A Theoretical Model For Accounting For Cost Variance In The Residential Home Building Industry

Abstract

The purpose of this study was to propose a theoretical model for home building contractors. The theoretical framework proposed was formulated from a systems approach focusing on the principles of general systems theory and applying the theory of single-loop learning to the task of a real-time cost variance calculation. In creating the model, the researcher first looked at the concept of general systems theory, applying the system concept using a systems approach. This approach has led to the development of the theoretical model for the home building industry. In the center of the model is the cost variance system interacting with the individual subsystems; estimating, accounting, standards, and technology. This model outlines the importance of four separate subsystems and their interrelationships in the calculation of cost variance. The model in this study has led to several important implications and recommendations for the home building industry