When we talk about the construction of buildings, roads and the repair of objects, we mean carrying out a whole set of activities and actions that lead to the desired result, namely a new building or a repaired road. Construction and installation work (hereinafter referred to as construction and installation work) is precisely the main part of the construction sector, without which it is impossible to carry out major repairs of premises or construct new buildings.
Explanation of construction and installation work
A fairly broad definition is understood to mean a variety of works that differ from each other in the direction of action and means of execution. If we give a general definition of the concept, then the decoding of construction and installation work will look like this - this is a set of actions for the construction of new objects (buildings, structures), their repair and reconstruction, as well as the installation and installation of equipment. One company simply cannot handle all the work, since the scale of the tasks assigned to it will be simply enormous. Therefore, there are organizations in the construction market whose activities have a narrower specialization. For example, there are companies engaged only in the construction and repair of roads, or companies building industrial facilities.
Types of construction and installation work
There are several main types of such work:
- general construction;
- transport and loading and unloading (delivery of materials, devices and equipment);
- special (with a special type of materials).
The most diverse is general construction activities. It consists of:
- earthwork (digging holes, trenches, ditches), pile work (driving, installation of pile foundations) and stone work (building walls, stone laying, etc.);
- roofing (installation of attics, roofs), plastering (painting, pasting) and insulation;
- installation of floors and communications;
- installation work of wooden, concrete and reinforced concrete, light enclosing structures;
- landscaping;
- installation work of technological equipment;
- and etc.
To finally understand what decoding construction and installation work is, you need to understand what all types of the above work include.
Features of construction and installation works
Each field of activity has a number of features and nuances. For construction and installation work, the most important criterion is quality, which completely depends on the professionalism of workers, competent organization of the process and the interaction of system parts with each other. At the beginning of the work, the set goals and objectives, planning and control are of great importance, and the end result is competent and high-quality construction and installation work. After all, people’s safety depends on this.
Proper preparation and organization of the process have a great influence on obtaining the desired result. Making mistakes or miscalculations can be costly for the contractor company in the literal and figurative sense of the word. Correcting defects in construction can cost human lives. Plus, this is always a rather expensive undertaking. It should also be understood that when calculating construction and installation work, the use of untested or low-quality materials, as well as unjustified savings on mandatory expense items, is not allowed. In order to take into account all the features of construction, it is necessary to carry out all work in stages.
Order of conduct
Deciphering construction and installation works will include competent and consistent implementation of all stages of construction activities.
For example, before constructing new facilities, it is first necessary to carry out geological studies of the soil of the site. It is possible that before construction begins, it will be necessary to drain the swamp or carry out drainage work to avoid flooding.
Afterwards you can start drawing the outline of the foundation. This is usually done using wire, wooden pegs and rope. Next, you need to dig a trench to lay the foundation of the future building. Afterwards you can proceed to the construction of walls. If you are planning a wooden building, then you should strictly adhere to the drawn up project. Stone walls have their own rules - for example, laying the stone strictly horizontally, bandaging the seams and filling with mortar.
After this, the attic floors are laid out, windows, attics and rafters are installed, it all depends on the number of floors of the building and the complexity of the construction. Next, the roof fronts are closed and the roofing material is laid. The next stage is finishing work (external and internal), then installation of equipment (plumbing, heating systems, etc.)
The scope of construction and installation work largely depends on the assigned tasks. For example, one company may be directly involved in the construction of the facility, but they trust another organization or do it themselves.
Organization of construction and installation work
In the process of constructing buildings and structures, various entities are necessarily involved: designers, surveyors, equipment suppliers and customers. In order for the construction and installation work process to be systematic, special attention should be paid to the organization of work.
It is better to clarify all questions regarding construction technology with representatives of construction and installation organizations and specialized trusts that prepare projects.
Typically, the project contains a work schedule, a general construction plan, according to which the deadlines for the execution of the contractor’s work are calculated and all volumes of construction and installation work are shown. In addition, this document indicates the location of the building and construction sites being constructed, water and energy supply schemes, as well as the number of materials, products and construction machines used. For complex buildings, technological maps are used, which specify special safety requirements, main stages, construction technologies, etc.
Organization of construction and installation work is very important, because it determines the rhythm in which installation, carpentry and other types of work will be carried out.
What is the estimated cost?
The level of quality of construction activities carried out largely depends on the amount of the allocated budget for construction. Therefore, such a concept as “estimated cost of construction and installation work” plays a decisive role in the work process. It is an official confirmation of project financing. It reflects all the final figures.
Calculation of construction and installation work
The jobs are fairly easy to count. It is necessary to add up all direct costs (cost of materials, wages of workers, etc.), overhead costs (administrative expenses, etc.) and planned savings. The last component is otherwise called the estimated or standard profit of a construction organization.
Construction and installation work is the most important stage of construction. Only with competent and qualified planning and organization of construction and installation work can the desired result be achieved with minimal expenditure of effort, money and time.
