Project Management Cost Control

Mainframe costs are rising, yet opportunities to control them are often overlooked. In my experience, small changes early in development, smarter operational visibility, and modernized practices can deliver measurable savings while improving resilience.   In this article, I highlight ten practical ways organizations are reducing CPU, storage, labor, and operational overhead on the mainframe. These strategies come from real-world insights across development, operations, and infrastructure, and can help teams achieve predictable performance and cost management.   Key takeaway: Preventing inefficiencies before they reach production and leveraging smarter operational practices can dramatically bend the mainframe cost curve.

Turning Around BlueRock Cement: A Strategic Cost Management Success by CMA Alokesh Dutta In 2021, BlueRock Cement Ltd. was struggling. Rising production costs, inefficient processes, and poor financial planning had led to continuous losses. EBITDA had dropped to 4%, and the company was burdened with ₹500 crores of debt. To address this crisis, the board brought in CMA Alokesh Dutta, a seasoned Cost and Management Accountant (CMA) known for his expertise in business turnarounds. Through strategic cost management, he transformed BlueRock Cement into a profitable company in just three years. Key Challenges ✅ High Production Costs – ₹4,500 per ton against a market price of ₹4,700. ✅ Excessive Energy Costs – 35% of total expenses due to outdated machinery. ✅ Inefficient Supply Chain – Poor procurement strategies increased costs. ✅ Overstaffing & Low Productivity – Workforce inefficiencies reduced output. ✅ Lack of Cost Control – No real-time data for decision-making. Strategic Cost Management Solutions ✔ Activity-Based Costing (ABC) – Identified high-cost areas, saving ₹30 crores annually. ✔ Energy Cost Reduction – Waste Heat Recovery Systems & solar power cut costs by ₹45 crores per year. ✔ Lean Manufacturing – Workforce optimization improved labor productivity by 25%, saving ₹25 crores. ✔ Supply Chain Optimization – Bulk supplier contracts & logistics improvements saved ₹40 crores. ✔ Digital Transformation – ERP-based cost tracking reduced overheads by ₹20 crores annually. Financial Turnaround (2021-2024) 📉 Production Cost per Ton: ₹4,500 → ₹3,800 📈 EBITDA Margin: 4% → 18% 💰 Net Profit: -₹50 crores (Loss) → ₹150 crores (Profit) 💳 Debt Reduction: ₹500 crores → ₹300 crores 🚀 Employee Productivity: 50 tons/worker → 75 tons/worker The Result? BlueRock Cement is now a profitable, efficient, and future-ready company. This transformation showcases how strategic cost management by CMAs can turn financial distress into success #CostManagement #Turnaround #CMA #BusinessTransformation #CostEfficiency #Leadership

𝐓𝐡𝐞 𝐒𝐢𝐥𝐞𝐧𝐭 𝐊𝐢𝐥𝐥𝐞𝐫 𝐢𝐧 𝐏𝐫𝐨𝐣𝐞𝐜𝐭 𝐁𝐮𝐝𝐠𝐞𝐭𝐬: 𝐈𝐧𝐝𝐢𝐫𝐞𝐜𝐭 𝐂𝐨𝐬𝐭𝐬 & 𝐎𝐯𝐞𝐫𝐡𝐞𝐚𝐝𝐬 🤫 We all focus on direct costs—the materials, the labor, the equipment—because that's what makes up the bulk of a project. But in a competitive market where direct costs are often similar between companies, it's your 𝐢𝐧𝐝𝐢𝐫𝐞𝐜𝐭 𝐜𝐨𝐬𝐭𝐬 𝐚𝐧𝐝 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐨𝐯𝐞𝐫𝐡𝐞𝐚𝐝𝐬 that can make or break profitability. 𝐂𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐭𝐡𝐢𝐬: In a straightforward, low-complexity project, most companies will estimate and execute the direct works at roughly the same cost. The real difference, and the key to a healthy profit margin, lies in the ratio between your direct costs, indirect costs, and company overheads. Mastering indirect cost management is not just a tactical skill; it's a strategic advantage for your company. It’s about more than just numbers on a spreadsheet; it’s about making your projects more efficient, your bids more competitive, and your bottom line stronger. How do we gain control? By breaking them down. 1️⃣ 𝐓𝐢𝐦𝐞-𝐑𝐞𝐥𝐚𝐭𝐞𝐝 𝐈𝐧𝐝𝐢𝐫𝐞𝐜𝐭 𝐂𝐨𝐬𝐭𝐬:  These are costs that directly scale with project delays. A one-week delay can have a domino effect on your budget. 2️⃣ 𝐅𝐢𝐱𝐞𝐝 𝐈𝐧𝐝𝐢𝐫𝐞𝐜𝐭 𝐂𝐨𝐬𝐭𝐬:  These are one-time hits, regardless of project length. They are essential for a robust estimate but must be managed with extreme care. 3️⃣ 𝐕𝐚𝐫𝐢𝐚𝐛𝐥𝐞 𝐈𝐧𝐝𝐢𝐫𝐞𝐜𝐭 𝐂𝐨𝐬𝐭𝐬:  These are costs that fluctuate based on the amount of work performed. They can be a key component of an Extension of Time (EOT) claim, especially if the delay requires additional work or rework. 4️⃣ 𝐂𝐨𝐦𝐩𝐚𝐧𝐲 𝐎𝐯𝐞𝐫𝐡𝐞𝐚𝐝𝐬:  This is the most critical element. These are the fixed costs of doing business—salaries for non-project staff, office rent, and insurance. The project is only responsible for covering its share of these costs, but if the project runs over its planned time, it may not be able to cover the extra overheads, which can lead to a direct loss for the company. By meticulously managing each category, a cost engineer can provide management with the tools to make smarter decisions, ensuring the company stays profitable and competitive.

