"Refined management aims at full project revenue collection, using data-driven cost reduction and efficiency improvement as new quality productive forces; the key lies in the support of 'AI = data + algorithms + scenarios.'" At the China Digital Building Conference 2024, Lei Peng, Vice President of Glodon Company Limited, gave a detailed interpretation of Glodon's construction cost value proposition.

Lei Peng stated that data is gradually becoming the core element driving leaps in productivity, making decisions more scientific and intelligent, making operations simpler and more efficient, and enabling enterprises to achieve higher benefits, better quality, and more refined cost control. For construction enterprises, how can they use data to drive the implementation of refined cost management and control?

Four core elements build a refined cost management and control system

First, it is necessary to start from the top leader and build awareness of cost control among all employees. Awareness determines action, and action determines results. Whether in projects, business, finance, or production, it is necessary to establish awareness of cost control, digitalization, and organizational talent upgrading.

Second, it is necessary to clarify the methods for advancing refined cost management and control. The business characteristics of "highly professional, highly collaborative, highly unique, and highly dynamic" make every enterprise different, which means there is no standard solution applicable to all enterprises. We need to refine the key points of business control processes in accordance with each enterprise's own business characteristics.

Furthermore, management and assessment systems for personnel at all levels must be established. The rights, responsibilities, and interests of personnel at each level should be distinguished, and changes should be driven through rights-responsibilities-interests within the system, ensuring through institutional safeguards that cost awareness reaches the operational level, thereby promoting business upgrading.

Finally, data standards need to be established, and appropriate digital tools must be found to provide support. With the gradual advancement of market-oriented reform, the role of refined cost management and control is becoming increasingly prominent, and the requirements for immediacy, accuracy, and penetrability of project cost data are growing higher. Effective tools will certainly include AI (artificial intelligence), that is, data (foundational support) + algorithms (linking tools) + scenarios (important carriers). With data as the core, enterprises should unify data standards, complete the accumulation and reuse of project data, and then consider using the business "line" to drive homogeneous improvement across the "surface" of cost management. Appropriate digital tools should be selected to help enterprises accumulate indicator data from different stages, form enterprise data assets, and then ensure high-quality data operation through necessary institutional safeguards, enabling projects to conduct refined cost estimation and effective analysis based on enterprise data assets and empowering scientific decision-making.

Three major application scenarios help implement refined cost management and control

Construction enterprises are currently facing a reality: there are fewer and fewer "good" projects, while "bad" projects are too risky to take on. How to bid well has become a problem troubling most enterprises. Under tight timelines, heavy tasks, and a lack of reference data, enterprises are not very accurate in judging expected profit margins, and often only discover project losses after winning the bid. At this time, how can they "treat bidding as winning the bid" within limited time and also ensure the accuracy of pre-bid costs? That requires an efficient tool for support.

The first scenario: optimal project acquisition and rational winning of bids. While preparing bid quotations, enterprises also need to complete total cost estimation, achieve interoperability between quotation and estimation data, and realize integrated estimation and bidding. In this way, during the bidding stage, refined comparative analysis of revenue data and cost estimation data can identify risk points at an early stage, formulate corresponding bidding strategies, clarify the maximum concession points, and provide effective support for contract negotiations. Even if there are losses in certain items, it is possible to know where these losses lie, which means enterprises need to conduct primary operation well and make effective decisions when exceeding the enterprise's operating red line.

The second scenario: detailed calculation and accurate target setting, the core of which lies in quantity control and price control. For quantity control, it is necessary to achieve accurate calculation and horizontal comparison of submitted-for-review, internal control, and subcontract quantities, so as to achieve refined quantity control. Glodon's BIMMAKE product is also based on this business principle, helping construction enterprises control quantities well and improve project surplus rates.

For price control, the first step is to properly decompose revenue and expenditure; the next is to conduct multi-dimensional revenue-expenditure comparisons, promptly identify cost risks, and effectively guide commercial planning. Under this model, the operational scope, efficiency, and quality are all very critical. Based on this business reality, Glodon uses enterprise databases to accumulate data, unify standards, and connect with cost estimation tools. With the help of data, it improves compilation and review efficiency, helping enterprises conduct efficient and accurate estimation and set targets well.

The third scenario: precise control and good process management. "Unclear profit and loss during the cost process, with risk events exposed only afterward" is a difficult problem faced by most enterprises. When carrying out process cost control for projects, economic activity analysis and the identification and prediction of risks are top priorities, and they can also effectively support enterprise business analysis.

Glodon's revenue and expenditure management tool can help enterprises unify the standards for budgeted revenue, target cost, and expenditure cost, precisely locate risk points through layer-by-layer data penetration, and ensure targeted business management. For example, it can conduct comparative analysis at the resource level across multiple dimensions to identify project risk points; dynamically and promptly present expected total revenue, total cost, and profit margin to predict project risk points; and use AI to accurately identify contracts and bill details, thereby correcting deviations in process accounting, improving efficiency, and reducing burdens.

Refined cost management and control in construction enterprises is not something that can be achieved overnight; it also requires quick small steps and point-based breakthroughs, and only by finding the right entry point can results be seen. On the road of steady progress for construction enterprises, Glodon will also provide support such as the establishment of cost standard systems, digital operation tools, and talent empowerment and training, helping enterprises remove the pain points and difficulties in current project cost management and control, form a synergy for cost reduction and efficiency improvement, enhance the level of refined project cost management and control, and accelerate the process of enterprise digital transformation.