The estimated cost of construction and installation works of Ssmr for economic content mainly consists of direct costs P3, overhead costs of HP and estimated profit of Psm. When developing estimates, limited and other costs are taken into account, as well as some taxes, in particular VAT.
Direct costs are directly related to the implementation of construction and installation work. Their value is determined by direct calculation and depends on the volume of work, required resources, estimated standards and prices for resources.
Direct costs include:
1. costs of basic wages for construction workers;
2. cost of operating construction machines and mechanisms, including wages for drivers:
3. cost of building materials, parts and structures (hereinafter referred to as materials) M;
The article “Basic wages of workers” includes the costs of paying workers performing construction operations and installing equipment, as well as delivering materials from on-site warehouses of construction sites and to workplaces. The composition of remuneration included in the cost of products (works, services) also includes additional wages - payments for unworked time in accordance with current legislation. The costs of additional wages for construction workers are included in overhead costs.
The cost of operating construction machinery and mechanisms includes the costs stipulated by the estimated standards for construction work and installation of equipment (depreciation deductions, the cost of fuels and lubricants, the costs of performing all types of repairs, for relocating from one construction site to another, as well as the basic wages of workers, construction machine operators).
The estimated cost of materials, semi-finished products, parts and structures includes the costs of their acquisition and costs associated with the procurement and delivery of materials to the on-site warehouses of the construction site.
Overhead costs are intended to compensate for the costs of construction organizations associated with ensuring the general conditions of construction production: maintenance, organization and management of construction (administrative expenses, etc.). Their size is determined indirectly as a percentage of the wage fund of workers (builders and machinists).
Direct costs and overhead costs together form the estimated cost of work:
Estimated profit is the standard (guaranteed) profit of the contracting organization as part of the price of construction products, which goes mainly to the development of the production base and social sphere of the contractor.
The distribution of the estimated cost of construction and installation work, taken as 100%, among cost groups indicating their share in the estimated cost of construction and installation work determines the structure of the estimated cost of construction and installation work.
S SMR = PZ + NR + P SM
S SMR = S S + P SM
C C = PZ + NR
PZ = M + Zs + E M
FOT = Zs + Z M
PP – direct costs, rub.;
HP – overhead costs, rub.;
P SM – estimated profit, rub.
С С – cost of construction and installation works, rub.
HP – overhead costs, rub.;
N HP – overhead rate, %;
Psm – estimated profit, rub.
Npsm – estimated profit rate, %
Payroll – wage fund, rub.
Wages of main workers, rub.
ZM - wages of machine operators, rub.
The rate of overhead costs (N NR) depends on the type of construction and installation work and is determined according to MDS 81-33.2004
N PSM depends on the type of construction and installation work and is determined according to MDS 81-25.2001
Cost of construction and installation works– the costs of an enterprise for producing products or performing work.
Direct costs– these are the costs associated with construction and installation work:
Overheads– these are the costs associated with the management and organization of construction:
HP = AHR + ROP + ROP + Pr,
where АХР – administrative and economic expenses, rub.; ROR – expenses for servicing construction workers, rub.; ROP – expenses for organizing production, rub.; Pr – other overhead costs, rub.
Administrative expenses:
– wages for engineering and technical workers (E&T);
– wages of junior service personnel (JS);
– travel expenses;
– office, postal and telegraph expenses, etc.
Costs for servicing construction workers:
– training and retraining of personnel;
– medical and social insurance;
– occupational health and safety, etc.
Costs for organizing production:
– fire and security guards;
Other overhead costs:
– insurance of enterprise property;
Overhead costs are determined by the formula
where НР – overhead costs, rub.; N HP – overhead rate, %; Z O, Z M – wages of main workers and machine operators, rub.
FOT = Z O + Z M,
where payroll is the wage fund, rub.
The rate of overhead costs (N NR) depends on the type of construction and installation work and is determined according to MDS 81-33.2004.
Estimated profit – this is the standard profit of the enterprise, which is determined by the estimate documentation and is part of the construction product.
The estimated profit is intended for:
– payment of income tax;
– production development;
– payment of loans to banks;
– modernization of production.
Estimated profit is calculated using the formula
,
where N PSM is the estimated profit rate, %.
N PSM depends on the type of construction and installation work and is determined according to MDS 81-25.2001.
Estimated regulatory framework for determining construction costs
Estimated standards is a generalized name for estimated norms, prices and rates, combined into separate collections. Together with certain rules and methodological annexes containing the necessary requirements, they serve as the basis for the determination, they serve as the basis for determining the estimated cost of construction.
Estimated norm is a set of resources (labor costs of construction workers, operating time of construction machines, need for materials, products and structures) set to the accepted meter for construction, installation and other works.