How I Break Down Expenses for Internal Reporting (and Why You Should Too) When preparing reports for internal management purposes, the key objective is not just compliance with IFRS or IAS standards (which is the requirement for annual or audited statements meant for external bodies), but rather providing clarity and actionable insights for decision-making. For monthly management reporting, however, it is more effective to break down expenses into practical categories that reflect how the business spends money. I recommend categorizing expenses into: ▪️ Energy: Covers power, diesel, fuel, and utilities that keep operations running daily. ▪️ Selling & Distribution Costs: Include marketing, logistics, delivery, and commissions tied to getting products to customers. ▪️ Repairs & Maintenance: Expenses for sustaining assets, equipment, and facilities in working condition. ▪️ Administrative & General Expenses: Overheads like salaries, office supplies, insurance, and communication essentials. This system helps management track cost drivers, spot trends, and evaluate efficiency in real-time. Picture your report presentation like this 📷 For September Your company recorded N200 Million in Revenue and total operating expense was N60 million, representing 30% of revenue. You clearly categories the expenses using the four categories: ▪️ Energy costs accounted for N20 million, making up 10% of revenue. ▪️ Selling and Distribution expenses were N12 million or 6%. ▪️ Repairs and Maintenance cost N6 million, about 3%. ▪️ Admin and General totaled N22 million, representing 11% of revenue. Interpretation ▪️ Energy (10%):- High, consider energy-saving options or contract renegotiation. ▪️ Selling & Distribution (6%):-Monitor efficiency & ensure expenses drives proportional revenue growth. ▪️ Admin & General (11%):- Review rising overheads to prevent margin erosion. By doing this, you’re not just recording numbers. You’re telling management a story about where their money is really going. Imagine you did the same for October, we can easily compare it. Your company recorded N220 million in revenue and incurred total operating expenses of N67 million, representing 30.5% of revenue. Breaking this down using our four categories model: ▪️ Energy expenses were N21 million, about 9.5% of revenue, showing a slight improvement in efficiency compared to the previous month. ▪️ Selling and Distribution costs increased to N15 million or 6.8%, indicating higher spending to drive sales or expand market reach. ▪️ Repairs and Maintenance rose to N7 million, accounting for 3.2%, possibly due to preventive upkeep or operational needs. ▪️ Admin and General stood at N24 million, about 10.9% of revenue, suggesting steady overhead levels that still warrant monitoring for efficiency. This approach enhances clarity, reveals cost drivers, enables quick identification of inefficiencies. I hope this helps someone out there. See comment for other information.

Most contractors treat overhead like a necessary evil. Rent, office staff, software, trucks, insurance… That’s just the cost of doing business. (right?) Wrong. Overhead is dollars you choose to invest to maximize profit. If it doesn’t increase profit in some way, shape, or form - it’s not overhead. It’s just waste. Here's how you can approach it: 1️⃣ Define overhead clearly: If the cost would still exist next month even if you had zero jobs, it’s overhead. If it only exists 𝘣𝘦𝘤𝘢𝘶𝘴𝘦 of a job, it’s job cost. (Stop hiding labor, trucks, or your own pay in “job cost” just to feel better about margins.) 2️⃣ Measure overhead against gross profit, not revenue: Don’t ask, “What percent of revenue is overhead?” Instead ask, “How many weeks of overhead does this month’s gross profit buy us?” That’s runway. That’s how you know if you can hire, buy that truck, or take on that sorta/kinda risky project. 3️⃣ Require a return on every overhead dollar Admin hire: How many hours will that free up for sales or my PMs/sups? Software: How many errors, change orders, or days in AR does it eliminate? Marketing: How many qualified bids, at what hit rate, at what gross margin? You’re not “stuck” with your overhead. You’re choosing it. Is juice worth the squeeze?

