Cost management is about all of the activities necessary to clarify, manage and account for a project’s financial status.
Undertake cost management training!TCO and cost management are two important terms that people often confuse with each other. What do they actually mean? Cost management is mainly about all of the activities necessary to clarify, manage and account for a project’s financial status.
TCO (Total Cost of Ownership) identifies the economic lifespan of the whole enterprise. TCO can be seen as a component of cost management, but primarily acts as a benchmark for comparing the costs of certain products or services with each other.
Cost management encompasses all of the methods and techniques for determining, controlling and managing the costs of an enterprise. This entails a continual process of budgeting, monitoring and adjusting in order to minimise the chance of a cost overrun. Cost management is also known as ‘Total Cost of Ownership’, ‘Should Cost, and ‘Integrated Supply Chain Focus’ and is increasingly being included in strategic procurement plans.
In practice, companies seem to have considerable difficulty in generating clear cost information and having a good idea of the profitability of products, customers and activities. A procurement professional focuses on the costs of the service or product to be purchased, and does not often look at costs throughout the whole supply chain.
Unlike traditional cost management, strategic cost management (SCM) is externally focused. It concentrates on the links in and around a company’s own value chain and focuses on creating competitive advantages. The priority is the strategic management of all costs.
Did you know that we can provide all of our training programmes in-company? You and your team can undertake cost management training at your own location. This means you’ll not only be benefiting from the training, you’ll also be working on team building and saving on travel costs and time. Read more about our in-company training programmes.
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