DESIGNED FOR

Operating managers, field personnel, project managers, technology managers, budget managers, or practically anyone in the company wanting to manage costs in a more efficient and effective manner.

A familiarity with finance is helpful but not required.

YOU WILL LEARN HOW TO

• Identify the fundamental types of costs and the cost drivers

• Understand the different cost classifications

• Trace all relevant costs to a single cost object to better manage costs

• Determine and monitor the behavior of costs

• Build your own Activity dictionary

• Use sensitivity analysis of cost behavior

• Design management control system that actually works

• Understand the principles of Activity Based Management (ABM) and its development and implementation

• Determine the relevant information for decision making

• Analyze capital projects using the proper tools and techniques

• Use and misuse the budget

• Manage and not mis-manage costs

• Evaluate costs for effectiveness

ABOUT THE COURSE

Few problems threaten the petroleum businesses more than uncontrolled costs. Economic realities have made it necessary for most companies to operate with a “lean and mean” philosophy. Industries previously operating under regulatory rules, which allowed them to pass on all costs to the customer, now face a changed regulatory environment. As the price of our products fluctuates widely, the most vulnerable companies are those that are ineffective in understanding and managing their costs.

Historically energy companies have relied on the efficiency of their operations to drive company profitability. The ability to properly manage costs is now paramount in a company’s success and even their ultimate survival. As the energy industry goes through its most monumental changes since the 1970’s, the companies that can identify efficiencies and inefficiencies will be able to react to the challenges of the global market place, thus generating higher profits. The course will cover costs management from the basics to the most recent events and trends, using relevant exercises, timely case studies and role-playing techniques.

This seminar is an introduction to Practical Cost Management techniques designed to help the participant better understand the underlying dynamics of cost, which will lead to better decision making concerning products and services, work flows, capital investments, as well as the day-to-day monitoring of the business.

One personal computer is provided, at additional cost, for each two participants.

COURSE CONTENT

• Defining costs, classifications and terminology

• Classifying costs

• Determining cost objects, cost drivers and their behaviors

• Assigning costs for an E&P company

• Types of Cost management systems

• Using value added costs versus non value-added costs for improvement

• Developing an BPA for an E&P company

• Building an activity dictionary

Operating Cost Management

• Using the budgets efficiently and effectively

• Support departments cost allocations

• Measuring activities and their performance

• Determining the break-even cost

• Using variance analysis to monitor every line item of the budget

• Measuring and controlling productivity

• Optimizing the supply chain

Capital Cost Management

• Capital investment decision making and the effect on cost management

• Developing and analyzing capital investment projects

• Replace versus maintain

• Life Cycle Costing

• Analytical techniques for managing costs

• Managing personnel, logistics, purchasing and material costs effectively

Performance Measurement

• Using capacity management techniques

• Ratio analysis and non-financial measures

• Economic Value Added™

• Key Performance Indicators

• The Balanced Scorecard that works

• Evaluation of financial measures

• Raising your own cost management awareness