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Cost accounting, budgetary control, financial statement analysis, and project management are essential tools in financial management for reducing business and project expenses through cost control that results in cost savings.
Cost management is a broader term that includes estimating methods to forecast required resources and perform cost estimation, budgeting, cash flow forecasting, funding the budget, controlling costs, and performing a post-project evaluation to identify future cost-saving opportunities. A company's cost accounting function contributes to the cost management procedure.
Cost Management in Project Management Cost
During the project's activities phase, the cost of project management must be monitored and attended to. In a cost control system, specialised project management software and metrics should be used to estimate cost baseline by task, control, and reduce project costs. Through a learning curve, post-project analysis can make future projects more efficient.
Standard versus actual costing can be implemented in manufacturing companies' ERP systems that are rich in features. Variations in standard costing include labour hours, labour pricing, material purchase price, material usage, and variances in overhead spending and overhead usage resulting from alterations in production volume or machine hours.
What Is Cost Control?
Cost control is the process of identifying, eliminating, or reducing unneeded business expenses in order to boost profits. Cost management begins with the budgeting procedure and examines vendor selection and negotiation, leveraging early payment and volume discounts, implementing spend management systems, and enhancing manufacturing or construction efficiency and product quality.Cost Management Consists of Cost Control
Cost control reduces costs and expenses by managing variances between budget and actual by cost centre, profit centre, department, or project and implementing corrective action. Cost control is a component of the process of cost management.Cost management is a broader term that includes estimating methods to forecast required resources and perform cost estimation, budgeting, cash flow forecasting, funding the budget, controlling costs, and performing a post-project evaluation to identify future cost-saving opportunities. A company's cost accounting function contributes to the cost management procedure.
Steps in Cost Management
Among the steps of cost management are:Cost Management in Project Management Cost
During the project's activities phase, the cost of project management must be monitored and attended to. In a cost control system, specialised project management software and metrics should be used to estimate cost baseline by task, control, and reduce project costs. Through a learning curve, post-project analysis can make future projects more efficient.
Control Techniques
Expense and cost management control methods include target net income, variance analysis, and earned value management. Utilizing specialised cost management software for business and project management to improve cost budgeting and cost performance is another control method.Examples of Cost Control
Examples of cost management include:Cost Control Software
As a management system for a variety of business applications, cost control software is offered, which frequently includes dashboards for spend management and spend analysis.Core ERP and Accounting Applications
ERP (enterprise resource planning) and accounting systems incorporate actual vs. budget comparisons for detailed financial statements by account, with drill-down access to underlying data. These variance budget features are essential for cost management.Standard versus actual costing can be implemented in manufacturing companies' ERP systems that are rich in features. Variations in standard costing include labour hours, labour pricing, material purchase price, material usage, and variances in overhead spending and overhead usage resulting from alterations in production volume or machine hours.
