Question

​​​​​​Discuss how to perform cost control based on the processes involved in cost management.

In details and what is the best ways possible.

Answer 1

(Part1) Cost Management has 4 processes, namely:

1. Plan cost management

2. Determine budget

3. Estimate costs

4. Control costs

Cost Control is addressed with estimating deviations from the cost threshold and taking potent remedial measures to pull off slightest costs. There are different approaches attained here to scan and pick various expenses and accomplishment against the headway of the tasks. Prime changes to the cost threshold needs to be documented and the anticipated total costs are consistently to be estimated. When real cost figures becomes accessible, a major part of cost control is to describe what is causing the deviations from the cost threshold. Based on this scrutiny, curative steps might be needed to circumvent cost overgrows.

The process can be understood by the below flowchart example:—

(Part2) Inefficiencies in Cost Control can lead to drastic difficulties in the organisation. Therefore, some of the best techniques possible are:

1. Imparting progress, resource & real cost through updated records and advanced software.

2. Enabling cost codes against each expense made to optimize and accelerate cash flows, thereby reducing per unit cost.

3. Governing real project costs without bookkeeping deferral.

4. Supervising downtime hours and bringing hourly skill based efficiency.

5. Synchronising defective materials and late deliveries with frequent budgeted quality checks and careful investigations.

LEVEL 1 GATHERING DOCUMENT LEVEL 2 CREATING MODEL OF COST CONTROL LEVEL 3 COLLECTION OF LATEST COST DATA

LEVEL 4 REAL COST ALLOCATIONS LEVEL 5 EXAMINE DATA WITH EV LEVEL 6 REPORTING & DECISION MAKING