Overview

Cost Management

About the Course

 Uncontrolled costs pose the greatest challenge to the petroleum industries. The majority of businesses now operate with a lean and mean attitude due to economic realities. Industries that formerly operated in a regulatory framework where they could pass all expenses through to the consumer are now subject to new regulations. The organizations who are least adept at comprehending and controlling their expenses are the most vulnerable given the huge price swings of our products.

 Energy companies have traditionally depended on the profitability of their businesses to drive operational efficiency. Today, a company's capacity to effectively control expenditures is crucial to its profitability and even to its long-term survival. The companies who can recognize savings and inefficiencies will be able to respond to the challenges of the global market place, therefore earning larger profits, as the energy industry experiences its most significant shifts since the 1970s with huge swings in prices and costs.

 The course will use pertinent exercises, current case studies, and role-playing approaches to cover costs management from the fundamentals to the most recent events and trends. A better understanding of the underlying dynamics of cost will enable the participant to make better decisions regarding goods and services, work processes, capital investments, as well as the ongoing management of the business. This seminar is an introduction to practical cost management techniques.

Target Audience

 Anyone in the firm who wants to manage costs more effectively and efficiently should be able to, including operating managers, field staff, project managers, technology managers, budget managers, and pretty much anyone else. Finance knowledge is advantageous but not necessary.

Course Objectives

 Participants will pick up skills in:

• Determine the basic categories of expenses and the cost-causing factors.
• Select the pertinent data for your decision-making. Recognize the various cost classifications
• Determine the purpose of costs.
• To effectively manage costs, track all pertinent costs to a single cost object.
• Determine and keep an eye on the expenses' behavior.
• Recognize the foundations of Activity Based Cost Management (ABCM), as well as how it was created and applied.
• Create a custom activity dictionary.
• Use cost behavior sensitivity analysis.
• Create management control systems that are effective for today's requirements.
• Analyze capital projects with the right methods and tools.
• Budget usage and abuse control your spending, not waste it.
• Create tools for managing costs. Analyze the effectiveness of the costs.

Course Outlines

• Increasing your own awareness of cost management
• defining prices, categories, and language in regard to oil and gas Sorting the various charges
• identifying cost drivers, cost items, and their behavior Effectively and accurately allocating expenditures for an E&P firm Establishing the break-even price and volume
• Budget variance analysis used effectively for performance evaluation examining several cost management system types
• Activity and performance evaluation
• Activities Based Management (ABM) is used to keep an eye on expenses and procedures.
• Creating and utilizing a useful activity dictionary
• Value-added vs non-value-added costs as a measure of improvement tying costs and revenues together to more accurately calculate profits recognizing the difference between cost efficiency and cost effectiveness
• Using expenses in four dimensions
• Creating effective productivity metrics Operating Cost Control
• Utilizing the funds wisely and effectively
• GAP analysis is used to calculate productivity and costs.
• Cost distributions for support departments
• transferring prices
• measuring and regulating output cost reduction in the supply chain Capital Cost Accounting
• Making decisions about capital investments and how they affect cost management creating and evaluating ideas for capital investment
• Life Cycle of replacing versus maintaining Costing
• Analytical methods for cost management
• Effectively controlling staff, logistical, purchasing, and material costs
• Analyzing sensitivity to save costs
• Using several case studies to more efficiently control expenses measurement of performance
• HSSE integration with the cost management system Specifying proactive versus reactive costs