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RSMean is used for construction estimating. Many construction projects can be difficult to estimate and the RSMeans database is a useful tool in preparing a bid for a client. The database can be used to calculate a construction project based on square footage, the equipment used and the materials used. The building cost index that is used in the system has been compiled over time and includes cost information about industry averages for specific construction activities. This index can account for the increased costs of a construction project that are due to factors such as inflation, cost of materials, and the cost of labor. For example, cost information from a construction project in the 1980s can be adjusted to represent what a similar project would cost in today's market. The accuracy of such estimates is considered to be within twenty to thirty percent of the actual costs. Therefore there is some margin of error that should be considered when estimating with such and index.
RSMeans Functionality
RSMeans stands for "Means Square Foot Costs." This model uses parameter cost...
The characteristics relate all costs of a project to just a few physical measures, or "Parameters" that reflect the size or scope of the project E.g., warehouse - the "Parameter" would be Gross Enclosed Floor Area:
All costs represented by X ($/S.F) ? total cost = X ($/S.F.) x the project's gross enclosed floor area (S.F.)
With good historical records on comparable structures, parameter costing can give reasonable levels of accuracy for preliminary estimates
After the historical values are estimated by using the square footage, additional calculations can be added to further refine the project. For example, if the structure requires a special feature that is beyond what the cost index includes, then this feature could be added to the estimate in addition to the base costs. This allows for a lot of flexibility in the estimation process using this system and the estimate based on square footage can be altered considerably. There are many reasons that contractors would choose to alter the initial calculations. Any factor that would…
Activity-Based Costing and AIS Activity-Based Costing (ABC) is an accounting method that identifies the activities a company carries out and then assigns indirect costs (overhead) to products. Activity-based costing shows the relationships between the activities, the costs, and the products, and correctly associates the lion's share of the resources used with the actual production or provision of services. The recognition of these relationships enables the indirect costs to be assigned to products in
(Questions that will assist in quantifying the relationship between resources and activities include: How much time is spent performing each activity? What equipment is used to perform activities? Do some activities have dedicated equipment? Do some activities require more space than others?) After the data on resources have been collected, establish cause-and-effect relationships between resources and activities or resources and cost objects. The third step in the process is
ABC can identify high overhead costs per unit and find ways to reduce the costs, avoid decreases in head counts due to inaccurate allocation of costs, and measure profitability with higher accuracy than traditional costing that uses direct-labor hours as the only cost driver (Activity-based costing, n.d.). Bibliography Activity-based costing (ABC). (n.d.). Retrieved Apr 2, 2009, from Managers-Net: http://www.managers-net.com/activityBC.html Activity-based costing (ABC): What is it and how can reengineering teams use it?
Activity-Based Costing in Service Industries Describe the company you researched in one to two (1-2) paragraphs. Since many traditional industries that deal with goods for sale also offer some service, it was somewhat difficult to settle on a company that dealt in services exclusively. Home Depot or another of that sort would have been easy because they offer both, but the company used for this examination was State Farm. Insurance companies will
But the customized product probably takes much more design and engineering time than the mass-produced product. Traditional costing systems would not, in most cases, pick up this difference. With traditional costing a company that makes both low and high volume products might spread all of its overhead to products it manufactures based solely on machine hours. This might misallocate overheads between products. And if one product demands a significant amount
Activity-Based Costing and Traditional Systems Activity-based costing (ABC) measures the cost of a product/service based on the activities performed to produce the product/service. Activities are processes, functions, or tasks that occur over time and have recognized results. Activities use up assigned resources to produce products and services. An ABC system first allocates indirect and support expenses to activities and processes and then to products, services and customers. Therefore, the ABC system