OVERHEAD IS TRICKY – HOW MUCH IS IT? AND HOW TO ACCOUNT FOR IT IN EACH JOB! Overhead is a critical part of business, however managing that overhead cost can often be the difference between making money or not. If your earnings aren’t meeting your expectations, it is very likely your overhead is part of the problem. To win work the market sets the price they will accept, but you control the cost of your overhead by how you manage your business. It’s not as simple as saying, "This is what I bid and this is what my overhead costs are – accept it." That’s the beauty of the world we live in, right? You bid, others bid, and whoever wins the job gets it. Many companies know their business but fail to scale it effectively, whereas those that succeed at scaling understand not only their costs but also how to control them. So where do you start? With overhead. I recommend looking at what the business ACTUALLY needs right now and only add overhead costs when it is absolutely necessary. Waiting to add costs to the business is hard but the longer you can wait, the better and stronger financial stability for your business. For example, if you’re looking down your payroll and see a lot of family members, you need to ask yourself: are they the best fit for these roles? Is this role necessary? If they quit tomorrow, would I have to replace them? To understand your overhead, go through the last 12 months and track EVERY SINGLE EXPENSE. Categorize it as project-related or overhead. Once you know your total overhead, you can determine what % you will need to add to each future project to cover the cost. For example, if you’re spending $500K on overhead and doing $5M in work, then you must add 10% to every project you bid. When looking at overhead, there may be some hard pills to swallow. As a business owner myself, no one likes to cut staff. Reducing overhead doesn’t NEED to be letting people go. It may be adjusting pay, reviewing subscriptions, or expanding roles into other areas. There are other options, and it’s going to be hard, but remember you are doing this to 𝘀𝗰𝗮𝗹𝗲 𝘀𝘂𝗰𝗰𝗲𝘀𝘀𝗳𝘂𝗹𝗹𝘆. Once you have an understanding of your business overhead, our two friends’ margin and markup come into play. Now, a lot of people confuse margins with markup. Here’s how I break it down: Margin is what’s left after project costs. If you want a 20% margin, don’t just mark up costs by 20%. Divide costs by 80% to get the right contract price. For example, if you bid $960K with $800K in costs, that’s a $160K margin. But with 10% retainage, $96K is held back, leaving $64K in free cash flow. That’s a lot less than the $200K you might think if you’re confusing margin with markup. Margin – what’s left after project costs Markup – the amount you increase your cost for a project It’s crucial to know the difference, or you’ll come up short and wonder why. What do you use to track your overhead, margin, and markups on projects? And for your business?

One client had expensive equipment parked on a jobsite. Not because the job needed it. Because there was no room back at the yard. They were charging the job for it anyway. Kathe Barrington told them: stop. The job isn't using it. The job shouldn't carry the cost. That's what good indirect cost discipline looks like in practice. In the latest episode of Construction Genius Podcast, Kathe and I go deep on indirect allocations, equipment costing, and overhead structure—the area she says causes more debates and more hidden margin erosion than almost anything else she works on. Here's what we covered: - The difference between indirect costs and G&A (and why the debate matters for banking and bonding) - How to cost owned equipment using market rental rates—and what lazy tracking costs you - Why your chart of accounts structure may be giving your estimators bad data - What Kathe checks first when a client feels like money is leaking out the door - Why these numbers need to be reviewed monthly—not annually Her phrase: "Every dollar needs a home and a purpose." If you don't know where your money is going, you can't make good decisions. You can't bid aggressively. You can't cut fast when things slow down. This is Part 4 of our Construction Accounting Series. Listen to the episode: https://lnkd.in/gEdGqAAA #ConstructionAccounting #ConstructionLeadership #JobCostReporting #ConstructionCFO #IndirectCosts #OverheadAllocation #ConstructionGenius

Contractors get this wrong more than anything else: They price jobs to cover materials and labor… but forget the cost of running the business. And overhead is relentless. Shop rent. Admin time. Phones, trucks, insurance, software. All the work you do that never touches a jobsite. Here’s the pattern: A contractor does five jobs. Four are decent. One goes over budget by a few thousand. That “one” job wipes out the profit on every other job. Why? Because overhead wasn’t funded by every job consistently. It was funded by whatever was left over. Smart operators do it differently: – They calculate true overhead burden – They bake it into every estimate – They protect margin instead of hoping it works out Overhead shouldn’t be a guess. It should be a number you know cold. Ever had one bad job wipe out an entire quarter?