Kustannusmanagement

Kustannusmanagement, often translated as cost management, is a crucial business process focused on planning, estimating, budgeting, financing, managing, and controlling costs so that a project can remain within the approved budget. It is an integral part of project management and overall business operations. The primary goal of cost management is to ensure that the necessary costs are incurred and paid, and that the potential for costs is reduced, avoided, or eliminated.

Effective cost management involves several key activities. It begins with cost estimating, which is the process of approximating the monetary resources needed to complete project activities. This is followed by cost budgeting, where the aggregated cost estimates are compiled to establish an authorized cost baseline. Cost control then involves monitoring the status of the project to update and manage changes to the cost baseline, and to ensure that the work performed is within the planned budget. This includes analyzing variances between planned and actual costs and taking corrective actions as needed.

The benefits of robust cost management are significant. It helps organizations to make informed financial decisions, optimize resource allocation, improve profitability, and enhance the likelihood of project success by meeting financial objectives. It also provides a framework for accountability and transparency in financial matters. Without proper cost management, projects are at a higher risk of cost overruns, which can jeopardize their viability and impact the overall financial health of the organization. Various tools and techniques, such as earned value management, are employed to support cost management processes.