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Contractors:

"How are off-the-shelf cost accounting systems conceptually flawed?"

Designed by computer people, not contracting managers, they:

  • have summative (bottom-up) architecture
  • which makes them unstable
  • lacking in checks and balances
  • difficult to edit
  • and lacking controls over prior period adjustments

Unrealistic design assumptions include:

  • every possible situation has to be foreseen in advance
  • data entry has to be faultless

"So, how do we make them work?"

We apply an allocative (top-down) architecture. This means that:

  • control totals (for materials, labour and overheads) are established (not as simple as it sounds!)
  • so that data input errors can be edited efficiently
  • and mis-allocations between jobs corrected
  • Our customised costing reports cut out immaterial clutter
  • and are fully consistent with board level management financial reports

"How will our customised costing reports differ?"

They will:

  • be in the format that best suits your needs and
  • supports the essential task of preparing progress billings

"What alternative formats are there?"

Three basic ones:

  • estimating format (the intuitive choice by people "at the coal-face")
  • accounting format (the standard off-the-shelf offering)
  • progress claims format (commercially the most important)
Our approach works in the real world
 
 

© Christopher Miller Consulting Pty Ltd