enterprises and will eventually seriously hinder the effective development of enterprise construction project economic project cost control management [19].
2.3 Innovative Cost Management Concept in Construction Economy
With the continuous development and prosperity of the economy of Ghana, if construction companies still adopt traditional management methods to manage and control production costs during the development process [20], it will not only lead to low efficiency of cost management but will even increase the cost of enterprises, restricting the further development of construction companies develop [21]. It can be seen from this that the traditional cost management concept is obviously not applicable to the current development of the enterprise [22]. Construction enterprises should follow the development of the times, innovate the concept of cost management, optimize the cost expenditure of the enterprise, and maximize the economic benefits of the enterprise when carrying out cost management work in the construction economy [23]. In order to innovate the cost management model, enterprises should clarify the importance of cost management to the development of construction enterprises [24]. Measures can be taken from two aspects. First, enterprise managers need to calculate the cost budget of construction projects during the bidding process, and during the construction process, according to different construction links, carry out project cost management planning so as to continuously optimize costs and improve the economic benefits of enterprises [25]. Secondly, enterprise managers need to dynamically monitor the whole process of construction project implementation, integrate the cost concept with different links of construction projects, check construction cost expenditures from time to time, optimize costs, and reduce enterprise expenditures on the premise of ensuring construction quality [26]. Scientific analysis and planning of bidding work at present, in the process of enterprise construction, bidding work is a very critical link. This link can directly control the cost, which is of great significance to the improvement of the economic benefit of the enterprise [27]. At present, in the process of cost management before bidding, enterprises need to calculate the project cost, use different payment methods to plan funds and calculate the project quantity. In the process of management, it is especially necessary to further control the economic strength and technical capabilities of the enterprise so as to improve the accuracy of the entire cost calculation work [28]. Adjust the concept of cost management in light of the actual situation of construction companies to better adapt to changes in the market environment and make overall and dynamic management. In the bidding stage, it is also necessary to predict possible problems, do a good job in related work, and formulate reasonable solutions to the problems that arise [29].
2.4 Optimizing the Work Structure of Enterprise Cost Management
The work structure of enterprise cost management is the focus of the entire cost management, which can effectively plan the cost management work and ensure the progress of the cost management work [30]. First of all, when optimizing the cost management work structure, it is necessary to pay attention to the optimization of the cost management system [31], eliminate the source of possible problems in cost management, and strictly require cost management personnel to control costs in accordance with the norms, so as to improve the company’s advantages. Secondly, it is necessary to optimize cost management personnel, clarify the goals of cost management, encourage cost management personnel to continuously innovate in their work, plan work content, arrange work progress reasonably, and improve cost management efficiency [32]. In addition, it is necessary to optimize the work content and establish a cost management system. On the one hand [33], it is to prevent the accumulation of cost management work, and on the other hand, it is to ensure the effective implementation of the system, optimize the system, and avoid the waste of work efficiency caused by the overlap of systems [34]. Throughout the process, it is necessary to clarify the development direction of the enterprise, understand each project of the construction enterprise, and ensure that the cost management work is consistent with the development of the industry and the market economy [35].
2.5 Standardize the Construction Procurement
The material technology used in construction engineering is an important basic technology part of Ghana’s construction engineering enterprises, and it is also the core technology part of the enterprise [36]. The cost occupies about half of the cost of construction engineering materials. The safety of all aspects of material equipment purchase is the most important link that directly affects the application of special materials and equipment for construction projects in the country [37]. Therefore, it is necessary to continuously strengthen the safety management and quality control of all aspects of construction material equipment procurement [38]. First of all, construction engineering enterprises must establish a standardized construction procurement budget system. In the early stage of construction projects, the statistical science and budget rationality of construction procurement budgets must be statistically analyzed [39] and submitted to the relevant financial departments of the state for approval in a timely manner [40]. After approval, a list of initial procurement items for construction projects will be formulated within the year to ensure that the revision and formulation of the procurement list are highly policy-specific and give full play to the guiding role of the construction project procurement list in the project procurement process [41].
- CONCLUSION
All in all, in order to effectively ensure that the construction industry of Ghana continues to maintain a steady growth rate of development and, at the same time, enhance the core competitiveness of enterprises in the international market competition, it is necessary to strictly supervise and manage various economic cost behaviors within construction enterprises. In the process of management, it is necessary to, from the current point of view, recognize the importance of cost management, establish advanced cost management concepts, and better carry out cost management through scientific planning of bidding work, improvement of cost refinement management in the construction stage and other measures, so as to realize the maximum economic benefits of enterprises maximize.
REFERENCES
- Amoatey, C. T., Ameyaw, Y. A., Adaku, E., & Famiyeh, S. (2015). Analyzing delay causes and effects in Ghanaian state housing construction projects. International Journal of Managing Projects in Business, 8(1), 198-214.
