Construction Economics

The production activity of construction companies should be based on general economic requirements. Construction economics is part of the process of successfully making a profit based on the measures taken. This concept is quite broad and includes a wide range of participants in the building process. In a general sense, the term Construction Organization Accounting means a separate branch of economics. But in everyday use, it means direct action to solve certain economic problems faced by the construction industry. Yes, some of the main tasks solved by construction economics are:

• study of economic efficiency of financial investments in construction;
• optimization of the estimated cost of construction;
• development of the correct economic part of the contract;
• economical and rational use of construction resources and reserves;
• implementation of effective commercial activities of construction companies;
• Development of real estate valuation criteria.

The successful formation of profitable economic activity of the enterprise depends on many factors. Thus, the construction economy must fully meet all the requirements of the legislation, take into account the current situation in the construction market, rely on modern research on the development of the industry and so on. Construction economics must be perfect at every enterprise at both the microeconomic and macroeconomic levels. Failure to take into account the general situation on the market, as well as neglect of details, reduces the economic activity of production and jeopardizes the activities of the construction trust as a whole. Construction economics must be constantly taken into account during the economic activity of these enterprises.

Construction organization accounting

Accounting is a mandatory component of any business. In the construction industry, the accounting service is subject to increased requirements, which arise due to the significant amount of information regarding the movement of tangible assets in the production process. Accounting of the construction organization must successfully and efficiently ensure the implementation of the following tasks dictated by the economics of construction:

• Formation of complete and reliable information about the activities of the construction organization, available on the construction reserves, equipment and tangible assets. This information must always be relevant and reliable, provided in a convenient form at the first request of the manager or owner. In addition, construction accounting has the function of supporting construction projects.
• Providing information necessary for participants in the construction process to comply with current legislation during the organization of business operations and for the purpose of Taxation of BIS .
• Prevention of negative economic results due to violation of the responsibilities of construction participants for the rational and economic use of available materials and equipment.

Construction organization accounting has a size that depends on production volumes. But in addition to size, a significant place is occupied by the effective structure of accounting. If the construction does not involve significant volumes, a linear accounting structure is appropriate. In this case, all accounting staff are directly subordinate to the chief accountant. If the construction company is a large trust, the accounting department can be formed according to a vertical scheme, which provides for the creation of certain departments headed by senior accountants. Depending on the need, the following departments can be created:

• estimated;
• material;
• cash;
• production;
• accounting for finished products;
• tax accounting;
• general.

Accounting of a construction organization of the highest level with a very significant amount of work, can be created by functional structure, when accounting departments conduct certain areas or cycles of work, as well as support of construction projects. Although the heads of such departments report to the chief accountant, they have broad powers.

Construction Accounting

Construction accounting must be kept continuously and ensure proper accounting of inventory, take into account their movement during the movement of production sites and write-off after use. It must be flexible and respond in a timely manner to any changes in economic performance. The difficulty of accounting in production is due to the high cost of facilities and work performed, as well as the long process of work. In addition, in construction, the price and the buyer are known in advance, but the price and construction materials and additional services can change dynamically, leading to an imbalance. Construction accounting of each object should be kept separately, not forgetting about BIS accounting. This is due to the need to allocate costs. The current cost estimate and the balance of inventories and warehouses must be reconciled on an ongoing basis. Construction economics should constantly use production process accounting to achieve its goals, using IT for construction. Construction Accounting should make every effort to maintain the economic component and a high level.