Introduction to Cost Management

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Cost Management
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A brief look at what we will discuss
on this report
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Introduction to Cost Management

1. Steps to effective Cost Management
2. Factors Affecting Cost Management
3. Steps in Project Cost Management
4. Cost Management Techniques
5. Advantages of Cost Management

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Introduction to Cost Management
The process of planning and controlling the
budget of any business is cost management. It
includes analyzing, collecting and reporting
cost details for a running business.
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Understanding Cost and Revenue Structure
Every business first need to understand the cost
and revenue structure for the better
functionality.
Steps to Effective Cost Management
Reduce Interfunctional Complexity Organizations
should diminish their interfunctional Complexity
to ease the cost mamagement. Provide Tools to
manage Cost Business should adapt upgraded tools
to manage the cost which can help in saving a
lot of time.
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Involve Employees in Decisions
Healthy Discussion with the employees are always
better. Organization should involve employees
while taking decisions.
Increase Effectiveness Every task that are
performed should be productive for the effective
cost management within the organization. Decisio
ns Against the Strategic Business
Plan Organizations should take decisions against
the Strategic Business Plan to avoid future
uncertainities.
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Factors Affecting Cost Management

• Overall Domestic Competition
• Growth in Information Technology
• Growth in Manufacturing Sectors

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Factors Affecting Cost Management
Overall Domestic Competition Every Business has
different cost control methods some of which
are highly effective and some less effective
which truly Affect the cost management for any
firm.
Growth in Information Technology Growth in
Information technology affects the
productivity, time, speed etc for the
organization and so the coet management.
Growth in Manufacturing Sectors The factor which
affects the production of any organization is
the manufacturing sector. And hence, the growth
in Manufacturing sectors affects cost
management of organization
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Steps in Project Cost Management
Cost Control It is the process of measuring
cost imbalance from the start and taking
needful actions.
Cost Budgeting Evaluation of cost associated
with the required resources.
Cost Estimation Cost estimation simply refers to
the allocation of cost for the department
working on the project.
Project Resource Planning The first step is to
identify the resources that are required for
the project
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Cost Management Techniques
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Manage Inventories
Manage Time It is important to make the
employees understand the value of money and be
productive to effective growth of organization
It is important to make the employees understand
the value of money and be productive to
effective growth of organization
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Control of Headcount
Outsourcing Outsourcing is the best way to save
money especially if it is for a particular time
or particular project. It also helps to build
business relations with third party.
The employees are the biggest asset for any
organization. Hence, a company should wisely
decide how to control the employee count.
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Advantages of Cost Management
It helps to control the specific project cost
and overall business cost. It also helps to
foresee the future cost and expenses.
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Analyse the long term trends Helps in better
planning and financial management Cost
Management Helps in maintaining Predefined
Costs Analyse the business position.
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