1. Polytechnic University of the Philippines; carolinecastolo21@gmail.com
2. Polytechnic University of the Philippines; carmencitasumande2@gmail.com

*             Correspondence: carolinecastolo21@gmail.com

Keywords: market economy; construction economy; cost management

1. INTRODUCTION

The notion of managing economic costs in construction is considered regressive; however, it serves as a crucial pillar industry for fostering the economic growth of the Philippines at a national level. The construction engineering industry possesses a comprehensive system of guarantees [1]; however, certain construction companies have yet to recognize the significance of economic cost management and lack the appropriate understanding and awareness of construction economic cost management. While facilitating economic development, it has the potential to augment the national Gross Domestic Product (GDP) [2]. The market economy has facilitated the development of the construction industry through the ongoing enhancement of internal management practices, particularly in relation to economic construction costs [3]. Based on the present empirical evidence, it can be observed that the cost management personnel within construction enterprises exhibit a deficiency in their understanding of the fundamental principles underlying construction cost risk management. Furthermore, they lack the advanced professional and scientific knowledge pertaining to cost management techniques that are possessed by cost managers employed within construction companies in the Philippines [4]. Certain risk issues encountered during the construction process do not contribute to enhancing the fundamental competitive advantage of construction companies within the market. The leaders and managers of companies exhibit limited understanding of economic management [5], resulting in a lack of holistic consideration for enterprise development, a dearth of strategic thinking, and a narrow focus on immediate interests, leading to the utilization of unqualified practices [6]. The utilization of inadequate building materials, insufficient attention to pre-construction design, and utilization of substandard construction techniques have resulted in significant damage to the construction company’s social image and reputation, as well as substantial financial losses. The adverse financial outcomes have rendered construction companies incapable of sustaining their operations indefinitely, leaving them submerged within the volatile currents of the market [7].

