A Project Report On Cost Control and Cost Reduction Techniques For Shaikh & Associates Tax Consultants &

Certified Auditor. By Mr. Mateen Mubeen Sayed Kadri Under the guidance of Mrs. Payal Samdariya Submitted to University of Pune In partial fulfillment of the requirement for the award of the degree of Master of Business Administration (MBA) Through AKI Poona Institute of Management Sciences and Entrepreneurship, Pune - 411001

Acknowledgement
I would like to express my special thanks of gratitude to my teacher Mrs. Payal Shreepal Samdariya as well as our principal Dr. G.M Nazeruddin who gave me the golden opportunity to do this wonderful project on the topic cost control and cost reduction, which also helped me in doing a lot of Research and i came to know about so many new things I am really thankful to them. Secondly i would also like to thank my parents and friends who helped me a lot in finishing this project within the limited time.

I am making this project not only for marks but to also increase my knowledge. THANKS AGAIN TO ALL WHO HELPED ME.

CERTIFICATE

This is to certify that Mr. Mateen Sayed Kadri has completed the Summer Project Titled Cost Control and Cost Reduction Techniques to my satisfaction and as per the requirements of the two year full-time MBA programme.

INDEX

Sr. No.

Title

Page Number

Executive Summary

II

Company Profile

III

Objectives of the Study

IV

Research Methodology

Project work undertaken

VI

Analysis and interpretation of data

VII

Suggestions and Conclusion

VIII

Bibliography

EXECUTIVE SUMMARY
Introduction Finance is the study of funds and management. Its general areas are business finance, personal finance, and public finance. It also deals with the concepts of time, money, risk, and the interrelation between the given factors. It is basically focused on how the money is spent and budgeted. It is one of the most important aspects in handling business. Finance addresses the methods wherein business entities used their financial resources on a certain period of time. It is the application of a set of techniques used by organizations in managing their financial affairs. The income and expenditure are emphasized in finance and its differences can easily be indicated. Nowadays, loans have been packaged for resale. This means that the debt has been bought by an investor from the bank. These bonds are sold to investors by financial corporations who have exceeded beyond their expenditures. The investor can now collect all the interests and be sold again through a secondary market. Banks serve as facilitators to companies in the provision of credit and mutual funds. Investments are managed carefully under a financial risk management to control gambling chances of these financial assets. Financial instruments are also used to secure these assets on securities exchanges such as stock exchanges and bonds. A bank provokes the activities of both borrowers and lenders. Lenders pay deposits to banks on which it pays the interest rates. The central banks are the last resorts that handle the monetary funds. These banks affect the interest rates being charged such as an increase in the money supply will result to a decrease in the interest rates. Financial capital is a monetary resource allows businesses to purchase items that will create goods for production and other services. The budget is the documentation of the

entire entrepreneurship. The outline includes the objectives of the business, the target sets, resulting costs, required investment, planned sales, growth, financing source, and financial results. It can be directed on long term or on a short term basis. The capital budget is mainly concerned with the proposed fixed asset requirements. The financing of the expenditure is also indicated in the capital budget. A detailed plan of all the sources and cash usage is emphasized in the cash budget. It has six main sections such as the beginning cash balance, cash collections, cash disbursements, cash excess, cash deficiencies, financing, the ending cash balance, and the management of current assets. A credit comes in various forms such as of open accounts, installment sales, credit cards, and supplier credits. The advantages of a credit trade are gaining loyalty and goodwill amongst costumers, drawing in more customers than cash trades, stimulates agricultural and industrial production, and increases rates. But there are also disadvantages to credit trades as well such as risks of bad debt, high administration expenses, necessitates more working capital, risks of bankruptcy declaration, and leading to purchasing nonessential items. An effective credit control may lead to increase in sales, increase in profits, reduces bad debts, builds costumer loyalty, and increases company capitalization. The information on creditworthiness is acquired through credit agencies, bank references, credit agencies, chambers of commerce, and credit application forms. Taking legal actions is one part of the many duties of the credit department. A personal finance is related to how much money is needed by an individual. It is concerned on financial resources and its usage. Tax policies and family assets will certainly affect personal decisions. It will also identify the credit score of the lender and the actual financial standing. Planning for a secured financial future within the

environments economic stability is one primary concern of the personal finance as well. There are various factors that affect decisions in handling personal finance which are financing durable goods, paying for education, monthly bills, secured loans, minimal debt obligations, and health insurance, and retirement plans. Meanwhile, a corporate finance holds a task in providing financial resources for certain organizations and balances risks and profitability. It is referred as SME finance for small enterprises. Managerial finance maximizes a companys wealth and it also values the stocks. Bonds are long-term funds created by ownership equity and long-term credits. Short-term funding comes from a line of credit given by banks as a working capital. Studying finance will lead you in wiser decisions making on your financial funds. It can help you identify risks and benefits if you are planning to put up your own business. Finance discipline requires you certain abilities and trainings which can be developed over a period of time. Finally, it will give you optimum control over your financial assets which will certainly help you in attaining a financially secured life.

