An ABC analysis for power generation project

Abstract

One of the primary concerns on performance measurement is to know how much a particular project cost. However, using traditional method on project-based products often leads to inappropriate results. In this paper, we re-examine this issue by comparing the cost of a power station construction project using ABC versus traditional method. The results of survey show that ABC method is capable of providing better estimates for overhead costs compared with traditional method. In other words, ABC method helps reduce some of the unnecessary overhead cost items and increase on some other cost components. This helps increase the relative efficiency of the system by reducing total cost of project.

Keywords

• ABC analysis
• Cost accounting
• Power station construction