RELEVANCE AND PROBLEMS OF CONSTRUCTION ENTERPRISES OVERHEAD COSTS BUDGETING

Abstract

This article delves into the complexities of the budgetary process within construction enterprises, providing a detailed examination of how these businesses operate and manage their finances. By closely analyzing the budget structure typical of industrial enterprises, this study considers both general accounting principles applicable to all businesses and the unique specializations inherent to individual construction entities. These specializations include variations in organizational structure, scale of operations, strategic goals, operational objectives, and numerous other idiosyncratic factors that influence financial management. A key focus is placed on elucidating how the economic and managerial aspects of construction companies, particularly the crucial task of preparing an operating budget, are distinctly shaped by the inherent characteristics of the construction industry. These defining features include the need to handle a substantial volume and diverse range of material resources, the reality that work often spans several reporting periods, the significant likelihood of discrepancies between actual and estimated project costs, and the multifaceted challenges associated with revenue recognition and accounting under construction contracts. Through a meticulous analysis of statistical reporting data from various construction enterprises, this paper highlights the considerable fluctuations observed in overhead costs relative to the overall structure of production costs. It emphasizes the vital role of precise overhead cost budgeting in ensuring a comprehensive and integrated approach to enhancing management processes and operational efficiencies within construction firms. This is achieved by proactively preventing the inefficient allocation of financial resources during both the forecasting and implementation control phases, thereby fostering sustainable business development. Moreover, the research argues for a critical refinement of existing methodologies in budget planning and control to bolster the competitiveness of construction enterprises. Such refinement is particularly crucial given the current economic downturn experienced within the country and further exacerbated by the complexities of operating under martial law.