2- THE STATUS QUO OF CONSTRUCTION ECONOMIC COST MANAGEMENT

Within the realm of the economic market, it is imperative for construction companies to engage in meticulous planning of cost management and establish a comprehensive understanding of various cost management methodologies. Nevertheless, within the present state of market progression, there exists a dearth of alternatives in terms of cost management methodologies, and the selection of cost management methodologies by construction firms does not align with the advancement of enterprises and their prospective strategies [8]. The implementation of an imprudent cost management approach results in the irrational growth of the overall business and also exerts a discernible influence on other management activities within the enterprise [9]. In light of the swift advancement of the Internet, it is imperative to augment cost management expenditures to ensure the comprehensive progress of engineering projects. The integration of companies is necessary in order to mitigate the effects of environmental and human factors [10]. The prompt emphasizes the importance of promptly addressing network information security concerns, while also seeking a solution that aligns with the economic development goals of Philippine enterprises. Additionally, it suggests the introduction of advanced technologies as a means to reduce costs [11]. The examination of environmental and human factors is imperative within a market economy system to safeguard the integrity and confidentiality of network information [12]. Within the current construction materials market in the Philippines, several construction companies encounter specific challenges when acquiring construction materials. Moreover, there is a pressing need for additional regulation to address the overall procurement process and conduct within the construction industry [13]. Based on the present circumstances, certain construction firms prioritize immediate self-interest when choosing and acquiring construction materials, neglecting a thorough and comprehensive assessment of the actual procurement conditions of suppliers [14]. Consequently, they enter into diverse contracts with manufacturers [15]. The aforementioned actions not only result in a significant infringement upon fair competition among other suppliers of building materials, but also pose a threat to the sustainable growth and stability of the building material market [16]. The system’s positive regulatory effect is not effectively and fully harnessed. There is no doubt that this will significantly decrease the production and management capabilities of construction enterprises in the Philippines [17]. Furthermore, within the realm of commodity procurement management, certain prominent construction firms prioritize the assessment of suppliers’ production service quality and the performance of the services rendered. However, they fail to thoroughly analyze and investigate the intricate connection between production costs and service quality [18]. This could potentially result in a significant divergence in the decision-making trajectory of project operating cost management within construction enterprises, ultimately impeding the efficient development of economic project cost control management within enterprise construction projects [19]. Given the ongoing progress and growth of the Philippine economy, the utilization of conventional management approaches by construction companies for overseeing and regulating production costs during the developmental phase [20] may result in suboptimal cost management efficiency. Furthermore, this could potentially escalate enterprise expenses, thereby impeding the future advancement of construction companies [21]. It is evident from this observation that the conventional cost management concept is evidently unsuitable for the present-day enterprise development [22]. Construction enterprises should align with the evolving trends and adapt their cost management strategies accordingly. By innovating the concept of cost management, optimizing cost expenditure, and maximizing economic benefits, construction enterprises can effectively carry out cost management in the construction economy [23]. To enhance the cost management model, it is imperative for enterprises to elucidate the significance of cost management in relation to the advancement of construction enterprises [24]. Measures can be implemented from two perspectives. Initially, it is imperative for enterprise managers to undertake the task of estimating the cost budget for construction projects during the bidding phase. Subsequently, throughout the construction process, it is essential to engage in project cost management planning, taking into consideration the various stages of construction. This approach enables a continuous enhancement of cost optimization and the overall economic performance of enterprises [25]. Additionally, it is imperative for enterprise managers to actively monitor the entire process of implementing construction projects. This entails integrating the concept of cost across various stages of the projects, periodically reviewing construction cost expenditures, optimizing costs, and minimizing enterprise expenses while ensuring the quality of construction [26]. The current stage involves the scientific analysis and strategic planning of bidding activities. Within the context of enterprise development, the bidding process holds significant importance as a crucial component. The provided hyperlink has the capacity to directly manipulate expenses, thereby holding significant importance in enhancing the economic profitability of the organization [27]. Currently, during the pre-bidding phase of cost management, enterprises are required to undertake the calculation of project costs, devise various payment strategies to allocate funds, and determine the project quantity. In the realm of management, it is crucial to exercise additional oversight over the economic prowess and technical capacities of the enterprise in order to enhance the precision of the overall cost calculation endeavor [28]. Revise the notion of cost management in response to the current circumstances faced by construction firms, with the aim of effectively accommodating market fluctuations and facilitating comprehensive and adaptable management practices. During the bidding phase, it is imperative to anticipate potential challenges, effectively execute relevant tasks, and develop rational strategies to address any arising issues [29]. The focal point of cost management in an enterprise is the work structure of enterprise cost management. This structure plays a crucial role in effectively planning and ensuring the progress of cost management work [30]. In the context of optimizing cost management work structure, it is imperative to prioritize the optimization of the cost management system [31]. This entails identifying and eliminating potential sources of problems in cost management, while also imposing stringent requirements on cost management personnel to adhere to established norms in cost control. By doing so, the aim is to enhance the competitive advantages of the company. Additionally, it is imperative to enhance the optimization of personnel involved in cost management, establish clear objectives for cost management, foster a culture of continuous innovation among cost management personnel, strategically plan work tasks, ensure a rational allocation of work progress, and enhance the overall efficiency of cost management [32]. Furthermore, it is imperative to enhance the efficiency of the task components and implement a comprehensive cost management framework. One perspective suggests that the purpose of this approach is to mitigate the accumulation of cost management tasks. Conversely, another perspective argues that it aims to guarantee the efficient execution of the system, enhance its optimization, and prevent the loss of work efficiency resulting from system redundancies. During the course of operations, it is imperative to establish a clear trajectory for the enterprise’s growth, comprehend each project undertaken by the construction enterprise, and guarantee that cost management practices align with the prevailing trends in the industry and the dynamics of the market economy [35]. The utilization of material technology in the field of construction engineering holds significant importance for Philippine construction enterprises, serving as a fundamental component of their operations. Moreover, it represents a pivotal aspect of the enterprise’s core technology [36]. The cost of construction engineering materials accounts for approximately 50% of the total cost. The paramount importance of ensuring safety in all facets of material equipment procurement is a critical factor that directly impacts the utilization of specialized materials and equipment in national construction projects [37]. Hence, it is imperative to consistently enhance the safety management and quality control measures pertaining to the procurement of construction material equipment [38]. To begin with, it is imperative for construction engineering enterprises to implement a standardized system for construction procurement budgeting. During the initial phase of construction projects, it is imperative to conduct statistical analysis on the scientific aspects and budget rationality of construction procurement budgets [39]. Subsequently, these analyses should be promptly submitted to the appropriate financial departments of the state for approval [40]. Once approved, a comprehensive inventory of initial procurement items for construction projects will be developed within the calendar year. This measure aims to ensure that the revision and formulation of the procurement list align closely with relevant policies and effectively fulfill the guiding function of the construction project procurement list throughout the project procurement process [41].

3. CONCLUSION

The concept of cost management in the construction sector is often viewed as regressive; nevertheless, it plays a pivotal role in driving the economic development of the Philippines on a national scale. The construction engineering industry is equipped with a comprehensive system of guarantees. However, there are certain construction companies that have not fully acknowledged the importance of economic cost management and lack the necessary understanding and awareness of construction economic cost management. By facilitating economic development, there exists the potential to enhance the national Gross Domestic Product (GDP). The construction industry has experienced significant growth and progress as a result of the implementation of market economy principles. This has been achieved by continuously improving internal management practices, with a specific focus on optimizing economic construction costs. Based on the available empirical evidence, it is evident that there is a lack of comprehension among cost management personnel in construction enterprises regarding the fundamental principles that underlie the management of construction cost risks. Moreover, the individuals in question exhibit a deficiency in the sophisticated expertise and scientific understanding related to cost management methodologies, which is typically possessed by cost managers employed in the construction industry in the Philippines. In order to sustain a consistent growth rate in the development of the construction industry in the Philippines and enhance the competitive advantage of enterprises in the global market, it is imperative to implement stringent supervision and management of economic cost behaviors within construction enterprises. In the realm of management, it is imperative to acknowledge the significance of cost management and adopt progressive cost management principles in order to enhance cost management practices. This can be achieved through the systematic planning of bidding activities, the enhancement of cost refinement management during the construction phase, and the implementation of other measures. These efforts aim to optimize the economic benefits of enterprises to the fullest extent possible.

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