Estimated standards are used to determine the standard amount of resources, the minimum necessary and sufficient to perform the corresponding type of work, as the basis for the subsequent transition to cost resources. They are also used in the development of construction management projects (COP) and work execution projects (WPP).
Estimated standards provide for work to be carried out under normal (standard) conditions, not complicated by external factors. Under special conditions: crowded conditions, gas pollution, near operating equipment, in areas with specific factors (high mountains, etc.), the appropriate coefficients given in the general provisions of the relevant collections of standards and prices (MDS 81-35.2004) are applied to the estimated standards and rates. ). Any standards are an averaging of resource consumption and are developed on the basis of data obtained as a result of special regulatory observations (timing), using advanced technology (digital video camera) or on the basis of accumulated regulatory and technical material. The norm is formed from three main parts: the net norm, the waste norm and the loss norm.
The sum of the product of the elements of the estimated norm by the corresponding prices of resources gives unit price– the cost of direct costs for the work meter.
Estimated standards are divided into:
According to the level of development and application, estimated standards and prices are divided into:
1. State (federal) (GSN)
2. Industrial and sectoral, introduced by ministries and federal agencies (POSN)
3. Territorial, introduced by executive authorities of the constituent entities of the Russian Federation
4. Branded, introduced by construction organizations (FSN)
5. Individual construction standards (ISN)
State, production-industry, territorial, company and individual estimate standards form a system of pricing and estimate standardization in construction.
State estimate standards include estimate standards that are part of group 8 of subgroups 81, 82 and 83 “Documents on Economics”.
Industry estimate standards include estimate standards introduced for construction carried out within the relevant industry.
Territorial estimate standards include estimate standards introduced for construction carried out on the territory of the corresponding constituent entity of the Russian Federation.
Territorial estimate standards are intended for organizations carrying out construction or major repairs on the territory of the corresponding constituent entity of the Russian Federation, regardless of their departmental subordination and sources of financing for the work performed.
Branded estimate standards or the user’s own regulatory base include estimate standards that take into account the actual operating conditions of a specific organization - the work producer. As a rule, this regulatory framework is based on standards at the state, industry or territorial level, taking into account the characteristics and specialization of the contracting organization.
If there are no separate standards for the work technologies envisaged in the project in the current collections of estimate standards and prices, it is allowed to develop appropriate individual estimate standards and unit prices, which are approved by the customer (investor) as part of the project (detailed design). Individual estimate standards and prices are developed taking into account the specific conditions of work with all complicating factors.
The use of proprietary and individual estimate standards to determine the cost of construction, the financing of which is carried out using federal budget funds, is recommended after their coordination with the relevant authorized federal executive body in the field of construction.
When applying individual estimate standards and prices, the increasing coefficients given in Appendix No. 1 of MDS 81-35.2004 are not applied to them.
There are estimated standards elemental(ESN)i enlarged (USN).
TO elemental estimate standards relate:
· Estimated standards for resource consumption for the corresponding units of measurement of work (GESN-2001);
· Unit prices (direct costs per unit of measurement of work) in collections of federal unit prices (FER-2001), territorial unit prices (TER-2001);
· Estimated prices for basic construction resources (materials, machinery, transportation of goods) SSC-2001.
TO enlarged estimate standards relate:
a) estimated standards expressed in%:
· Standards for overhead costs for the main types of construction and types of construction, installation and repair work (MDS81-33.2004, MDS 81-34.2004);
· Estimated industry-wide profit standards and by type of construction, installation and repair work, MDS81-25.2001;
· Estimated cost standards for the construction of temporary buildings and structures GSN 81-05-02-2001, GSNr 81-05-01-2001;
· Estimated standards for additional costs when carrying out construction and installation work in winter (GSN 81-05-02-2001, GSNr 81-05-02-2001);
· Indices of changes in the cost of construction and installation work and design and survey work, set to the base price level;
· Standards for the maintenance of customer service (technical supervision);
· Reserve of funds for unforeseen work and expenses (MDS 81-35.2004, clause 4.96);
b) estimated standards and cost indicators:
· Indicators of the basic cost of construction of buildings and structures;
· Basic cost indicators for types of work;
· Basic cost indicators for similar objects;
· Indicators of the cost of design work.
Elementary estimate standards of ESN:
- State elemental estimate standards (GESN-2001)
The state elemental estimate standards include:
collections of state elemental estimate standards for construction and special construction work (GESN);
collections of state elemental estimate standards for repair and construction work (GESNr);
collections of State elemental estimate standards for installation of equipment (GESNm);
collections of State elemental estimate standards for commissioning works (GESNp).