COMPANY PROFILE

SHAIKH & ASSOCIATES History Shaikh & Associates is located at Asha Complex, 414, Mangalwar Peth, Pune - 411011. It was founded in the year 2000 and is a renowned Tax Consultancy & Law Firm. The Firm is associated in serving society with the Consultancy in relation of Indian Laws and Tax related works such as Tax Payments, Consultancy about Taxation, Accounts Writing, Return filing of various departments of Govt. viz Central Govt., State Govt., Local body etc. and various financial service. It is also leading firm in the field of Law. Founders and Proprietor The founder and proprietor of Shaikh & Associates ; Mr. Sameer I Shaikh is a members of Maharashtra Bar Council, Sales Tax Practitioner Association and others. He had started the firm with a small office at Nana Peth, Pune 411002 as tenant then afterwards he shifted his whole business in a self occupied office at Asha Complex, 414, Mangalwar Peth, Pune 411011.

Organization Chart

Shaikh & Associates

Legal Dept

Income tax Dept

Sale Tax Dept

Service Dept

ROC Dept

New Projects In future the firm is very much positive about its performance in the concerned fields and looking forward for new projects. H. K. Builder H.K. Garden is the First project done by H.K. Builder in Pune. Mitha Nagar Sr. No 42 Kondwa Pune 48. Basically H.K. Builder is from Mumbai. From Last 3 to 4 Year he is in Pune. There is 4 to 5 Site Under construction in Pune of H.K.Builder.

Objectives of the Study

Cost control Cost control means costs are regulated within the set parameters. Cost control implies sustaining cost at a budgeted or some pre-determined level. The function of cost control is to keep the costs within prescribed limits. The basic objective of cost control is to ensure that actual cost conforms to the budgeted or pre-determined standards set by the management. Management has to lay down cost standards or norms for all the elements of cost as well as various segments of activity. Actual cost has necessarily to be considered element-wise or segment-wise so as to pinpoint any deviation from standard or norms laid down as benchmark. Cost Control To identify job costs which are not properly supported To Determine the cost components for each billing And the amount charged for each.

Enhance the quality of a final audit and decrease the amount of field work required.

Cost reduction Cost reduction simply means bringing down the cost without sacrificing the costs without sacrificing the utility of the product or service. Cost reduction question the reasons for spending and try to eliminate wasteful or unproductive expenditure. Cost Reduction: To reducing expenditure on various heads. To aims at reducing achieving the overall costs without Corresponding loss of efficiency.

Research Methodology

Research Methodology is a method of collecting data and information relevant to the project. It's a systemized way of getting knowledge and learning new things their relations and casual explanation and the natural laws which governs them. Research Methodology is a "Systemized effort to gain new knowledge".

Research Methodology is original contribution to the existing stock of knowledge making for its advancement. It is the purist of truth with the help of study.

Observation, Comparison and Experiment. In short also covers the systematic method of finding solution to a problem is research. It also covers the systematic approach concerning generalization and the formulation of the theory. Different stages involved in research consists of enacting the problem, formulating a hypothesis, collecting the facts or data, analyzing the facts and reaching certain conclusion either in the form of solution towards the concerned problem or in generalization for some theoretical formulation. Collection of data was done by using questionnaire. A number of questions were typed in a definite order and this set of questions were given to respondents, who were expected to read and understand the questions on their own and answer in the space provided in the questionnaire itself.

In Research Methodology mainly Data plays an important role.

The Data is divided in two parts: a) Primary Data. b) Secondary Data.

(a) Primary Data is the data, which is collected directly by direct personal interview, interview, indirect oral investigation, Information received through local agents, drafting a schedule, drafting a questionnaire.

(b) Secondary Data is the data, which is collected from the various books, magazine and material, reports, etc. The data which is stored in the organization and provide by the HR people are also secondary data. The various information is taken out regarding that subject as well other subject from various sources and stored.