- Shah, R. K. (2016). An exploration of causes for delay and cost overrun in construction projects: A case study of Australia, Malaysia & Ghana. Journal of Advanced College of Engineering and Management, 2(1), 41–55.
- Amewu, S., Asante, S., Pauw, K., & Thurlow, J. (2020). The economic costs of COVID-19 in sub-Saharan Africa: insights from a simulation exercise for Ghana. The European Journal of Development Research, 32, 1353-1378.
- Aduhene, D. T., & Osei-Assibey, E. (2021). Socio-economic impact of COVID-19 on Ghana’s economy: challenges and prospects. International Journal of Social Economics.
- Williams, J., Fugar, F., & Adinyira, E. (2020). Assessment of health and safety culture maturity in the construction industry in developing economies: a case of the Ghanaian construction industry. Journal of Engineering, Design, and Technology, 18(4), 865-881.
- Ametepey, O., Aigbavboa, C., & Ansah, K. (2015). Barriers to the successful implementation of sustainable construction in the Ghanaian construction industry. Procedia Manufacturing, 3, 1682-1689.
- Boadu, E. F., Wang, C. C., & Sunindijo, R. Y. (2020). Characteristics of the construction industry in developing countries and its implications for health and safety: an exploratory study in Ghana. International Journal of Environmental Research and public health, 17(11), 4110.
- Boadu, E. F., Wang, C. C., & Sunindijo, R. Y. (2020). Characteristics of the construction industry in developing countries and its implications for health and safety: an exploratory study in Ghana. International Journal of Environmental Research and public health, 17(11), 4110.
- Asante, J., Kissi, E., & Badu, E. (2018). Factorial analysis of capacity-building needs of small-and medium-scale building contractors in developing countries: Ghana as a case study. Benchmarking: An International Journal, 25(1), 357-372.
- Oppong, G. K., Pattanayak, J. K., & Irfan, M. (2019). Impact of intellectual capital on the productivity of insurance companies in Ghana: A panel data analysis with system GMM estimation. Journal of Intellectual Capital.
- Kissi, E., Adjei-Kumi, T., Badu, E., & Boateng, E. B. (2017). Factors affecting tender price in the Ghanaian construction industry. Journal of Financial Management of Property and Construction.
- Somiah, M. K., Osei-Poku, G., & Aidoo, I. (2015). Relative importance analysis of factors influencing unauthorized siting of residential buildings in the Sekondi-Takoradi Metropolis of Ghana. Journal of building construction and Planning Research, 3(03), 117.
- Darko, A., Chan, A. P. C., Gyamfi, S., Olanipekun, A. O., He, B. J., & Yu, Y. (2017). Driving forces for green building technologies adoption in the construction industry: Ghanaian perspective. Building and Environment, 125, 206-215.
- Danso, H., & Obeng-Ahenkora, N. K. (2018). Major determinants of price increase of building materials in the Ghanaian construction market. Open Journal of Civil Engineering, 8(2), 142-154.
- Phillips, J., Hailwood, E., & Brooks, A. (2016). Sovereignty, the ‘resource curse and the limits of good governance: a political economy of oil in Ghana. Review of African political economy, 43(147), 26–42.
- Ameyaw, E. E., Pärn, E., Chan, A. P., Owusu-Manu, D. G., Edwards, D. J., & Darko, A. (2017). Corrupt practices in the construction industry: Survey of Ghanaian experience. Journal of Management in Engineering, 33(6), 05017006.
- Kotir, J. H., Smith, C., Brown, G., Marshall, N., & Johnstone, R. (2016). A system dynamics simulation model for sustainable water resources management and agricultural development in the Volta River Basin, Ghana. Science of the Total Environment, pp. 573, 444–457.
- Osei-Kyei, R., & Chan, A. P. (2017). Comparative analysis of the success criteria for public–private partnership projects in Ghana and Hong Kong. Project Management Journal, 48(4), 80-92.
- Ameyaw, P. D., & De Vries, W. T. (2020). Transparency of land administration and the role of blockchain technology, a four-dimensional framework analysis from the Ghanaian land perspective. Land, 9(12), 491.
- Balana, B. B., Bizimana, J. C., Richardson, J. W., Lefore, N., Adimassu, Z., & Herbst, B. K. (2020). Economic and food security effects of small-scale irrigation technologies in northern Ghana. Water Resources and Economics, 29, 100141.
- Hsiang, S., Kopp, R., Jina, A., Rising, J., Delgado, M., Mohan, S., … & Houser, T. (2017). Estimating economic damage from climate change in the United States. Science, 356(6345), 1362–1369.
- Raheem, D., Dayoub, M., Birech, R., & Nakiyemba, A. (2021). The contribution of cereal grains to food security and sustainability in Africa: potential application of UAV in Ghana, Nigeria, Uganda, and Namibia. Urban Science, 5(1), 8.
