Browse Definitions :
Definition

cost management

Cost management is the process of planning and controlling the budget of a business. Having a good cost management system in place will allow organizations to better estimate and allocate budget. Cost management is a form of management accounting that allows a business to predict impending expenditures to help reduce the chance of going over budget. 

Many businesses employ cost management tactics 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 is 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 cost management structures

Implementing a cost management structure for projects can help a business keep its over-all budget under control. The first step in this is resource planning. This includes assessing resource requirements for future projects, the work that will go into them, and who or what is going into that work as well as time durations. With this information, a business can begin estimating the costs of the required resources. The business can then allocate resources. Cost performance should be able to be measured and assessed.

Variances from cost baselines should be measured. If there are any differences between what is expected and what is measured, then corrective measures can be enacted to avoid going over budget. Changes to the process should also be measured.

Several business intelligence (BI) programs, such as Oracle Hyperion, offer cost management software to help businesses monitor costs and increase profitability. While the software may help, it is not imperative that software is used when executing a cost management plan.

Vendors may refer to cost management software applications as cost accounting, spend management or cost transparency products.  

Learn more about cost management:

Cost Management Analysis Guide
Bernie Klinder describes how standardizing hardware to create a common desktop environment can keep costs down in a well-managed Windows environment.

How a cost management analysis affects Windows Server 2008 migration
In order to calculate ROI for a Windows migration, you need some "hard savings numbers." In other words, you need to find areas where you can cut existing costs in your cost management analysis.

Spend management software, cost transparency tools help CIOs cut costs
For enterprise organizations with sprawling global operations, spend management software and cost transparency tools can help CIOs gain insight into spending and cost-cutting opportunities.

IT project management: The cost estimating process

The cost estimating process will begin by breaking the project into work phases such as design, engineering, development and fabrication.

This was last updated in September 2020
SearchCompliance
  • pure risk

    Pure risk refers to risks that are beyond human control and result in a loss or no loss with no possibility of financial gain.

  • risk reporting

    Risk reporting is a method of identifying risks tied to or potentially impacting an organization's business processes.

  • risk profile

    A risk profile is a quantitative analysis of the types of threats an organization, asset, project or individual faces.

SearchSecurity
  • script kiddie

    Script kiddie is a derogative term that computer hackers coined to refer to immature, but often just as dangerous, exploiters of ...

  • cipher

    In cryptography, a cipher is an algorithm for encrypting and decrypting data.

  • What is risk analysis?

    Risk analysis is the process of identifying and analyzing potential issues that could negatively impact key business initiatives ...

SearchHealthIT
SearchDisasterRecovery
  • What is risk mitigation?

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • fault-tolerant

    Fault-tolerant technology is a capability of a computer system, electronic system or network to deliver uninterrupted service, ...

  • synchronous replication

    Synchronous replication is the process of copying data over a storage area network, local area network or wide area network so ...

SearchStorage
  • gigabyte (GB)

    A gigabyte (GB) -- pronounced with two hard Gs -- is a unit of data storage capacity that is roughly equivalent to 1 billion ...

  • MRAM (magnetoresistive random access memory)

    MRAM (magnetoresistive random access memory) is a method of storing data bits using magnetic states instead of the electrical ...

  • storage volume

    A storage volume is an identifiable unit of data storage. It can be a removable hard disk, but it does not have to be a unit that...

Close