Cost Management and Profitability Analysis

Budget cutbacks, increased customer (taxpayer) demands, increased operational complexity many of todays managers have to deal with these challenges. Every organization, be it public or private, operates in an environment that is going through fundamental and ongoing changes. It is vital, therefore, that these organizations equip themselves with the management tools that will allow them to progress at the same rapid pace. Knowing how your costs break down and especially how they behave depending on a variety of different situations and decisions are two elements vital to sound organizational management. Knowing how fast things change today is yet one more reason to deploy a strategic cost management enabling you to react quickly. In the public sector, taxpayers demand more services while requiring the use of technology and new distribution means such as the internet. The rapid transformation of the government sector has had a major impact on its cost structure. For the federal government, knowing your costs is part of knowing your business. Departments with external user fees are required to know their costs and report on them. Cost management is part of a sound governance process and leads to an accountable environment.