resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview
resource preview

Download and customize this and 500+ other business templates

Start here ⬇️

Voila! You can now download this Presentation

Download

Preview

Synopsis

Cost overruns are dangerous as they demand funds allocated for other purposes and needs. To avoid them, managers must have a top-notch cost management strategy up their sleeve at all times. The good news is that our Cost Management agement presentation deck allows you to introduce your strategy for effective management of cost with ease and, therefore, provide your businesses with the freedom to make the right choices, remedy the shortcoming between strategy and execution and fuel growth.

stars icon
5 questions and answers
info icon

Some external factors that can affect the effectiveness of a cost management strategy include market fluctuations, changes in labor costs, changes in material costs, regulatory changes, economic conditions, and competitive actions.

A cost management strategy can contribute to the growth of a business by providing it with the freedom to make the right choices, remedy the shortcomings between strategy and execution, and fuel growth. It helps avoid cost overruns that can divert funds allocated for other purposes and needs. With a top-notch cost management strategy, a business can effectively manage its costs, which can lead to improved profitability and growth.

Some potential obstacles and challenges in implementing a cost management strategy include resistance to change, lack of understanding or knowledge about cost management, inadequate resources, and poor communication. It can also be challenging to align the cost management strategy with the overall business strategy and to ensure that it is effectively executed.

View all 5 questions
stars icon Ask follow up

Download and customize this and 500+ other business templates

Start here ⬇️

Voila! You can now download this Presentation

Download

Slide highlights

Use this slide to list all cost determinants for the project. Although determinants vary from organization to organization, they depend on two main factors: The Quantities of Resources and Combinations and Techniques of Productions.

resource image

High costs most likely prevent your team from achieving goals, thus, identifying obvious and hidden causes for inefficient costs is crucial. Use this slide to discuss causes for high costs and introduce elimination solutions.

resource image

With this slide, introduce cost reduction potential and propose strategies for savings. These can include: bartering with other businesses, monetizing marketing methods, sponsoring your events and introducing four-day work week.

resource image
stars icon
5 questions and answers
info icon

A four-day work week can contribute to cost savings in several ways. Firstly, it can reduce overhead costs such as utilities and maintenance for the extra day that the office is closed. Secondly, it can increase employee productivity and reduce absenteeism, as employees are likely to be more rested and satisfied with a better work-life balance. Lastly, it can reduce costs related to employee turnover, as a four-day work week can be an attractive benefit for potential employees.

Some potential strategies for cost reduction in a business could include bartering with other businesses, monetizing marketing methods, sponsoring your own events, and introducing a four-day work week. It's also important to identify and eliminate any obvious and hidden causes for inefficient costs.

Some techniques of production that can influence cost include the choice of technology, the scale of production, and the efficiency of the production process. The choice of technology can significantly impact the cost as different technologies have different levels of efficiency and require different amounts of resources. The scale of production can also influence cost as larger scales often allow for economies of scale, which can reduce the cost per unit. Lastly, the efficiency of the production process can influence cost as more efficient processes can reduce waste and improve productivity, thereby reducing costs.

View all 5 questions
stars icon Ask follow up

Overview

Cost management is the process of estimating, allocating and controlling the costs in a project, which enables an organization to forecast upcoming expenses and avoid exceeding the allocated budgets.

The most important element in cost management, says David Axson, managing director at Accenture Strategy, CFO & Enterprise Value "is to live and breathe a relentless customer focus. All too often cost reductions lead to service reductions, opening the door to disruptors who can deliver great service at the same or lower cost. Digital tools allow organizations to deliver better service at lower costs – it's no longer a trade-off of one for the other. Think about automatically checking into your hotel room, choosing your room and accessing your key through the app on your phone. For the hotel this lowers costs (no check in line, no plastic keys, etc.) while for the guest it delivers faster, more personalized service."

stars icon Ask follow up
resource image

Download and customize this and 500+ other business templates

Start here ⬇️

Voila! You can now download this Presentation

Download

Application

There are four major steps to the process:

  1. Resource planning – the process of discovering future resource requirements for an organization or a particular project. This requires the assessment and planning of the use of the labor, finances and other resources.
  2. Cost estimating – the process used to quantify, cost and price the resources required for an organization or a particular project. It requires the employment of tools that transform technical and programmatic data into finance and resource data.
  3. Cost budgeting – the process used for evaluating the estimated cost of resources into cost accounts and measuring cost performance against them.
  4. Cost control – the process used for measuring variances from the cost baseline and establishing effective correctional action to achieve minimum costs.
  5. resource image
    resource image

    Case study

    Boeing Commercial Airplane Group Wichita Division

    The case study published by Massachusetts Institute of Technology examined the effects of employing Activity-Based Costing and Management Practices (ABCM) – an approach where activity-based cost (ABC) models provide economic information for management decision making, within the Aerospace Industry.

    According to MIT, BCAG is the world's largest manufacturer of commercial airplanes, which comprises about 60% of Boeing's total revenues. The main focus of BCAG Wichita is the development of a lean, efficient design and production system supported by an effective cost management strategy in order to capture and maintain world-class aerospace manufacturing reputation.

    stars icon Ask follow up

    The MIT researchers write: "One of the most attractive and counterintuitive characteristics of activity-based costing arises from the previously untapped sources of added value that it allows a company to discover. As the emphasis on costs shifts from labor to overhead, companies are changing their business strategies to capture these gains. Although overhead costs now dwarf labor costs as a percentage of overall expenditure, companies have not changed the methods they use to quantify costs."

    stars icon Ask follow up

    And continue: "Advocates of ABCM believe that unless there is a change to a new way of identifying monetary output, companies will never know the true costs of production. At present, a majority of the companies that have adopted ABCM operate in the commercial sector. Traditionally, these companies have been perceived to be more exposed to economic variability, and thus must be able to adapt to changing market conditions in order to retain competitiveness.5 Although the aerospace industry has been slower to adopt activity-based costing methods, cycles of instability in the industry may lead to increasing interest in ABCM. The successes of the pilot projects at BCAG Wichita may illustrate the benefits of investigating different cost management strategies. BCAG Wichita hopes to move ABCM principles into other areas of the manufacturing process, and encompass an ever-increasing portion of the facility's operations."

    stars icon Ask follow up

    Download and customize this and 500+ other business templates

    Start here ⬇️

    Voila! You can now download this Presentation

    Download