Economics / Accounting and Auditing

Tkachuk-Fatenok A. O., Ph.D. in Economics, Assoc. Prof.

Fed O. O.

Lesya Ukrainka Eastern European National University, Ukraine

NON-PRICE FACTORS IN THE ACCOUNTING PROCESS OF FORMATION COST BUILDING SERVICES IN UKRAINE

Price fixing in the construction industry is different from the price fixing in other activities that is caused by the peculiarities of construction products, which are produced only on order by individual investors according to the design estimates. Therefore, most of all production costs (prime cost) influence the price, and the role of demand is extremely minor and indirect. Because of this, in most market part of the building products competitive pricing is almost absent, just as in each case the actual sales price are determined individually by mutual consent of the parties – applicant and contractor or developer (construction organization). After reducing the impact of price competition, interaction between supply and demand will irritate, and therefore it is impossible to speak about the approximation of market prices with market equilibrium.

The applicant, designer and contractor are the subjects pricing for construction products. Usually, the most active of them is the designer and contractor, and what is concerned to the customer, he stands aloof the pricing process, mostly agreeing with the proposed price, or puts forward counter accounts, trying to "knock down price" in his favor.

Prices for construction products are used for applicant accounts with contract construction organization. These prices are referred to as budgeted (estimate is a document containing information on the cost of production of certain products).

In the accounting process of formation cost building services should be considered the following factors:

First, to determine the cost of construction a two-tier price system is used, covering basic construction cost estimate and that is determined by the stage conclusion of service contracts. The basic estimated value is determined on the development stage of design estimates according to the budgeted standards and prices. The cost of construction is defined in the process of concluding contracting contract (contract price). It takes into account the additional cost of the applicant and the contractor in connection with the liberalization of prices according to the market conditions. Consequently, the price on construction products in the private sector is approved by the contractor (investor).

Secondly, in construction industry the prices of consumer unit (the cost of 1 square meters of housing, industrial or total area), cost of 1 bed for hospitals, sanatoriums landing seat for cafes, restaurants, cinemas and others may be determined. These prices are significant in the sale of construction products.

Thirdly, prices of construction products are determined by individual estimate. And even objects, constructed on a standard project, have different cost estimates from local differences: the cost of land area, the volume of excavation and zero-cycle costs for the construction elements of industrial and social infrastructure, etc.

Fourth, prices in construction execute planning and performing accounting functions that are the basis for contracts and payments at the cost of fulfilled work and services rendered, as well as for reporting.

Fifth, a great pricing feature is a method of valuation of current expenses and planned saving, that is absorbed overhead are determined by the rules approved in the percentage of direct costs and planned saving – at the percentage of the estimated cost of work (the sum of direct and absorbed overhead). These pricing features have significant shortcomings that affect the quality of estimates [1, 2, 3].

In general, the cost of construction (investment) of enterprises, buildings and structures is defined by the applicant and includes:

- the negotiated price, which include the cost of the works which are liable to execution by general contractor;

- the part of base construction estimated cost belonging to the activities of the applicant;

- basic estimated cost of commissioning;

- additional applicant expenses, caused by the formation of market relations;

- compulsory charges, fees and payments foreseen by valid law;

- a value-added tax (VAT);

- prize for commissioning of production facilities and construction objects;

- additional costs on the development of material and technical base of construction organizations, if they are provided to the construction contract.

Pricing method in the investment area, mentioned above, is extremely imperfect and cumbersome and carries vestiges of the administrative-command system [4].

Taking into account the global experience, we can recommend some suggestions to improve pricing in the investment sphere of Ukraine. They are:

- at the stage of substantiation expedience investments, investor estimates should already be developed by the applicant, where acceptable at all stages of the investment process construction cost is determined;

- public and private investors are able to choose from those contractors, who offer lower prices estimates inherent in the investor;

- the rationing of current expenses, planned savings and other costs, which are limited, should be made to the basis (direct costs, estimated prime cost), which has extracted the cost of materials, components and structures;

- the estimated price level, increased consumer prices unit of the construction products has to be adjusted by the system of prevailing regional price averages, not being established according to standards limit;

- contract company estimates are developed on the basis of investor estimates, considering a possible reduction in the cost of operations as a condition that ensures victory in the tender;

- also, it is reasonable to give the opportunity to publish regional prices for material and technical and human resources, consisted in the building production for the independent engineering and consulting companies [5].

BIBLIOGRAPHY

1. The rules of construction costs determination. DBN. D 1.1-1-2000 changed 01.05.2008 year. - K: "Ipproekt" / Collection "Pricing in Construction», №6. - 2013. - 524 p.

2. The procedure for determining the cost of construction, which is carried out on the territory of Ukraine. – K .: State Building Ukraine, 2014. – 387 p.

3. The rules of construction costs // Collection of official documents and explanations "Pricing in construction." – 2013. – №5. – 235p.

4. Kudenko M., Zhukov P. P. Features of preparation investor estimates in modern conditions // Scientific and Technical Collections 2012. – № 56. – P. 126-131.

5. The Law of Ukraine “About Price And Price Fixing " // Collections of systematic pricing. Newspaper Ukrainian Bookkeeping. – 2002. – № 47. – P. 31-33.