Scope of Cost Reduction A cost reduction programme should be all pervasive because cost reduction is attainable in almost all the area of business activities. There can hardly be any area of operation, which cannot be improved. Cost reduction cover a wide range of area like product design, plant layout, production methods, substitution, tool design reduction in wastes, innovation in marketing, etc. we shall now study the critical area of application of cost reduction method. 1) Product design Product design offers the greatest scope for cost reduction of a permanent nature. Designing bring the first step in manufacturing a product, the impact of a decision at this stage is felt throughout the manufacturing or processing of the product in the factory. Most costs are committed at the designing stage 2) Production Planning and control Production planning and control (including material planning and control) endeavors to achieve the best coordination among material, manpower and manufacturing facilities so that delivery commitments are met without causing waste of resources. 3) Plant layout and equipment Plant layout is the floor plan which involves analysis and arrangement of equipment, workstation and floor area to ensure most efficient utilization of equipment plant facilities and plant service. 4) Factory organization

A considerable cost reduction can be achieved by improving the factory organization. Although cost reduction resulting from an improvement improve in the organization cannot be measured. 5) Purchasing and material control 6) Direct labour 7) Marketing 8) Administration Finance

EXAMPLE

Save up to 20 times with the detailed cost estimate report? Our calculations and feedback from our clients have shown that this report gives you 1000% to 2000% return of your investment. The detailed estimate costs are: Built Area in Square Feet Up to 2000 sq.ft. From 2001 sq.ft to 5000 Sq. Ft . From 5001 sq.ft to 10,000 Sq. Ft . From 10,001 Sq. Ft onwards. Rs. 1.25 per square feet. Rs. 1.75 per square feet Price of our report Rs. 2.50 per square feet Rs. 2.25 per square feet. Report will help you save from Rs. 25 to Rs. 50 per Square Feet Saving Potential

What do we do need from you to prepare this report? We will need architectural plan and other drawings that your architect had provided you have for your home. We review the quantity that is required from each item and then research the rates from your area.

Sample Detailed Cost Estimate 1) Cost Analysis Total Area Total Cost 3214 sq.ft Rs.3170162 (Rupees Thirty One lack Seventy Thousand One Hundred and sixty Two) Cost Per Sq.ft (total Area/ Total cost) Rs. 987 (Rupees Nine Hundred Eighty seven Sq. ft

2) Specifications chosen by you Question: Your Reply: What type of flooring are you planning to use in all the rooms? Either vitrified tile or Granite not exceeding RS 100 per square fee (including laying cost) Question: Your Reply: Which type of frames is being used for doors and windows? The main entrance door frame and shutters would be teak. All other frames are pad auk wood Question: Which type of shutters and wood is being used for doors and windows? Would it be deodar wood, hillock wood, teak wood etc. Your Reply: Question: Windows will have tinted glass shutters What material are you planning to use on Bathroom and Kitchen Walls?

Your Reply: Question: Your Reply:

Normal good quality Sanitary ware. What type of finishing will be used for Exterior walls? I'll use good quality exterior paint.

3) Detail of Material (Required for the whole project) Stage wise material will help you procure the raw material properly. A lot of times, the building owner do not keep track of the material used in their construction and the labor uses this lack of information to either use sub standard material or use less than the specified quantity. Sr. no 1 2 3 Material Cement Sand Bazari Or Stone Chipping 12 to 20 mm gauge 4 5 6 7 8 9 10 Stone Blast/ Brick blast Brick Bitumen Polythene sheet MS Steel bars of different diameter Ceramic tiles Vitrified tiles 1000 50400 200 1600 10896 866 3200 C ft No. s Kg S ft Kg S ft S ft Quantity 1250 3600 3200 Unit Bags C ft C ft

11

Granite

52

S ft

To know more about purchasing tips of Cement and Bricks click or copy the link below: http://www.gharexpert.com/articles/Start-Construction-1460/Purchasing-GuidelinesCement-Bricks-_0.aspx C ft=Cubic Feet

4) Detail of Material (Stage Wise) Foundation Sr. no 1 2 3 Material Cement Sand Bazari or Stone Chippings 12 to 20 mm gauge 4 5 6 7 8 9 10 11 Stone Blast / Brick Blast Bricks Bitumen Polythene sheet MS steel bars of different diameter Ceramic tiles Vitrified tiles Granite 350 8000 250 250 1719 ---C ft No. s C ft C ft Kg ---Quantity 180 650 550 Unit Bags C. ft C ft