Designed to determine the composition and need for resources necessary to complete the work. They have the code GESN 81-02-2001-01
v GESN 81-02-2001 for construction work consist of:
GESN 81-02-2001-01 Earthworks
GESN 81 -02-2001-05 Pile work (book 1, 2)
GESN 81-02-2001-04 Wells (book 1, 2)
GESN 81-02-2001-06 Monolithic concrete and reinforced concrete structures
GESN 81-02-2001-07 Prefabricated concrete and reinforced concrete structures
GESN 81-02-2001-08 Brick and block structures
GESN 81-02-2001-09 Building metal structures
GESN 81-02-2001-10 Wooden structures
GESN 81-02-2001-11 Floors
GESN 81-02-2001-12 Roofs
GESN 81-02-2001-13 Protection of building structures from corrosion
GESN 81-02-2001-14 Structures in agriculture
GESN 81-02-2001-15 Finishing work
GESN 81-02-2001-16 Internal pipelines
GESN 81-02-2001-17 Water supply and sewerage - internal devices
GESN 81-02-2001-18 Heating - internal devices
GESN 81-02-2001-19 Gas supply - internal devices
GESN 81-02-2001-20 Ventilation and air conditioning
GESN 81-02-2001-21 Temporary prefabricated buildings and structures
GESN 81-02-2001-22 Water supply - external networks
GESN 81-02-2001-23 Sewerage - external networks
GESN 81-02-2001-24 Heat supply - external networks
GESN 81-02-2001-25 Main and field pipelines
GESN 81-02-2001-26 Thermal insulation work
GESN 81-02-2001-27 Highways
GESN 81-02-2001-30 Bridges and pipes
GESN 81-02-2001-33 Power lines
GESN 81-02-2001-34 Communications and radio broadcasting structures
GESN 81-02-2001-42 Bank protection works
GESN 81-02-2001-45 Industrial furnaces and pipes
GESN 81-02-2001-46 Work during the reconstruction of buildings and structures
GESN 81-02-2001-47 Landscaping
v GESNm81-03-2001 for installation work consist of:
GESNm81-03-2001-03 Lifting and transport equipment
GESNm81-03-2001-05 Weighing equipment
GESNm81-03-2001-06 Thermal power equipment
GESNm81-03-2001-07 Compressor units, pumps and fans
GESNm81-03-2001-08 Electrical installations
GESNm81-03-2001-10 Communication equipment
GESNm81-03-2001-11 Instruments. Automation and computer equipment
GESNm81-03-2001-12 Process pipelines
GESNm81-03-2001-37 General purpose equipment
GESNm81-03-2001-38 Manufacturing of technological metal structures in production bases
GESNm81-03-2001-39 Additional movement of equipment and material resources in excess of those provided for in the collections of unit prices for equipment installation
GESNm81-03-2001-40 Overhaul and modernization of elevator equipment
v GESNr81-04-2001 for repair and construction work consist of:
GESNr-2001-51 Earthworks
GESNr-2001-52 Foundations
GESNr-2001-53 Walls
GESNr-2001-54 Floors
GESNr-2001-55 Partitions
GESNr-2001-56 Openings
GESNr-2001-57 Floors
GESNr-2001-58 Roofs, roofing
GESNr-2001-59 Stairs, porches
GESNr-2001-60 Furnace work
GESNr-2001-61 Plastering works
GESNr-2001-62 Painting work
- Federal unit prices (FER-2001)
FERs are used when financing or co-financing objects from the federal budget, as well as for extra-budgetary financing at the customer’s preference. FERs are designed to determine the cost of direct costs per unit of work. FERs are created on the basis of GESNs, therefore they have the same structure and encryption.
They have the code FER 81-02-2001-01
81 (first group of numbers) – code of estimate standards
02 (second group of numbers) - standards for construction work, 03 - standards for installation work, 04 - standards for repair and construction work, 05 - standards for commissioning work, 06 - major repairs of equipment
2001 (third group of numbers) – year of the estimated regulatory framework
01 (fourth group of numbers) – collection number
- Federal estimated prices for materials, products and structures in construction (FSSTsm-2001)
- Federal estimated prices for the operation of construction machinery and mechanisms (FSCT-2001)
- Federal estimated prices for the transportation of goods for construction (FSSTsper-2001)
They are intended to determine the cost of transporting 1 ton of cargo for construction by road, rail and tractors.
- Territorial unit prices (TER-2001)
TERs are used when financing objects from the regional budget, as well as for extra-budgetary financing at the customer’s preference. TEPs are designed to determine the value of direct costs per unit of work. TERs are created on the basis of GESNs, therefore they have the same structure and encryption. They have the code TER 81-02-2001-01
81 (first group of numbers) – code of estimate standards
02 (second group of numbers) - standards for construction work, 03 - standards for installation work, 04 - standards for repair and construction work, 05 - standards for commissioning work, 06 - major repairs of equipment
2001 (third group of numbers) – year of the estimated regulatory framework
01 (fourth group of numbers) – collection number
- Territorial estimated prices for materials, products and structures in construction (TSSCm-2001)
They are intended to determine the cost of materials, products and structures and have the structure:
Part I “Materials for civil works” (2 books)
Part II “Building structures and products”
Part III "Materials and products for sanitary work"
Part IV “Concrete, reinforced concrete and ceramic products. Non-metallic materials. Ready-mixed concrete and mortars"
Part V “Materials, products and structures for installation and special construction work” (2 books)
- Territorial estimated prices for the operation of construction machinery and mechanisms (TSCT-2001)
They are intended to determine the cost of 1 machine-hour of machines and mechanisms, incl. for wages of machine operators.
