Effective Budgeting & Operational Cost Control

The Course

The effective management of budgeting and cost control is crucial for project/process-based organizations. Nowadays, if contemporary organizations want to stay competitive, they are urged to think in terms of process-value added to customers/shareholders. Along this line, budgeting, as well as tracking, controlling & reducing cost represent essential activities to be performed and monitored by organizations as they implement their key processes, activities and operations. In addressing these issues, this course is relevant for those professionals & analysts facing the difficult challenge of improving performance while reducing costs of those processes for which there are accountable. By combining techniques analysis, problems and examples with real case studies the course provides delegates with key cost awareness and budgetary skills, which is essential managing and controlling processes/projects in times of increasing global competition where the budgets are inextricably linked with both strategy formulation and cost analysis.

The Goals

• Integrate the organization's strategic planning with budgets and processes of cost control
• Understand the importance of project management, appraisal, planning
• Explore traditional versus innovative budgetary techniques
• Get to know activity-based budgeting (and costing)
• Explore capital budgeting techniques & cash flows
• Identify key financial indicators for the business, and how and when to monitor them
• Discuss the problems and limitations of budgetary control and look for alternative tools
• Understand the importance of balancing financial and non-financial measure in managing projects
• Interpret budgets and performance measurement as communication tools
• Link budgetary processes with quality issues and business process improvement

The Process

We combine theory and practice. Therefore, besides in-class lectures, discussions and exercises, we use company examples to illustrate how the techniques presented have been applied in real case studies.

The Benefits

• Gain project management abilities
• Integrating planning, budgeting and cost control by relying on a financial-based language
• Managing different types of cost and their relevance to decision making
• Understand the problems of overheads and how Activity Based Analysis may aid decision-making and pricing strategies
• Select the performance measurement system that works
• From cost to strategy to performance measurement
• Looking beyond budgeting: balanced scorecard and six-sigma
• Contribute to implement change in the organization.

The Results

• Facilitate the elimination of non-value activities and the reduction of costs within key projects
• Contribute to the achievement of breakthrough improvements in competitiveness.
• Successfully build an integrated planning, budgeting and reporting process
• Understand projects' costs behavior and patterns
• Deliver more timely and useful information to decision makers fro projects' management
• Ensure that processes of business planning, budgeting, and management reporting are robust in themselves and suitable for your organization
• Link these processes together in your organization
• Identify & manage key financial indicators for the business
• Describe specific cost analysis and performance measurement techniques
• Explore Balanced Scorecards and six-sigma
• Facilitate the continuous and radical redesign of business processes
• Support a process-centered organizational culture that focuses on customer value

The Core Competencies

• Master techniques for costing & budgetary analysis
• Be able to identify the right processes to redesign in terms of added-value
• Confidently contribute to business process improvement
• Permits testing of financial impact of strategic direction

The Programme Content

Day One

Introduction: Building a Common Financial Language

• The key role of budgeting and cost control in contemporary organizations
• The 21st century business imperative: delivering value added (but to whom?)
• Towards a cross-functional process-view of the organization
• Financial vs. Managerial accounting (for decision making)
• Understand you processes: integrating financial and non-financial aspects
• Identify the key processes/projects for your own organization
• Video, Examples & Discussion

Day Two

Budgeting and Cost analysis

• Cost concepts and terminology
• Different costs for different purposes
• Fixed Vs Variable costs: the Cost-Volume-Profit analysis model
• Contribution Margin analysis
• Manufacturing vs. non-manufacturing costs
• Period Vs. Product costs: inventory evaluation and control
• Case study

Day Three

Traditional vs. advanced techniques in cost-control

• Under-costing and over-costing: the consequences for profitability
• How to refine a costing system?
• Indirect (OH) Vs. Direct costs: Traditional Cost Allocations systems Vs. Activity-Based Costing (ABC)
• Cost hierarchy & Cost drivers
• Linking resources, activities and management
• Introducing Activity-Based Budgeting (ABB) and Management (ABM)
• Video, Case Study and Examples

Day Four

Master Budget, Flexible budgets and Variance Analysis

• Define the master budget and explain its major benefits to an organization
• Describe the difference between a static budget and a flexible budget
• Compute flexible-budget variances and sales-volume variances
• Discuss the behavioral implication of budgeting
• The budgeting process in your organization: how to improve it?
• Which tools shall we use to complement budgeting and costing?
• Problems, Case Study and Exercises

Day Five

Beyond the Budgets: Balanced scorecards and Six-sigma

• Broadening performance measurement systems
• The key role of customer satisfaction and business process reengineering
• Beyond budgeting: integrating financial and non-financial issues
• Introducing the Balanced Scorecard
• Introducing the Strategy maps
• Introducing Six-sigma
• Video, Case Study and examples