In Euro some organizations began to make a separate department called "cost saving" What is the difference between cost management and cost saving?

 cost management is the reason behind cost saving

Cost management is managing costs to maintin them within the standard cost model of the business.

Cost saving is reducing costs below the standard cost level.

Cost management is the process of planning and controlling the budget of a business. 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. While Cost Saving is the amount of money saved as a result of changes to plans or policies that reduce the expense associated with a business activity. Cost saving may also refer to the changes that generated the savings recorded. Identifying cost saving opportunities can help a business to increase profits, by reducing outflows...

We can determine that Cost Management is the planning process on how to control the budget alloted to a certain project wherein Cost Saving is a plan that is already in action while making or finishing a certain projects. In our company we strictly implement that after office hours all computers needs to be shutdown,lights off all aircon should be off,we have this thing in our office the3 Rs REUSE, REDUCE AND RECYCLE because let's face it economy is not stable so FCs, Accountant and Owners in order to save some expenses they need to think other means to stay afloat. I think this also being used by mother's,housewife or home maker especially if they are the one who handles the budget for the family and they try to meet the needs of the family the cost saving and the cost management.

thank you for question

saving cost could be also by looking for hidden cost in the project

Agree with Khirani

Agree with Mr. Muhammad Latif Khirani  

The points of distinction between Cost reduction and Cost control are as follows:

 

Cost reduction:

 

·         It aims at achieving a reduction in unit cost of goods manufactured or services rendered without impairing their suitability for the use intended.

·         It does not recognise any condition as permanent and believe that by waste reduction, expense reduction and increased production cost reduction objective can be achieved.

·         It assumes existence of concealed potential savings and challenges the norm.

·         It is a corrective function.

 

Cost control:

 

·         It aims at achieving the pre-determined cost targets and ends when the targets are achieved.

·         It entails target setting, ascertaining the actual performance and comparing it with the targets, investigating the variances and taking remedial measures.

·         It does not challenges norms or standards established for the purpose.

·         It is a preventive function.

 

Distinction between Cost Control and Cost Reduction:

 

Cost control is operated through setting standards of targets and comparing actual performance therewith, with a view to identify deviations from standards or norms and taking corrective action in order to ensure that future performance conforms to standards or norms.

 

Cost reduction is a continuous process of critical cost examination, analysis and challenge of standards. Each aspect of business viz., products, process, procedures, methods, organization, personnel, etc. is critically examined and reviewed with a view of improving efficiency and effectiveness and reducing the costs.

 

Cost control lacks the dynamic approach which planned cost reduction demands. In cost reduction, standards which are the basis of control are constantly challenged for improvement.

 

 

Cost management:

 

 Cost management is like wringing out a wet towel. The biggest reaction is obtained first, but we must keep wringing. Even when the towel appears dry to the touch we must bring it to extract more, so it is cost management is continuous process.

 

To achieve this level of performance and success in strategic cost management requires the commitment of resources, the formulation and application of appropriate policies and procedures, and the establishment of objects, activities and instruments. Strategic cost management is in its infancy.

 

Cost Saving:

 

The amount of money saved as a result of changes to plans or policies that reduce the expense associated with a business activity. Cost saving may also refer to the changes that generated the savings recorded. Identifying cost saving opportunities can help a business to increase profits, by reducing outflows.

 

really,I don't know, I sorry for that.

Cost management is mainly planning,estimating project activities costs along with adding contingency and management reserves to acquire project budget then monitoring the spending of money during execution till project completion. Cost saving: aims to utilizing different strategies and techniques such as value engineering to reduce gold plated items.

The question asked is to differentiate Cost Management from Cost Saving

 

The main reason in organizing a separate department  called "Cost Saving" is to emphasize the pressing need of saving costs in a "belt tightening situation" where all aspects of business expenditures are  properly monitored, analyzed, and strictly controlled.

 

The Companies that set up this separate "Cost Saving Department" are obviously becoming very careful on spending funds for perceived unnecessary items. They are therefore studying thoroughly in what areas can they impose cost savings most , apply stringent control, initiate relevant measures  and concentrate to focus on how the Company can get the optimum possible  benefit or advantage that it can get from any expenditure.

 

Most likely, the following will happen;

1) Reduction of number of Employees : Terminate those who are redundant and those who are not performing well

2) Stringent control of procurement of office supplies, machines, equipment, furnitures, facilities, services etc

3) Strict control of travel requests

4) Adjustment of salaries and improved benefits are more carefully decided

5) Reduction of office space if necessary

6) Closure of other business branches will be an option

7) Merger of two (2) closely related departments is also an option

8) More "belt tightening measures" might be considered

 

whilst

 

Cost Management Department remains existent, its functions are the following :

1) Analyse the reports submitted by cost saving department as to whether those reports will still enable the Company to maintain a good working environment, can continue with normal operations and Company will remain in its current stature towards the business community in general. Depending on the merits of report contents, this Department will either concur or reject some of the cost saving measures in the said reports - then submit its recommendations to the Higher Management for review and approval.

2) Undertake mandated responsibilities in the overall monitoring, recording, analysing allocated budgets & actual costs  and preparation of regular reports to be submitted to the Higher Management.