Why R&D Costs Should Be Accounted by Project

Why R&D Costs Should Be Accounted by Project?

Institutional requirements: Corporate policies of China State Construction Group, accounting standards, tax regulations for R&D expense super‑deduction, and high‑tech enterprise applications all mandate cost accounting at the project or topic level, or require providing R&D input data by project/topic.

Management requirements: Counting R&D input at the project/topic granularity allows precise calculation of input‑output for each product or project, supplying reliable data for senior‑level decisions and helping identify the root causes of R&D efficiency problems to devise effective improvement plans. Aggregating by department or company-wide obscures actionable insights and offers little managerial value.

How labor hours serve as the basis for allocating R&D expenses?

Basis for labor‑cost allocation: In internet‑industry R&D projects, personnel costs dominate and staff often work across multiple projects, product lines, or departments. Recording each employee’s hours per project enables a reasonable and as‑accurate‑as‑possible distribution of total labor costs to individual projects.

Basis for indirect‑cost allocation: Each project’s expenses consist of direct inputs (personnel, travel, dedicated equipment, services) and indirect inputs (shared resources such as rent, utilities, network fees, operations staff, DBA, senior‑level labor). Since indirect costs cannot be directly assigned, labor hours are used as a practical proxy for sharing these common resources among projects, a method recognized by industry practice and regulatory guidelines.