Finance accounting and cost control for long-term construction contracts supported by the integrated management and information system Aristoteles

Hochtief AG Germany has developed a comprehensive management and information system for the construction industry named Aristoteles. This system is an efficient supporting tool to manage a variety of construction sites as well as operating business units with required economic targets. As such, Aristoteles offers wide-ranging control of complex economic processes in construction in a consistent manner. In this paper the process oriented functions of the system will be described with special emphasis on finance accounting and cost control. The basic elements in this respect are tender estimation, creation of initial project budgets and running budgets, regular determination of work done and result forecast to the end of the project. Further, cost accounting, monthly reporting, and all balance-related postings are included. On the basis of the extensive reporting (targeted/actual cost comparison, cost manager, project report, actual/targeted hours worked comparison, overhead cost report, amendment report or project (result) lists of all projects realized by one business unit), the responsible managers can make justified project evaluations, project controls and variance analyses during the project period and derive appropriate management measures. Thus, Aristoteles includes all substantial elements for the risk management of the operational business. In big construction joint-stock companies it is of crucial importance to satisfy the information requirements of the investors. In this respect the system provides a transparent presentation of the financial, investment and profitability situation of the company. In the international construction industry the balancing rules according to IAS (International Accounting Standards) have already been used to a larger extent. In accordance with these rules the partial profits of the work during execution can be shown as realized even before completion of a long-term contract. The validity of Aristoteles will be outlined briefly. Major advantages using the system are highly enhanced accuracy of project controlling, systematic overhead allocation to projects, change of attitude of the project personnel due to increased cost consciousness and improved flow of information within the company.