COST

MANAGEMENT
COST MANAGEMENT
 is the process of planning and controlling the budget for a project or
organization. It involves the efficient and effective allocation and utilization
of resources to achieve project or organizational objectives while minimizing
costs.
COMPONENTS OF COST MANAGEMENT

1. Resource Planning: Resource planning involves

identifying and allocating the necessary resources (such as
labor, equipment, and materials) for a project or
organizational activity. This includes determining the
types and quantities of resources required, as well as the
timelines for their acquisition and utilization.
2. Cost Estimating: Cost estimating involves developing an
estimate of the total cost of a project or organizational
activity, based on the resources required and their
associated costs. This includes estimating both direct costs
(such as materials, labor, and equipment) and indirect
costs (such as overhead, utilities, and administrative
costs).
3. Cost Budgeting: Cost budgeting involves developing a
detailed budget plan that outlines the expected costs for a
project or organizational activity, broken down by
resource category and time period. This plan helps to
ensure that resources are allocated and utilized efficiently
and effectively, and that costs are managed within the
approved budget.
4. Cost Control: Cost control involves monitoring and
managing project or organizational costs to ensure that
they stay within the approved budget. This includes
tracking actual costs against the budget plan, identifying
variances and their causes, and taking corrective action to
address any cost overruns or under-spending.
5. Effective cost management is essential for the success
of any project or organization, as it helps to ensure that
resources are used efficiently and effectively, and that
costs are managed within the approved budget. By
effectively planning, estimating, budgeting, and
controlling costs, organizations can minimize waste,
increase productivity, and achieve their objectives while
minimizing costs.
 QUALITY
MANAGEMENT
QUALITY MANAGEMENT

 is an approach that seeks to ensure that an organization

produces goods or services that meet or exceed
customer expectations. It is a critical process for any
organization, as it can help them to build a reputation
for quality, enhance customer satisfaction, reduce
costs, and increase efficiency.
Key Principles of Quality Management
 There are several key principles that underpin quality management,
including:
 Customer focus: Quality management is all about meeting the needs and
expectations of customers. Organizations that are customer-focused are
better able to identify and address customer needs, which can lead to
increased customer satisfaction and loyalty.
 Continuous improvement: Quality management is an ongoing process of
continuous improvement. Organizations that are committed to continuous
improvement are always looking for ways to enhance their processes and
systems to improve quality and efficiency.
 Employee involvement: Quality management is a collaborative effort that
involves everyone in the organization, from top management to front-line
employees. Organizations that encourage employee involvement and
participation are better able to identify and address quality issues.
 Process orientation: Quality management is focused on processes rather
than individual products or services. Organizations that adopt a process-
oriented approach are better able to identify and address problems at the
root cause, rather than simply addressing symptoms.
Tools and Techniques of Quality Management
 There are a number of different tools and techniques that organizations can use to
implement quality management, including:
 Statistical process control (SPC): SPC is a statistical method for monitoring and
controlling quality. It involves collecting data on a regular basis and using statistical
methods to analyze the data to identify trends and patterns.
 Root cause analysis (RCA): RCA is a problem-solving technique that seeks to identify
the underlying causes of a problem, rather than simply addressing the symptoms. By
identifying the root cause of a problem, organizations can develop more effective
solutions that address the underlying issue.
 Failure mode and effects analysis (FMEA): FMEA is a risk management tool that helps
organizations to identify potential failures in a system or process, and develop
strategies to prevent or mitigate those failures.
 Benefits and Challenges of Quality Management There are a number of benefits
associated with quality management, including improved customer satisfaction,
increased efficiency, reduced costs, and enhanced reputation. However, there are also
some challenges associated with implementing quality management, including
resistance to change, lack of employee
Deming’s 14 Points