Ground Floor Sr. .no 1 2 3 4 5 6 7 8 9 10 11 Material Cement Sand Bazari or Stone Chippings 12 to 20 mm gauge Stone Blast / Brick Blast Bricks Bitumen Polythene sheet MS steel bars of different diameter Ceramic tiles Vitrified tiles Granite Quantity 570 1650 1400 350 22400 --4837 436 1764 28 Unit Bags C. ft C ft C ft No. s --Kg S ft S ft S ft

First Floor Sr. .no 1 2 3 Material Cement Sand Bazari or Stone Chippings 12 to 20 mm gauge Quantity 500 1350 1250 Unit Bags C. ft C ft

4 5 6 7 8 9 10 11

Stone Blast / Brick Blast Bricks Bitumen Polythene sheet MS steel bars of different diameter Ceramic tiles Vitrified tiles Granite

300 20000 175 1350 4340 430 1436 24

C ft No. s --Kg S ft S ft S ft

5) Abstract of Cost Abstract of cost is used for the planning purposes. From the abstract of cost, we will get stage wise and item wise expenditure. With the help of this we can control the expenditure item wise and stage wise and also in better position to deal with contractor & supplier. Sr. no 1 Earth work in excavation in foundation of columns walls including dressing the side and ramming the bottom up to 5' lift 2 Earth filling with earth available at site from excavation around columns footings, plinth beam and masonry in layers 2124 C ft 1 2124 2124 C ft 3 Description Quantity Unit Rate Amou nt 6372

including watering and compacting. 3 Earth filling under floor with earth brought from out side including carriage of earth, loading, un loading watering and compacting the same. at site around columns footings , plinth beam and masonry. 4 Supplying and laying sand filling in foundation of footing under PCC 5 Pc c 1:5:10 with granite stone aggregate of 40mm and down size mechanically mixed and vibrated including laying compacting as per requirement. 6 Cement concrete 1:1.5:3 with stone chipping or bazri 12 mm to 20 mm gauze in foundation of columns footings, plinth beam etc including centering and shuttering but excluding steel reenforcement mechanically mixed and vibrated complete in position as per specification. 573 C ft 140 80220 366 C ft 70 25648 827.6 C ft 50 41380 3275 C ft 4 13100

6) Detail of Quantities

Abstract or detail of quantities provides us quantities required to complete the construction. With the help of this we are able to know the quantities of each item stage wise, unit wise and this will help in doing agreement, procurement of raw materials according to need. Save wastage in materials, labor. And timely Construction. Sr. no Earth work in excavation in foundation of columns walls 1 including dressing the side and ramming the bottom up to7' lift Columns footings Footing I Footing II Footing IV Plinth beam 4 8 4 2 4 4 4 40 4 4 5 1.5 5 5 5 1.5 320 640 400 180 C ft. C ft. C ft. C ft. Particulars No L .s B H Q(Quantity) Unit (Length) (Width) (Height)

bed1,2 and toilet vertical Plinth beam bed1,2 and toilet 4 internal Plinth beam 1 toilet internal Plinth beam 1 toilet internal Plinth beam 1 right side Plinth beam living, study, and kitchen. Plinth beam 1 kitchen. Plinth beam 1 kitchen. Plinth beam 1 living Total 2124 C ft 13.25 1.5 1.5 29.81 C ft. 11.25 1.5 1.5 25.31 C ft. 14 1.5 1.5 31.5 C ft. 3 21.5 1.5 1.5 145.1 C ft. 52 1.5 1.5 117 C ft. 10.33 1.5 1.5 23.24 C ft. 8.5 1.5 1.5 19.13 Cf t. 12.5 1.5 1.5 112.5 C ft.

Techniques of Cost control Techniques for ensuring cost control include the following: i. ii. iii. iv. v. System of budgetary control; Standard costing and variance analysis; Control on purchase, handling and investment in materials; Control on labour cost including labour time, productivity and remuneration ; Control on production, office and selling overheads; Definition of Budgeting: A budget may be defined as a comprehensive and coordinated plan of action, expressed in monetary terms. It is prepared and approved prior to the budget period and may show income, expenditure and capital to be employed to attain the objective.

