Read Why do business professionals choose ready-to-use KPIs? to find out the answers to these questions:
Cost Management is a relatively undefined domain that covers any and every effort undertaken with the aim of bringing the costs of products and services down and increase value provided to customers.
To attain this, cost accounting is frequently utilized by managers for pulling the 'costs incurred' slot down and adding to what is given to clients as 'value'.
Consequently, all the short-run and long-run decisions that pertain to planning and controlling are included under this heading.
Owing to the 'general' nature of this concept, it is not worked on in a 'separate' manner, rather is well incorporated in other managerial thoughts that occur in the organization. This is to say that all programs and strategies that are developed with the purpose of aggravating customer satisfaction can be well placed under the 'cost managing field'.
However, one should not infer from this understanding that cost management has a single dimension, that too of 'somehow reducing costs' as managers often go for bearing large expenditures like 'advertising' to expand customer base.
Stating it in a nut-shell, one can effectively manage costs by attaching it intelligently with other concepts like lean accounting, value chain analysis, throughput accounting etc.
A balanced scorecard is an effectual way to have a 'measurable determination' for managing costs incurred in organizational processes.
This is the actual scorecard with Cost Management Performance Indicators and performance indicators. The performance indicators include: cost management, labor cost, avg. monthly labor cost, hours per year, number of project staff, equipment cost, new equipment cost, downtime cost, project time, time spent on specification, time spent on project design, time spent on testing, quality metrics, number of defects, cost of defect, hours per defect, actual vs planned, total cost, product cost, cost per unit, units per hour .
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