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Special report: Financial planning and cost management

Cost management is something that we all do all day and most of us will reckon, with justification, that we are fairly good at it. We are keen to back up members of the Finance and Management Faculty and hope that the articles in this report might be of interest to you and your team.

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Financial planning and cost management

The first part of cost management is, of course, ensuring that all costs have been captured. The process of then allocating them to products or income streams correctly can be contentious, especially when allocating overheads.

The second part of cost management is addressing the underlying costs and identifying those for elimination while understanding the impact of such action on the underlying performance of the business and making judgement calls for each. We have two articles within this report covering cost control.

When attending Efficiency Committee meetings with the Department for Business, Innovation and Skills (BIS) in my previous job, to identify ‘red tape’ costs for elimination, one of the attendees piped up, during a particularly dull meeting, that the quickest way to achieve efficiencies would be to stop forcing people to travel across the country to attend meetings about efficiency! Not all costs are so easily despatched. Some cost centres are sacrosanct, as many of you will have already discovered. Care should be taken when making proposals about, for example, the CEO’s travel and expenses budget, unless it has been expressly stated that this is within remit.

Financial modelling and performance measurement can help with identifying abnormal costs and we hope that you also enjoy the pieces by Frank Selto and Tom Groot. Their clear explanation of scenario and Monte Carlo analysis is a welcome addition to our many other articles on modelling.

Please also get in touch if you have any questions or would like to comment on this report or faculty work.

Comments and suggestions to Robert Russell, Technical Manager, Finance and Management Faculty

Webcast

On 20th June 2013, David Vine, managing director UK SMB of Concur and Colin Drury of the University of Huddersfield presented a webcast on on travel and expenses management and activity-based costing respectively.

Sample report: Financial planning and cost management

A sample report is available if you are not a Business and Management Faculty member. Subscribe to the Business and Management Faculty to get the full report.