Corporate profitability and cost controls in difficult times: two goals to be achieved by applying Total Cost Management in international practice and experience.
The serious global crisis of financial markets has become an economic problem, which is trickling down to impact projects. This has caused a decline of both manufacturing and consumption. Investment in production appears to be the one way to overcome the crisis.
One obstacle to this is the lack of resources of national Governments, which swamped by excessive debt. Limited funds for large public projects are compelling careful focus on project performance, economy and efficiency. Also, Owner organizations are experiencing a progressive decrease of profit margin. To compete in the international market, these Enterprises are endeavouring to maximize production to the extreme, with new risk factors, that must be evaluated and monitored. The Total Cost Management (TCM) community, urged by market challenges such as expenditures control, transparency, production efficiency, and risk management, has become increasingly aware of the process of scope, purpose and return on investment. This brought TCM to assume a crucial role: not just professional practice but a governance and control mechanism that provides value for money. There are various ways in which the development of TCM may reveal itself, depending on the different enterprises to which it applies:
- the selection of the investments to be made and accurate costs control are tied to the need to integrate traditional ERP processes of Management and Works Accounting with the planning and control approach at both project and portfolio levels. The TCM discipline extensively and successfully supports both in terms of methods and tools offered;
- major industrial groups and large enterprises, adopting the practices of TCM at an “enterprise” level are going to extend top down the organizational, methodological and IT systems – typical of the “project based” discipline – to all the most important operational processes, to render the company operational structure profitable as a whole;
- for companies whose core business is represented by a limited number of large size job-orders, choosing TCM can mean adopting the discipline’s concepts throughout the whole delivery process (from the bidding phase to the execution of works), regulating and managing the complex network of commissioning, supplying and controlling relations, that increasingly characterizes the operations of large public and private contracts for infrastructure, construction and industrial plant design.
- the application of TCM techniques and practices to the management of their job orders and projects has increasingly become a need also for smaller-sized businesses, in order to be proactive and competitive in the national and international productive markets.
- long term infrastructural projects are, in general opinion, considered out of control. Actually TCM methods and tools can let us achieve the target to keep projects under control.
The aim of this Congress is to illustrate significant international experiences and practices, with the goal of correlating needs and achieved results to facilitate a greater dissemination of TCM on a global scale, at a time in which cost control and profitability issues have reached and touched all levels of society, who realize now the possible consequences of individual economic choices and factors.
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