Cost Management

Abstract

Many businesses employ cost management plans for specific projects, as well as, for the over-all business model. When applying it to a project, expected costs are calculated while the project is still in the planning period and are approved beforehand. During the project, all expenses are recorded and monitored to make sure they stay in line with the cost management plan. After the project is finished, the predicted costs and actual costs can be compared and analyzed, helping future cost management predictions and budgets. Implementing a cost management structure for projects can help a business keep their over-all budget under control.

Cost Management

Cost management is a key business management function. Cost management is said to be the process by which companies control and plan the costs of doing business. Companies as a whole also integrate cost management into their overall business model (wisegeek.com, 2012). For a company’s management to be effective overall, cost management must be an integral feature. Before a company starts any project, the anticipated costs should be identified and measured. The expenses should then be approved before any purchasing occurs. During the process of completing a project, all incurred costs should be noted and kept in a record to help ensure that the costs are controlled and kept in line with initial expectations. After the project is finished, the predicted costs and actual costs can be compared and analyzed, helping future cost management predictions and budgets. By taking this approach to cost management, it will help a company determine whether they accurately estimated expenses at first, and will help them more closely predict expenses in the future. Overspending can be monitored in this way, also. In starting a company project with cost management in mind would help to avoid certain pitfalls fully researched before the project, they may be underestimated. Effective cost management...