Enlarged estimate standards of the simplified tax system:
- MDS 81-35.2004 Methodology for determining the cost of construction products in the Russian Federation
- MDS 81-33.2004 Guidelines for determining the amount of overhead costs in construction
- MDS 81-34.2004 Guidelines for determining the amount of overhead costs in construction carried out in the Far North and equivalent areas
- MDS 81-25.2001 Guidelines for determining the amount of estimated profit in construction
- GSN 81-05-01-2001 Estimated cost standards for the construction of temporary buildings and structures
- GSNr 81-05-01-2001 Estimated cost standards for the construction of temporary buildings and structures during repair and construction work
- GSN 81-05-02-2007 Estimated standards for additional costs during construction and installation work in winter
- GSNr 81-05-02-2001 Estimated standards for additional costs when carrying out repair and construction work in winter
Publications of the Tomsk Center for Pricing in Construction (TCCP):
2. Monthly magazine “Norms and prices in construction” (quarterly territorial indices of conversion into technical specifications, letters and explanations of the Federal Agency for Construction and Housing and Communal Services in the field of construction, design, estimated pricing, review articles).
3. Quarterly magazine “TomskStroyPrice” (estimated and current prices for materials, products and structures, operation of machines and mechanisms, tariff rates for labor in construction).
The main methodological document is the Methodology for determining the cost of construction products on the territory of the Russian Federation (MDS 81-35.2004). They provide general information about the pricing system and estimate standardization in construction, provisions for determining the cost of construction and the procedure for drawing up estimate documentation for construction.
The system for determining overhead costs is given in the Guidelines for determining the amount of overhead costs in construction (MDS 81-33.2004, MDS 81-34.2004), put into effect by decree of the State Construction Committee of Russia. The document provides general provisions, a methodology for developing overhead cost standards and recommended areas of their application in the preparation of estimate documentation. The appendices to the guidelines detail the composition and structure of overhead costs by cost element.
Guidelines for determining the amount of estimated profit in construction MDS 81-25.2001. Designed to determine the estimated profit by type of construction and installation work as a percentage of the wage fund for construction workers and machine operators.
Methodological recommendations for determining the amount of funds for wages in contract prices and estimates for construction and wages for workers of construction, installation and repair organizations (MDS 83-1.99) were developed in accordance with the decision of the Gosstroy of Russia. They reflect practical proposals for remuneration of workers of construction organizations in accordance with contract prices, construction estimates and contract agreements. The general regulatory and calculation base for determining funds for wages in contract prices and estimates for construction and organizing wages in construction, installation and repair and construction organizations, methods for determining the amount of funds for wages, characteristics of systems and forms of wages, principles of application of a single tariff schedule for remuneration of workers of any construction organization with specific examples. The annexes to MDS 83-1.99 are practically valuable (list of works with heavy and harmful, especially difficult and especially harmful working conditions, regional coefficients for workers' wages by region of the Russian Federation, etc.).
In order to calculate the costs of operating machinery and mechanisms, the Guidelines for the development of estimate standards and prices for the operation of construction machinery and vehicles are used - MDS 81-3.99. They were developed by structural divisions of the State Construction Committee of Russia, headed by the Central Research Institute of Economics and Management in Construction. They provide specific examples of determining estimated standards and prices for the operation of construction machines and mechanisms, and vehicles in order to maintain uniformity in the development of collections of estimated prices and prices for the operation of machines at the federal, territorial and sectoral levels.
The Resolution of the State Construction Committee of Russia approved guidelines for the development of collections (catalogs) of estimated prices for materials, products, structures and collections of estimated prices for the transportation of goods for the construction and major repairs of buildings and structures (MDS 81-2.99). Estimated prices for certain types of resources (labor, machine and material) are intended to determine the estimated cost of construction and installation works (repair and construction work) and are used in the preparation of estimate documentation and the development of enlarged estimate standards for structures and types of work.
The Ministry of Regional Development, by order of December 31, 2010 No. 573, approved the Methodological Recommendations for the formation of the cost of construction and installation work (hereinafter referred to as the Methodological Recommendations No. 573), which come into force on April 1, 2011. Please note that from April 1, 2011 they are no longer valid previous Method Recommendations approved by order of the State Construction Committee dated February 16, 2004 No. 30.
The new methodology for determining the cost of construction and installation work (hereinafter - CEM) has no fundamental differences from the previous one, but has some features. Let's take a closer look at them.
