Cost Management is defined as the effective method of financial control of the project by evaluating, estimating, budgeting, monitoring, analyzing, forecasting and reporting the cost information. Money saved is money earned; Cost Management procedure helps companies in controlling expenses. Companies integrate cost management in their business models.
Cost Management has broad applications and offers many numbers of strategies when controlling and managing cost comes into question. Cost Management when properly implemented proves a boon as it reduces costs of products and services and customer gets value products and services for lesser prices.
To make management strategies of a company successful, cost management must be an integral element of it. Understanding concepts of cost management is not a difficult task, when explained in the environment of a single project. For example, before the beginning of a project the probable costs should be identified and measured, and before any expenses made, these costs should be approved. In the times of running a project, all incurred costs should be kept in written record.
Following this fundamental approach of cost management helps a company in identifying, whether company exactly estimated costs at firsts, and helps predicting expenses in the future. Overspending can also be monitored in this way. Cost Management can not be implemented as separate technique, projects must be organized and with the right strategies keeping in mind.
When a project is completely defined, this provides for the effective management of cost to be incurred. Effective cost management strategies, helps a team in delivering finished project within the budget, and make the product or services valuable to both - the company and the customer. Possibilities of unexpected expenses always involve in a project, and through effective techniques of cost management it is much easier to deal with such happenings.
Training of cost management in India is offered through various autonomous bodies of government and universities. After completing the cost management course a candidate learns the art of tracking, recording and analyzing costs associated with the activity of an organization, where cost is defined as 'required time or resources'. Cost managers evaluate the operating efficiency and effectiveness of production and service management by collecting, compiling, organizing, verifying, comparing and analyzing information from different departments of the organization.
In large organizations, information may be made available on computer based systems specially designed to systemize the work. The process involves critical monitoring of relevant costs and overheads like material, labor, capital costs etc. involved in making a product or a service.
Cost Managers analyze the sales trend to strike a balance between the demand and supply, to prevent over production. They also monitor the performance, to spot and report on problems and prevent them from occurring in future. This analysis helps in comparing the financial performances, making assessments and projections, providing figures for future costing and pricing policies and other managerial decisions.
Career Prospects:-
Primarily Cost Management Professionals get work opportunities with medium and large size manufacturing organizations of government and public sector undertakings. You are appointed as:
- Sales Manager
- Purchase Manager
- Marketing Manager
- Accounting Manager
- Finance Director
- Finance & Budget Manager
- Finanace Controller
- Cost Controller
Who can become Cost Management Professional?
Candidates having Post Graduate Degree or Diploma in Cost Management and allied fields like accounting, finance and actually are given preference when controlling and managing of cost comes into question. Candidates with higher qualification in Computers & Mathematics / Statistics and Accounting etc are also given preference.
Institutes Offering Courses in Cost Management:-
- Indian Institute of Management , Ahmedabad
Course Offered: Elective course in cost management for Post-Graduate Programme in
- Management The Institute of Cost and Works Accountants of India, New Delhi
Course Offered: Foundation & Intermediate