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Cost Management Tips For Public Companies

Posted on 6/10/14 by admin

Cost reduction practices employed by private businesses work in the same way when it comes to the public sector. Government departments and local authorities use methods such as budgeting, estimates, analysis, evaluations and forecasts. The secret to good cost management lies in developing robust cost reduction measures and that’s where an experienced cost reduction company like us can help.

One thing you must understand here is that public institutions are funded by tax payers’ money. The public wants to know how their money is spent. Public institutions must therefore be on the front line when managing their costs. This requires managers to set goals that will act as a benchmark.


If you hold a leadership position in a public enterprise, you have a huge responsibility to transform it. The easiest way is to call for suggestions from other key players. Assemble your managers and have a discussion, let each suggest a plan detailing how they intend to reduce costs in their own sections.

Increase Revenue, Reduce Expenses

Business cost reduction requires that you increase revenue and decrease expenses. Once you have these two in check, the next step is to improve productivity. One way to achieve this is by reviewing the existing vendor contracts. Find out whether you are obtaining goods and other supplies at friendly prices. Assess how the available equipment can be used to save costs.

Avoid Layoffs

While most organizations resort to staff reductions, the measure can be counterproductive. Usually, if you look at it carefully, the problem does not lie in having too many staff. Avoid it as this creates fear among workers and lowers staff morale.


A budget is an estimation of how you intend to use money in future; a financial plan that helps avoid overspending. Every department must draw its budget. These estimates should then be merged in order to create an entire institution’s budget. You must investigate variances that arise thereafter between budgeted and actual expenditure.

Use Of Technology

Public institutions that are still living in the past are spending a lot of money to keep such ageing systems in place. The most appropriate way to curb this would be to upgrade the present systems. Evaluate areas where the government organisation is lagging behind technology wise. You may learn that a task that is being done by five people can be handled by a computer manned by one person. The aim is to keep looking at ways of reducing costs. It is a continuous process.

For more information on our range of cost management services get in touch with us today.