Recommendation method No. 573 defines the production cost of construction and installation work as a set of direct material costs, direct labor costs, other direct costs, as well as variable production overhead and constant distributed overhead costs associated with the implementation of construction and installation work. Moreover, such a cost can be planned (determined on the basis of technical and economic calculations, building codes and regulations) and actual (actual construction costs). In addition to certain types of construction and installation work and construction projects, these Methodology Recommendations also include construction contracts as objects of expenditure.
Classification of expenses
Methodology Recommendation No. 573 defines expenses as “a decrease in economic benefits in the form of disposal of assets or liabilities that lead to a decrease in equity capital (with the exception of a decrease in capital due to its withdrawal or division by owners).” Basically, the principle of classification of expenses remains unchanged. Only to the criteria by which expenses are classified was added the degree of influence of the volume of construction and installation work on the level of expenses.
Classification according to this criterion divides expenses into fixed and variable. Fixed expenses include expenses that remain unchanged (or almost unchanged) in the event of a change in the volume of construction and installation work performed. And variable costs change in direct proportion to changes in the volume of construction and installation work. In addition, expenses based on their place of origin highlight expenses based on geography. These costs differ depending on the location of individual facilities, located in certain regions of Ukraine, in a separate foreign country, in permanent regional groups of the country. The enterprise independently determines the level of detail of geographical regions.
The classification of expenses by type is also important. In accordance with it, expenses are divided by elements (for operating expenses) and by costing items.
Based on the periods of occurrence, expenses will now be divided into current, long-term and one-time. Here, long-term expenses are expenses associated with the implementation of a long-term contract (it is not planned to be completed earlier than 1 year from the date of making the first expenses or receiving an advance). In this regard, it should also be noted that until April 1, 2011, paragraph 7.10 of the Profit Law provides for a special taxation procedure for long-term contracts. However, the Profit Law has a different definition of such contracts. And the Tax Code of Ukraine does not provide for a separate procedure for imposing this tax, therefore, with the entry into force of Section III of the Tax Code of Ukraine from April 1, operations under long-term contracts (agreements) will be taxed according to the general rules, that is, according to the date of signing the act of completed work. And tax obligations for VAT (clause 187.9 of the Tax Code), in contrast to the general procedure, are determined not by the first event, but by the date of actual transfer by the contractor of the results of work under such agreements (contracts). In the same paragraph, a long-term contract is defined as a contract for the manufacture of goods, performance of work (services) with a technological production cycle of more than 1 year, unless their phased delivery is provided for.
Grouping expenses by elements and items
Grouping of expenses by elements is carried out in order to determine the total volumes of material, labor and other resources used by the construction organization in operating activities and for financial reporting (in accordance with P(S)BU 3 “Report on Financial Results”). And by item, expenses are distributed in order to determine the volume of material, labor and other resources that are included in the production cost of construction and installation work. At the same time, the expenses of the main activities of a construction organization are grouped according to the following calculation items:
Other direct costs;
Variable production overhead and fixed allocated production overhead.
The list of costing items and their composition can be specified by the construction organization independently.
Cost of construction and installation work under a contract
The cost of construction and installation work under a contract includes:
Direct material costs;
Direct labor costs;
Other direct costs (including, in particular, the cost of work performed by subcontractors, the cost of operating machinery and equipment, rental). We will also include deductions for the unified social contribution here, although in accordance with clause 3 of Appendix 1 of the Method of Recommendations, other direct expenses include “social” deductions in the old way;
General production expenses in accordance with P(S)BU 16 “Expenses”.
Costs under a work contract include expenses for the period from the date of conclusion of the work contract to the date of its completion. In this case, income and expenses during the execution of the contract are recognized taking into account the degree of completion of the work as of the balance sheet date - if the final financial result of this contract can be reliably estimated. If it cannot be estimated reliably, then:
1) income is determined in the amount of actual expenses from the beginning of the execution of the work contract, in respect of which there is a possibility of their reimbursement;
Fixed expenses are expenses that remain unchanged if the volume of construction and installation work performed changes.
Variable costs change in direct proportion to changes in the volume of construction and installation work.
2) costs under a work contract are recognized as expenses for the period during which they were incurred.
If in the following reporting periods there is no uncertainty that prevented in previous periods from obtaining a reliable assessment of the final financial result, then income and expenses associated with the implementation of this contract are recognized in accordance with clause 3 of P(S)BU 18 “Construction Contracts”. If, at the balance sheet date, there is a likelihood that total expenses will exceed the total income under this work contract, then the expected losses are recognized as expenses of the reporting period with the inclusion of actual expenses for the implementation of this work contract in the cost of sales.
Regarding the mandatory nature and principles of accounting, Method Recommendation No. 573 refers us to the provisions of the Accounting Law - after all, it is on accounting data that financial, tax, statistical and other types of reporting that use a monetary meter are based. For our part, we note that reliable and timely reflection of all business operations in accounting directly affects the reliability of determining the financial result not only of a specific contract, but also the profitability of the entire enterprise.
