Case Study - Overhead Costs Analysis

Yong-Woo Kim1 & Glenn Ballard2

1Ph. D. Candidate at University of California at Berkeley, ywkim@uclink4.berkeley.edu
2Research Director at Lean Construction Institute (LCI) and Associate Adjunct Professor at University of California at Berkeley, gballard@leanconstruction.org

Abstract

Construction projects become complicated and fragmented so that many specialty contractors are involved. In such changed environments, a general contractor’s overhead costs are increasing comparable to direct costs. In addition to an increase of volume, activities consisting of overhead costs play an important role in coordinating different participants who include different specialty contractors and client. This paper reviews traditional overhead control and critiques problems thereof through literature review, interviews with professionals, and data collection. It proposes a new overhead cost control method, called profit-point analysis (PPA) applying activitybased costing (ABC). It is followed by a case study presented to exemplify the new method.

Keywords

Construction overhead costs, activity-based costing (ABC), profit point analysis (PPA), nurturing relationship

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Reference

Kim, Y. & Ballard, G. 2002, 'Case Study - Overhead Costs Analysis' In:, Formoso, C.T. & Ballard, G., 10th Annual Conference of the International Group for Lean Construction. Gramado, Brazil, 6-8 Aug 2002.

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