This opens the door to increased investment in those productive areas since it provides concrete data with which to make capital allocation decisions. Easy identification of profitable activitiesīy extension of facilitating activity-based costing, standard construction cost code lists help professionals figure out which activities are profitable. Handling project financials in this way meshes very well with a coherent construction resource management strategy because it helps companies determine where money is being spent relative to which activities are actually the most important and productive. This accounting strategy helps construction management professionals attach costs to outcomes, referred to as cost drivers. Cost codes are central to activity-based costing and resource managementĬonstruction cost code lists are an essential part of activity-based costing. Next, let’s look at the benefits of using cost codes rather than other methods. Benefits of using construction cost codes However, it’s also not uncommon for companies to create their own standard cost codes for construction projects if they believe the CSI’s list is unsuitable. Often companies will simply use the construction cost codes list provided by the Construction Specifications Institute (CSI) as a means of ensuring their documents can be easily-interpreted by outside sources (i.e. What are construction cost codes?Ĭonstruction cost codes are standardized values – typically numerical – that help professionals organize expenses into common categories. Keep reading to learn more about construction cost codes and how to use them more effectively. Construction cost codes greatly simplify accounting within the industry, ensuring various stakeholders speak the same language regarding the categorization of expenses.
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