Techniques of Cost Reduction Techniques of cost reduction are similar to those used for cost control. These are; i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi. xvii. xviii. xix. xx. Budgetary control, Standard costing, Control on material cost, Control on labour cost, Control on overheads, Standardization of product, Product simplification, Production scheduling, Product designing Engineering improvements, Technological up gradation, Production research, Market research operation research, Improvement in plant layout, Value analysis, Cost benefit studies, Contribution analysis, Quality measurement and research, Job evaluation and rating, Work studies.

Project Work Undertaken

Cost Control and Cost Reduction A study on Cost Control and Cost Reduction with Special reference to Shaikh & Associates Tax Consultants & Certified Auditor. Shaikh & Associates Tax Consultants & Certified Auditor. It help in Tax Consultants to the people and Companys The Office of Shaikh & Associates Tax Consultants & Certified Auditor. Is located in Asha Complex 414 new mangalwar peth Pune 411011. H. K. Builder H.K. Garden is the First project done by H.K. Builder in Pune. Mitha Nagar Sr. No 42 Kondwa Pune 48. Basically H.K. Builder is from Mumbai. From Last 3 to 4 Year he is in Pune. There is 4 to 5 Site Under construction in Pune of H.K.Builder.

Analysis and Interpretation of data

Q1. What type of flooring are you planning to use in all the rooms? Answer: - Either vitrified tile or Granite not exceeding RS 100 per square fee (including laying cost) Types of flooring Granite laminated wooden flooring vitrified Answers Yes No maybe

type of flooring

Types of flooring

48

48

Types of flooring

4 Granite Tiles laminated wooden flooring Vitrified Tiles

Granite Tiles are strong and good looking tiles and it fit in the budget. (Rs.100 per.sq.ft)

Laminated wooden flooring is awesome but they are very costly. . (Rs.350 Per.sq.ft) Vitrified tiles are good tile and can fit in budget. (Rs.60 per.sq.ft) Q2. Which type of frames is being used for doors and windows? Answer: - The main entrance door frame and shutters would be teak wood. All Other frames are pad auk wood. Type of Door Teak Wood Doors Maple wood door Sandal wood Answers Yes As per request As per request

Requirement of types of Doors

60% 50% 40% 30% 20% 10% 0% Teak Wood Doors Pak auk Doors Sandal wood

Requirement of types of Doors

Teak Wood Doors is nice and commly use door is cost Rs 3000 each.

Maple wood door are imported door they are Costly. (Rs.10000 each) Sandal wood Door is very costly then any other door in the whole world. Sandal wood cost Rs.6000 per Kg. The door weight is 40 Kg. That means Rs 240000

Q3. Which type of Safety Wood is being used for doors? Answer: - Iron Safety Door or Wooden Safety Door Types of safety Door Iron Safety Door Wooden Safety Door Answer As per request As per request

As per Requirement Shutter Doors

70% 60% 50% 40% 30% 20% 10% 0% Iron Safety Door Wooden Safety Door As per Requirement Shutter Doors

Iron Safety Door is most costly but strong. (Rs.13,000 each) Wooden Safety Door is stylesh and cost Rs 7,000 each.

Suggestion & Conclusions

Better Technique should be use to decrease the time. Gas Pipe line should be given in every flat. CC TV Camera should install in every building and every floor. The builder is using old techniques to build the building so he should use new techniques that decrease the time to make building.

Bibliography

Introduction http://www.bigrefinance.com/ Meaning & Definition From Pragati page 1.1 Objectives of the Study http://www.managementparadise.com/forums/final-100-mark-project/175617cost-control-cost-reduction.html Ppt of 23.2.2 Scope of cost reduction Book: - principles and practice of cost accounting Third edition by Asish K. Bhattacharyya Chapter no: 23 cost reduction and productivity Page 1041 Techniques of Cost control Book cost Accounting for P.E.II (C.A.), NEW Syllabus By D.K.MITTAL Chapter 19: cost control and Cost reduction Page: 808 Techniques of Cost Reduction Book cost Accounting for P.E.II (C.A.), NEW Syllabus By D.K.MITTAL

Chapter 19: cost control and Cost reduction Page: 814 Definition of Cost Control Book: - cost Accounting for P.E.II (C.A.), NEW Syllabus By D.K.MITTAL Chapter 19: cost control and Cost reduction Page: 807 Definition of cost Reduction Book: - Management Accounting By Prof. A.P.Rao Chapter: - 15 Cost Control and Cost reduction Page: - 412 Distinction between Cost Control and cost reduction Book: - cost Accounting for P.E.II (C.A.), NEW Syllabus By D.K.MITTAL Chapter 19: cost control and Cost reduction Page: 810