- Agyapong, F., & Ojo, T. K. (2018). Managing traffic congestion in the Accra central market, Ghana. Journal of Urban Management, 7(2), 85-96.
- Sambasivan, M., Deepak, T. J., Salim, A. N., & Ponniah, V. (2017). Analysis of delays in the Tanzanian construction industry: Transaction cost economics (TCE) and structural equation modeling (SEM) approach. Engineering, Construction, and Architectural Management.
- Kissi, E., Agyekum, K., Baiden, B. K., Tannor, R. A., Asamoah, G. E., & Andam, E. T. (2019). Impact of project monitoring and evaluation practices on construction project success criteria in Ghana. Built Environment Project and Asset Management.
- Banson, K. E., Nguyen, N. C., & Bosch, O. J. (2016). Using system archetypes to identify drivers and barriers for sustainable agriculture in Africa: a case study in Ghana. Systems Research and Behavioral Science, 33(1), 79-99.
- Hsiang, S., Kopp, R., Jina, A., Rising, J., Delgado, M., Mohan, S., … & Houser, T. (2017). Estimating economic damage from climate change in the United States. Science, 356(6345), 1362–1369.
- Huang, B., Wang, X., Kua, H., Geng, Y., Bleischwitz, R., & Ren, J. (2018). Construction and demolition waste management in China through the 3R principle. Resources, Conservation and Recycling, 129, 36-44.
- Liu, J., Liu, Y., & Wang, X. (2020). An environmental assessment model of construction and demolition waste based on system dynamics: a case study in Guangzhou. Environmental Science and Pollution Research, 27, 37237-37259.
- Ghisellini, P., Ripa, M., & Ulgiati, S. (2018). Exploring environmental and economic costs and benefits of a circular economy approach to the construction and demolition sector. A literature review. Journal of Cleaner Production, 178, 618-643.
- Ruiz, L. A. L., Ramón, X. R., & Domingo, S. G. (2020). The circular economy in the construction and demolition waste sector–A review and an integrative model approach. Journal of Cleaner Production, 248, 119238.
- Burova, E., Grishunin, S., & Suloeva, S. (2021). Development of a system-synergetic approach to cost management for a high-tech industrial enterprise. Sustainable Development and Engineering Economics, (1), 15-32.
- Diagne, C., Leroy, B., Vaissière, A. C., Gozlan, R. E., Roiz, D., Jarić, I., … & Courchamp, F. (2021). High and rising economic costs of biological invasions worldwide. Nature, 592(7855), 571-576.
- Bozgulova, N., Parmanova, R., Abenova, M., Ivanyuk, T., & Aryshev, V. (2019). Calculation methods for cost management in the construction industry. Entrepreneurship and sustainability issues, 7(2), 1450.
- Bakhodirovna, A. N. (2019). Ways of efficient cost management by accounting policy. International Journal of Research in Social Sciences, 9(2), 700-710.
- Tomaskova, H., Kopecky, M., & Maresova, P. (2019). Process cost management of Alzheimer’s disease. Processes, 7(9), 582.
- Žic, J., & Žic, S. (2020). Multi-criteria decision-making in supply chain management based on inventory levels, environmental impact, and costs. Advances in Production Engineering & Management, 15(2), 151-163.
- Li, Z., Tavakoli, F., El-Shafay, A. S., Liu, X., Mousa, M., & Heidarshenas, B. (2022). Economic cost and technical efficiency analysis of thermal management of a triple pack of lithium-ion battery with forced airflow and nano-phase change materials. Journal of Power Sources, p. 542, 231715.
- Mela, A., Rdzanek, E., Poniatowski, Ł. A., Jaroszyński, J., Furtak-Niczyporuk, M., Gałązka-Sobotka, M., … & Staniszewska, A. (2020). Economic costs of cardiovascular diseases in Poland Estimates for 2015–2017 Years. Frontiers in Pharmacology, 11, 1231.
- Squire, M. M., Munsamy, M., Lin, G., Telukdarie, A., & Igusa, T. (2021). Modeling hospital energy and economic costs for COVID-19 infection control interventions. Energy and Buildings, 242, 110948.
- Galati, A., Adamashvili, N., & Crescimanno, M. (2023). A feasibility analysis on adopting electric vehicles in the short food supply chain based on GHG emissions and economic costs estimations. Sustainable Production and Consumption.
Publication History
Published: March 01, 2023
Identification
D-0037
Citation
Bismark Abankwah, Amfo Vincent, & Mohammed Usamah, (2023). A review of construction economic cost management based on ghana market economy. Dinkum Journal of Economics and Managerial Innovations, 2(03):144-150.
Copyright
© 2023 DJEMI. All rights reserved