Example
In pursuance of the construction and installation contract for the construction of a residential building in March, the following expenses were incurred (excluding VAT):
Materials were written off according to the material report - in the amount of UAH 256,000;
Operation of machines and mechanisms - 84,100 UAH;
Subcontracting services - 25,000 UAH;
Electricity costs - 3100 UAH;
Transport services by hired transport (including the work of a crane, excavator) - 15,650 UAH;
Auxiliary materials (electrodes, heat-insulating materials, etc.) - 12940 UAH;
Salaries and ECB have been accrued: for workers engaged in construction and installation work - 17,300 UAH (ECB - 6,570 UAH); crane operator - 2000 UAH (ECB - 760 UAH); linear AND TP (foreman, master) - 5840 UAH (ECB - 2220 UAH); management apparatus (administration) - 10,000 UAH (ECB - 3800 UAH);
Administrative expenses (communications, office rent, interest on loans, etc.) - 15,760 UAH. These costs are variable;
Other fixed costs associated with construction and installation work - 2310 UAH.
No other work was carried out in March.
For the purpose of calculating costs for a construction project, the actual cost of construction and installation works is formed as follows (see table).
Cost items for the formation of construction and installation costs
Costing items |
Actual cost of construction and installation work (main activity expenses, UAH) |
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direct costs |
general production costs for construction and installation work |
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Topic 6. – Cost of products of a construction organization
Questions
1. The concept of the cost of construction and installation work, the composition of its costs
2. Estimated cost of construction and installation work: concept and purpose
3. Planned cost of construction and installation work: concept, purpose, determination procedure
4. Actual cost of construction and installation work: concept, purpose, determination procedure
The concept of the cost of construction and installation work, the composition of its costs
Product cost - the most important indicator of the economic efficiency of its production, reflecting all aspects of economic activity and accumulating the results of the use of all production resources. Depends on its level
Financial results of enterprises;
Rate of expanded reproduction;
Financial condition of business entities.
Cost of construction and installation works carried out by the construction organization on its own, includes
Expenses for the purchase of materials, fuel, energy;
Payment of employees.
All costs, depending on how they are included in the cost, are divided into straight And invoices .
Direct imply costs associated with construction work, which can be directly and directly included in the cost of specific construction projects.
Pz= M + Z + A,
Pz- direct costs for construction and installation work;
M- cost of materials used;
Z- expenses for remuneration of production workers and employees;
A- expenses for the maintenance and operation of construction machines and mechanisms.
Under overhead costs understand the costs associated with organizing and managing construction work related to the activities of the construction organization as a whole. They include:
Administrative and economic expenses (remuneration of AUP, deductions for social needs);
Costs of servicing construction workers (costs of training and retraining of personnel, costs of labor protection);
Expenses for organizing work at construction sites;
Other overhead costs (property insurance for a construction organization; payments on bank loans...);
Costs that are not included in overhead rates, but are attributable to them (disability benefits...).
The cost of construction and installation work is determined by the formula
CC = Pz + Nr,
where Pz – direct costs;
Нр – overhead costs.
Used in construction estimate indicators (defined in estimates), planned (calculated by the construction organization taking into account specific conditions) and actual (actually prevailing at the construction site) cost of construction and installation work.
Estimated cost of construction and installation work: concept and purpose
Estimated cost determined design organization in the course of drawing up the necessary set of design documents according to estimated standards and prices on a scale valid at the time of its calculation.
Estimated cost is base to calculate the planned cost of construction and installation work and allows
on the one hand, the construction organization can predict in advance the level of its future costs,
on the other hand, the customer needs to assess the limits within which bargaining with the construction contractor can be carried out.
Estimated cost is the main indicator by which state tax authorities monitor the profitability of a specific transaction of a construction organization.
Planned cost of construction and installation work: concept, purpose, determination procedure
Planned cost of construction and installation work represents a forecast of costs specific construction organization to carry out a certain set of construction and installation works.
Estimated (planned) cost of construction and installation work is used by a construction organization to determine profits and opportunities for its production and social development, to build in-house economic calculations for its structural divisions and for other purposes.
Cost planning Construction and installation work is carried out by construction organizations independently and is an integral part of their business plan.
Planning procedure and methods Each construction organization can set the cost of construction and installation work independently, based on the conditions of its activities.
In this case, the planned cost of work can be calculated
For individual objects;
Under contract agreements;
For the production program as a whole.
The planned cost of construction and installation work can be determined by a technical and economic calculation by cost item based on an action plan to increase the technical and organizational level of production compared to that provided for in the design and estimate documentation.
The more fractional the calculated activities, the higher the accuracy of the planned cost calculation.
