COST MANAGEMENT

COST MANAGEMENT

By

A Presented in Partial Fulfillment

Of the Requirements of

Project Management Capstone

November 2005

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Instructor :I . Practical Application of Cost Management

Everything starts from the planning process . Planning is the most important step of business practices around the world . Without proper and careful planning , enterprises are sure to lead nowhere but disaster in the long run . Therefore , planning is obviously a step where we must put all of our effort , knowledge , information , and experience . The company

in this term is not only a big corporation but also a doctor who provide health service or a freelance technician who deliver technical service to maintain an air conditioner , for example

Concerning the cost management in a clinic , herewith , I provide some suggestion on how to reduce inappropriate budget so that the clinic will become cost-effective . The case that I will discuss is on Dr . Stephanie White , the Chief Administrator of Uptown Clinic , a community mental health agency

Prior to the suggestion , I will discuss about the meaning of costs in an industry , including a clinic as following

Given a specific HYPERLINK "http /www .economicswebinstitute .org /glossary /product .htm " service production costs are usually classified according to their responsiveness to different levels of production attained

Fixed costs are simply not responsive to production levels . For instance , the cost of renting an office is a fixed cost , since usually the contract fixes it for a certain period of time (say one year

Variable costs grow with higher levels of production (proportionally or not

III . Suggestions

Reading the lists of previous expenses that Uptown Clinic made , I suggest that Uptown Clinic should reduce or adds several items as following

No . Items Previous year ) Suggested Budget /worst case Suggested Budget /best case

1 Professional meetings /dues 14 ,000 10 ,000 2 ,000

2 Advertising and promotion 9 ,000 20 ,000 20 ,000

3 Salaries (two social workers 46 ,000 35 ,000 30 ,000

4 Consulting 10 ,000 5 ,000 2 ,000

5 Two Social Workers 70 ,000 40 ,000 26 ,000

6 Administrator 60 ,000 35 ,000 21 ,000

br Reduced budget for upcoming years

- 64 ,000 - 94 ,000 In the table above , I suggest that Dr . Stephanie White , the Chief Administrator of Uptown Clinic , should reduce some salaries for two social workers and administrators that I found to be far greater they deserve

In addition , I also recommend to cut-off costs for consulting since as a developing clinics , Dr . Stephanie White has known well how to run the clinics well so there is no need to conduct extensive consulting session

In addition to reduce some costs , I also suggest that Dr . Stephanie White , the Chief Administrator of Uptown Clinic , should increase the budget for advertising and promotion . This is because the clinic needs to increase revenue

Therefore , by cutting some costs above , I believe that the Dr . Stephanie White , the Chief Administrator of Uptown Clinic , could still provide better services to customers

Bibliography

Hansen , Don...