II. OBJECTIVES OF COST MANAGEMENT
The objective of cost management is
• To reduce the cost expended by an organization while strengthening the strategic position of the firm.
• To identify future expenditure in a business to reduce budget overages.
• Tackle challenging task in business management, to reduce construction delays.
• To improve pricing decision.
IMPORTANCE OF COST MANAGEMENT :-
• It helps to finish project on time & in given budget.
• It also helps to analyse expected cost to control project expenses.
• Cost management tackle challenging task in business management, to reduce construction delays.
• It improves pricing decision.
• Cost management link corporate strategies.
• It evaluate the effectiveness of activities for investment.
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There is scope for further research to improve the traditional cost management system which looks into the issue of wastage.
Mr. Joseph A Lukas [2] This paper will first provide a review of earned value terminology, formulas and key metrics to monitor when using earned value analysis. After this review, the common errors encountered in implementing EVA and corrective actions will be covered in detail. By the end of this paper you’ll hopefully realize this paper really isn’t just about using earned value analysis, but really covers the more important topic of having a complete and integrated project plan in place, which is a cornerstone of earned value`
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M. K. Trivedi and Sapan Namdev [4] Over a year many research had solved construction optimization problems. The techniques used by them varied in nature between mathematical techniques or conventional techniques to heuristic techniques. Over a past 20 years researchers had emphasized on Evolutionary Algorithms (EA) to solve construction optimization problems. Different Evolutionary Algorithms techniques such as Genetic Algorithm (GA), Ant colony method etc, had been used by many researchers to optimize the time-cost of a construction project. In this paper a detailed literature review of different approaches used by researchers to optimize the time-cost of a construction project is going to be
can expand through marketing ideas and ways the company can save money by not stocking up on as
The initiation phase of a project is not complete without a clearly defined goal and realistic, measurable objectives that describe the business benefits which are expected to be delivered upon completion of a project (Laureate Educatio...
So, there should be an efficient and optimum use of resources with the modernised techniques that provide them competitive advantage over the competitors and make them an efficient organization.
Making an investment towards a new project/product/company is hardly a simple process. Numerous factors including costs, benefits, time, and resources need to be taken into account before a decision to pursue a new project should be ventured into. At the end of the day prioritising projects and investing funds into projects that have the most potential towards favourable return on investment should be considered. Investment appraisal should not only be used for projects with a monetary return, it is also pertinent to use the tools where the return may not be easy to quantify such as training or development programs. Investment
Evaluate the Performance and Reward model that the company currently uses in order to identify weaknesses and areas whe...
To give alternative courses of action and to recommend the best alternative to improve the company’s operations.
Spokane Industries has contracted Franklin Electronics for an 18 month product development contract. Franklin Electronics is new to using project management methodologies and have not been exposed to earned value management methodologies. Even though Franklin and Spokane have worked together in the past, they have mainly used fixed price contracts with little to no stipulations. For this project Spokane Industries is requiring Franklin Electronics to use formalized project management methodologies, earned value cost schedules, and schedules for reports and meetings. Since Franklin Electronics had had no experience with earned value management, the cost accounting group was trained in the methodology in order to bid for the project. Franklin Electronics won the contract because they had the lowest price. They developed a work breakdown structure that consisted of 45 work packages with 4 of the work packages being delivered in the first 4 months. They also developed a simple status report consisting of the work packages due, budgeted cost for work scheduled, budgeted cost for work performed, actual cost for work performed, cost variance and price variance. When they deliver the first status report, the Franklin Electronics project manager is called into an emergency meeting because Spokane Industries vice president is unhappy with the progress. In this paper, we will discuss Six Sigma process improvement for tracking time and cost, recommendations on how Franklin Electronics can use project management principles to meet their goal of improving efficiency and empowering management to make better and informed decisions through the use of Earned Value Management, how an effective Earned Value Management System contributes ...
... standard and help to reduce the preparer cost. And it has also enhanced the financial statements decision usefulness and make the organization prepare for expanded disclosure requirements.
Organizational changes that reduce cost. The M&S reduced its management levels to reduce the cost.
of a firm to attain new forms of competitive advantage (Müller, 2011). It is due to these
To begin with, I believe that a proactive approach exhibited by a firm, makes a statement that do not want to lose their competitiveness. One such reason is capitalizing on economy of scale and growth (Pearce & Robinson, 2011, p. 125). Businesses can lower their cost per unit and spread their cost over more items by selling and producing
 Reduce overall costs by reining in the expense of legacy system. Use savings to fund new applications and infrastructure.
From the A12 redesign proposal, it shows that the current standard cost system is unable to link the reduction in the number of parts to activity reductions and cost savings. The labor-direct-based standard cost system reflects the cost of A12 is distorted. Using the ABC system, according to the activities of A12 allocate the overhead cost to A12 that could find that the current overhead cost of A12 was overstated by the standard cost system. At last, A12 Junction Box could be identified it is an attractive and profitable product, at the same time, it demonstrates the value of ABC.
Focusing on the benefits to the business organisation, this is a very important concept for them to gain their maximum potential profits and the success of the business as a whole.
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data