Strategic Cost Management

NEW Strategic cost management can lead to huge benefits for a business. This programme will give you the knowledge and skills to use best practices and make difficult decisions effectively and confidently, to achieve the cost management outcomes your business requires.

Course overview

Increasingly companies are looking at cost as a means of providing competitive advantage. In this two-day programme we examine best practice strategic cost management and explore the techniques that can be used to manage costs pro-actively.

Using examples from world-class companies and their approaches to price and cost management, participants will learn how to manage price and cost movements, get the best from competitive tenders, develop target costs, establish collaborative approaches with suppliers and work with parametric cost estimating.

Your next step is to call us now on +44 (0)20 7729 6677 or email us at info@falconbury.co.uk or use our contact form and find out how we can help. There are no commitments, and if we cannot help our advice and recommendations are free of charge.

Why you should attend

Strategic cost management can lead to huge benefits for a business. This programme will give you the knowledge and skills to use best practices and make difficult decisions effectively and confidently, to achieve the cost management outcomes your business requires.

Sample programme

1. Getting to grips with costs

We examine the various types of costs and how they behave to ensure participants are able to understand how costs move and behave and recognise the various types of costs.

  • Direct
  • Indirect
  • Stepped
  • Variable

2. Costing techniques

Understanding the macro concepts that underlie traditional approaches to costing and estimating.

  • Absorption costing
  • Marginal costing
  • Activity based costing
  • Value-based costing

3. Cost information

Much of the conventional wisdom surrounding costs is made up of rumour and myth – economies of scale, batch sizes, indices etc are all examples of part truths.

  • Dispelling the myths
  • Sources of information
  • EBQ/MOQ/economies of scale
  • Indices and tracking

4. Cost management tools

Costs often creep in to products and services – often for good reasons, but sometimes not. This session looks at the major sources of cost inflation and some tools to overcome them.

  • Rationalisation
  • Simplification
  • Standardisation

5. Cost modelling

We then turn our attention to approaches such as zero base pricing, establishing target costs, should-cost models, and co-operative costing.

  • Story boarding
  • All the way back to the cow
  • Costs versus cost drivers
  • ‘Good enough for government work’

6. Total life costing

Different products behave differently. For some, the main costs are upfront, for others the major costs are incurred in use and some others have a high cost incurred at end of life disposal. Often trade-offs can be made if the total life cost is understood and can be predicted.

  • Whole life
  • Different cost/usage profiles
  • The budget problem
  • Sensitivity analysis

7. Value engineering

What is it worth? How much does it add? Is it worth it? These are all ways of approaching the question about whether we are getting the right product or service for the money we’re paying, and whether each bit or component is delivering its fair share.

  • Function analysis
  • How? Why?
  • Frugal costing
  • Structured process

8. Managing price and cost movements

Whatever happens, specifications, costs and prices are likely to change. Making sure that you pro-actively manage your exposure to changes and capture both the downs as well as ups is crucial.

  • Price variation formulae
  • The index ratchet
  • Fixed and variable allocations
  • Volume changes

9. World-class companies and their approaches

As businesses outsource more and more, the focus needs to shift from managing labour to managing costs, wherever they come from. Some businesses have set out to make their mark in their own way.

  • F4
  • Parametric cost estimating
  • NASA and learning curves
  • Tiger Teams