Determining the amount of cost reduction for large elements of planned costs can be carried out in the following order:
1) reduction in the cost of construction and installation work as a consequence reducing costs for building materials and structures can be calculated using the formula:
Cm=Um.o.[ 1-( 100-Ur)*(100-Uts)]
Um.o – the share of costs for materials and structures as a percentage of the estimated cost of all construction and installation works;
Ur, Uts – respectively, the percentage reduction in the consumption rate and price of materials and structures.
2) reducing the cost of operating construction machines for the planned period, can be predicted based on the planned increase in machine production standards using the formula:
Laughter.= Skill.o*Pu.p*Rmech.
(100+Rmech)*100
Umekh.o – level of costs for operating construction machines in the total cost of work performed, %
P.p - the share of semi-fixed costs for the operation of construction machines in the total cost of work, %
Rmech is the planned percentage increase in machine output.
3) reducing the cost of construction and installation work due to increased labor productivity, occurs only when this indicator exceeds the rate of wage growth.
Сз=(1- Iz.p)*Uz.p
Iz.p - growth of wages in comparison with that included in the estimates, %
IP.t - increase in labor productivity in comparison with those provided for in the estimate, %
Uz.p - share of wages in the cost of construction and installation works, %.
Actual cost of construction and installation work: concept, purpose, determination procedure
Actual cost of construction and installation work - this is the sum of costs incurred by a specific construction organization during the implementation of a given set of works in the current production conditions.
The purpose of accounting for the actual cost of construction work is a timely, complete and reliable reflection of the actual costs associated with the production and delivery of work to the customer by type and object of construction, identification of deviations from expected values, as well as control over the use of material and financial resources.
Accounting for the costs of construction work is carried out by the accounting department of a construction enterprise most often using the “custom-made” method, in which the object of accounting is a separate order opened for each construction project in accordance with the contract concluded by the customer.
For each order, costs are recorded on an accrual basis until the completion of the work; this method is currently the main one.
Accounting for production costs is carried out on the basis of primary accounting documentation, compiled with mandatory copying, ensuring accounting for construction projects and types of work.
The cost of production expresses in monetary form all the organization's costs associated with the production and sale of products.
Cost of construction and installation works – these are the monetary costs of the construction organization for their implementation. In construction, the estimated, planned and actual cost of construction and installation work is used.
Planned cost Construction and installation work is a forecast of the cost of a construction organization to carry out a specific complex of construction and installation work.
Actual cost Construction and installation work is the amount of costs incurred by a construction organization in the course of performing a certain amount of work and is determined according to accounting data.
Estimated cost determined in the process of developing design and estimate documentation according to estimate standards and current prices at the time of its calculation.
Cost structure by items and cost elements.
The relationship between individual items and cost elements is called structural cost of work.
Distribution of construction and installation costs can be done in the form of distribution by cost elements:
─ for material costs
─ for labor costs
─ contributions for social needs
─ depreciation of fixed assets
─ other costs
Task. Determine the estimated cost and the estimated cost of construction and installation work for the construction of a residential brick house. According to the estimated cost, the costs are:
1). cost of parts and structures = 6749 thousand rubles,
2). wages of workers = 1181 thousand rubles,
3). operation of construction machinery and mechanisms = 894 thousand rubles, including salaries of drivers 110 thousand rubles,
4). overhead costs = 118% payroll (wage fund)
5). estimated profit = 65% payroll
1. Determine direct costs
Salary = 6749 + 1181 + 894 = 8824 thousand rubles,
2. Let’s calculate the wage fund (payroll)
Payroll = 1181 + 110 = 1291 thousand rubles,
3. Determine overhead costs
N p = 1.18 * 1291 = 1523.38 thousand rubles.
4. Determine the estimated cost of construction and installation work
cm cmr = Z p + N r = 8824 + 1523.38 = 10347.38 thousand rubles,
5. Determine the estimated profit
0.65 * 1291 = 839 thousand rubles,
6. Determine the estimated cost of the object
Estimated cost of construction and installation work + Estimated profit =
10347.38 + 839 = 11186 thousand rubles,
Current expenses– these are expenses that depend on the volume of work, on the number of products and services produced.
One-time costs- These are those that are produced periodically or once.
By reducing the duration of construction, a constant portion of overhead costs is saved, i.e. administrative and economic expenses are reduced, the costs of maintaining household premises are reduced, the costs of maintaining fire and security guards and maintaining the construction site are reduced.
Saving (or overexpenditure) of the constant part of overhead costs is determined by the formula:
E n.r. – saving a constant part of overhead costs;
N y is the constant part of overhead costs, which is approximately 50% of the amount of overhead costs;
Tf, Tn – actual and standard duration of construction of the facility.
Task. Determine the savings of the constant part of overhead costs if Tn = 9 months, but with the introduction of improved means of small-scale mechanization, the facility was built in 8 months. Overhead costs according to the estimate amount to 16 million rubles, the constant part of overhead costs is 50% of the value of all overhead costs.