W. Edwards Deming was a renowned American statistician,

engineer, and management consultant who developed a
philosophy of quality management that came to be known
as the Deming Method. One of the most important
contributions of Deming's philosophy was the "14 Points," a
set of principles that he believed were essential for
achieving quality and continuous improvement in any
organization. These 14 Points are as follows:
 Create constancy of purpose for improvement of product and service: This
point emphasizes the need for organizations to have a clear and consistent
focus on improving the quality of their products and services. Deming
believed that this focus should be long-term and strategic, rather than short-
term and reactive.
 Adopt the new philosophy: The new philosophy that Deming referred to is a
shift away from traditional management approaches that prioritize individual
performance and focus on short-term results. Instead, Deming advocated for
a philosophy that emphasizes collaboration, teamwork, and continuous
improvement.
 Cease dependence on mass inspection: Deming believed that traditional
methods of quality control, such as mass inspection, were inefficient and
ineffective. Instead, he argued that quality should be built into the process
from the beginning, rather than being inspected out later.
 End the practice of awarding business on price alone: Deming believed that
organizations should focus on building long-term relationships with suppliers,
rather than simply selecting the lowest-priced option.
 Improve constantly and forever the system of production and service: This
point emphasizes the need for continuous improvement in all aspects of the
organization's operations, including production, service delivery, and
management systems.
 Institute training on the job: Deming believed that training was essential for
ensuring that employees had the skills and knowledge necessary to contribute
to the organization's goals.
 Institute leadership: Deming emphasized the importance of strong leadership
in driving organizational change and promoting a culture of quality and
continuous improvement.
 Drive out fear: Deming believed that fear was a major barrier to effective
performance and innovation. He emphasized the need for organizations to
create an environment where employees feel safe to experiment, take risks,
and learn from their mistakes.
 Break down barriers between departments: Deming believed that silos and
territorialism were major obstacles to effective collaboration and
communication within organizations. He advocated for breaking down these
barriers and promoting cross-functional teamwork.
 Eliminate slogans, exhortations, and targets for the workforce: Deming
believed that traditional management approaches that relied on slogans,
targets, and motivational speeches were ineffective. Instead, he advocated for
a more collaborative and participatory approach to leadership.
 Eliminate numerical quotas: Deming believed that numerical quotas were
counterproductive, as they often incentivized employees to prioritize quantity
over quality.
 Remove barriers to pride of workmanship: Deming believed that employees
who take pride in their work are more likely to produce high-quality products
and services. He emphasized the need for organizations to create an
environment that fosters pride of workmanship.
 Institute a vigorous program of education and self-improvement: Deming
believed that continuous learning and improvement were essential for
achieving quality and innovation. He advocated for organizations to invest in
training and development programs that support these goals.
 Put everyone in the organization to work to accomplish the transformation:
Deming believed that achieving quality and continuous improvement required
the participation and collaboration of everyone in the organization, from top
management to front-line employees.
 The eight principles of quality management are a set
of fundamental concepts that guide the implementation
of quality management practices within an organization.
These principles were established by the International
Organization for Standardization (ISO) in its ISO 9000
quality management standard. Below are the eight
principles of quality management and a brief
explanation of each:
 Customer Focus: This principle emphasizes the importance of understanding and
meeting the needs and expectations of customers. Organizations should gather
feedback from customers to improve the quality of their products or services, and
use this feedback to continually improve.
 Leadership: Strong and effective leadership is critical to the success of any quality
management program. Leaders must establish a clear vision and strategy for quality,
and provide the necessary resources and support to enable employees to achieve
quality objectives.
 Engagement of People: Organizations must involve their employees in the quality
management process to achieve success. Employees should be empowered to
contribute to the development and improvement of quality management practices
and should receive training and support to ensure they have the necessary skills and
knowledge to achieve quality objectives.
 Process Approach: The process approach involves understanding and managing all
the interrelated processes within an organization as a system, rather than as
separate activities. This principle emphasizes the importance of understanding the
inputs, activities, and outputs of each process and continuously improving the
system as a whole.
 Improvement: Continuous improvement is a fundamental principle of quality
management. Organizations must strive to continuously improve their processes,
products, and services through the use of data and feedback to identify areas for
improvement and implementing solutions to address these areas.