Project Management

Cost Control

Cost control is different from cost reduction. The word "control" indicates an exercise in restraint. When expenses are controlled, they are restrained from growing larger than they should grow. The process of cost reduction, on the other hand, concerns reducing expenses that are too high. Controlling is a very different concept than reducing.

Very Constraining

In terms of business practices, cost control is a much better plan of action. It indicates that expenses have not been allowed to grow past a reasonable level than what the expenses are intended to accomplish. There could probably be a lot of debate over which is easier, controlling or reducing expenses, but controlling costs is the best way to maintain or increase cash flow.

Cost control requires management from the start of the business. Cost reduction is a reaction to a problem. It is always better to be proactive versus reactive. To control costs means managers are staying on top of operations and attempting to create the maximum profit margin. Managers who must implement a cost reduction plan are solving a problem that might possibly have been avoided.

Cost control affects every expense category in a company. But cost control is a lot more than just saying "no" to incurring an expense. It is a management technique that requires all business activities to be evaluated on several levels.

Is the activity designed to operate as efficiently as possible?

Have necessary materials being purchased at the lowest price while maintaining quality?

Can the process be mechanized or computerized to minimize labor costs?

Have the cost of service levels been related to the benefits provided in a nonprofit?

Cost control is a systematic review of the resources a company uses to achieve its mission.

Unconstrained Success

Cost control is cost management. Reviewing expenses to find areas that can be cut is not nearly as effective as upfront cost management. To determine...