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What are some management techniques in cost management

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What are some management techniques in cost management

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Step 1

Cost Management refers to the practice of estimating, recording and closely the monitoring the costs associated with running a business.

It ensures proper control over the costs of the business and helps tackles cost overruns that adversely impact the business.

Step 2

Cost management/mismanagement impacts every aspect of the business right from procurement to sales, delivery and after-sales.

Cost Management occurs at all levels of management and encompasses the line management, middle management and top management.

There are several ways to control and monitor costs of a business. They are:

 

  1. Estimating Costs
  2. Planning Costs
  3. Tracking and Analysing Costs
  4. Time Management
Step 3

Estimating Costs:

This is often the first step of a project or a business. The cost estimates include estimates of prices of raw material, capital equipment, labor etc.

Cost Estimates must be based on sound information and they must be valid and current in order to be effective.

The cost basis for each head must be clearly stated in simple language.

For e.g. the current and estimated prices of raw material,...

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