Cost management concepts

  • Cost accounting topics

    The cost associated with a managerial objective results from the relation between its output (production man hours, production machine hours, product quantities, etc.) and the inputs (labor, equipment, raw material, floor space, utilities, etc.) required to produce the output..

  • Techniques of cost control

    While cost management overall is a complicated process and a critical project management knowledge area, we can break it down into four processes:

    Resource planning. Cost estimation. Cost budget. Cost control..

  • Techniques of cost control

    They include: Standard cost accounting.
    Activity-based cost accounting.
    Marginal cost accounting..

  • What are examples of the cost concept?

    Examples: Rent, rates, taxes, power, insurance, depreciation.
    Overheads include the cost of indirect material, indirect labour and indirect expenses.
    Overheads may be classified into (i) production or manufacturing overheads, (ii) administrative overheads), (iii) selling overheads and (iv) distribution overheads..

The three broad objectives of a cost management information system are: (1) to cost out products, services, and other cost objects; (2) to provide information for planning and control; and (3) to provide information for decision making.

What are the challenges of Cost Management?

Common challenges of cost management include:

  • the following:
  • Change management.
    Project changes are inevitable.
    Teams must be able to adapt to changing circumstances and manage the budget accordingly.
    Effective communication.
    Reporting can be perceived in different ways, depending on who sees it.
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    What is included in a cost management plan?

    Sections often include:

  • the cost variance plan
  • the cost management approach
  • information on cost estimation
  • the cost baseline
  • cost control
  • and reporting processes
  • the change control process
  • the project budget
  • and approvals.

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