This page is a compilation of blog sections we have around this keyword. Each header is linked to the original blog. Each link in Italic is a link to another keyword. Since our content corner has now more than 4,500,000 articles, readers were asking for a feature that allows them to read/discover blogs that revolve around certain keywords.
The keyword project activity objectives has 6 sections. Narrow your search by selecting any of the keywords below:
- cost variance (8)
- actual cost (7)
- cost performance (7)
- actual costs (7)
- corrective actions (5)
- planned cost (4)
- variance analysis (4)
- historical data (4)
- actual planned costs (4)
- cost deviation (3)
- natural disasters (3)
- cost-variance analysis (3)
- project managers (3)
1.Identifying the Key Drivers[Original Blog]
cost deviation is the difference between the actual cost and the planned or budgeted cost of a project or activity. It can be positive (when the actual cost is higher than the planned cost) or negative (when the actual cost is lower than the planned cost). Cost deviation can have significant impacts on the performance, quality, and profitability of a project or activity. Therefore, it is important to identify and analyze the factors that influence cost deviation and understand how they affect the project or activity outcomes. In this section, we will discuss some of the key drivers of cost deviation and provide some examples of how they can cause cost deviations in different scenarios.
Some of the factors that can influence cost deviation are:
1. Scope changes: Scope changes refer to any modifications or additions to the original scope of the project or activity. Scope changes can occur due to various reasons, such as changing customer requirements, unforeseen problems, new opportunities, or errors in the initial planning. Scope changes can affect the cost of the project or activity by increasing or decreasing the amount of work, resources, time, or quality required to complete the project or activity. For example, if a customer requests additional features or functionalities that were not included in the original scope, the project team may have to spend more time, money, and effort to deliver them, resulting in a positive cost deviation. On the other hand, if the project team finds a more efficient or effective way to achieve the same scope, they may be able to reduce the cost of the project or activity, resulting in a negative cost deviation.
2. Resource availability: Resource availability refers to the availability and suitability of the human, material, financial, and technological resources needed to execute the project or activity. Resource availability can vary depending on the demand, supply, quality, and cost of the resources. Resource availability can affect the cost of the project or activity by influencing the productivity, efficiency, and effectiveness of the project or activity execution. For example, if the project team faces a shortage of skilled labor, equipment, or materials, they may have to delay, outsource, or compromise on some aspects of the project or activity, resulting in a positive cost deviation. Conversely, if the project team has access to abundant, high-quality, or low-cost resources, they may be able to accelerate, enhance, or optimize some aspects of the project or activity, resulting in a negative cost deviation.
3. Risk occurrence: Risk occurrence refers to the occurrence of any uncertain events or conditions that can have a positive or negative impact on the project or activity objectives. Risk occurrence can be influenced by various factors, such as the complexity, uncertainty, novelty, or interdependence of the project or activity. Risk occurrence can affect the cost of the project or activity by causing deviations from the planned or expected outcomes, processes, or assumptions. For example, if the project team encounters unexpected technical difficulties, legal issues, or natural disasters, they may have to incur additional costs to overcome, mitigate, or recover from them, resulting in a positive cost deviation. Alternatively, if the project team benefits from favorable market conditions, technological innovations, or stakeholder support, they may be able to save costs or generate additional revenues, resulting in a negative cost deviation.
4. Estimation errors: Estimation errors refer to any inaccuracies or biases in the estimation of the cost, time, scope, or quality of the project or activity. Estimation errors can occur due to various reasons, such as lack of information, experience, or expertise, unrealistic assumptions or expectations, or intentional manipulation or distortion. Estimation errors can affect the cost of the project or activity by creating a gap between the actual and the planned or budgeted cost. For example, if the project team underestimates the complexity, duration, or difficulty of the project or activity, they may have to spend more than what they had planned or budgeted, resulting in a positive cost deviation. Likewise, if the project team overestimates the benefits, value, or feasibility of the project or activity, they may end up spending less than what they had planned or budgeted, resulting in a negative cost deviation.
These are some of the main factors that can influence cost deviation. However, there may be other factors that are specific to the context, nature, or scope of the project or activity. Therefore, it is essential to conduct a thorough and systematic cost-deviation analysis to identify, measure, and explain the causes and consequences of cost deviations and to take appropriate actions to prevent, control, or correct them.
Identifying the Key Drivers - Cost Deviation Analysis: How to Analyze and Explain the Causes and Consequences of Cost Deviations
2.Key Concepts of Cost-Variance Analysis[Original Blog]
Cost-variance analysis is a technique that compares the actual costs of a project or activity with the planned or budgeted costs. It helps managers and stakeholders to identify the sources and reasons of deviations from the expected performance and take corrective actions if needed. Cost-variance analysis can also be used to evaluate the efficiency and effectiveness of the resources used and the quality of the outputs delivered. In this section, we will discuss some of the key concepts of cost-variance analysis, such as:
1. Cost variance (CV): This is the difference between the actual cost (AC) and the planned cost (PC) of a project or activity. It can be calculated as CV = AC - PC. A positive CV indicates that the actual cost is lower than the planned cost, which means the project or activity is under budget. A negative CV indicates that the actual cost is higher than the planned cost, which means the project or activity is over budget. For example, if the planned cost of a project is $100,000 and the actual cost is $90,000, then the cost variance is $10,000, which is favorable. If the actual cost is $110,000, then the cost variance is -$10,000, which is unfavorable.
2. cost performance index (CPI): This is the ratio of the earned value (EV) to the actual cost (AC) of a project or activity. It can be calculated as CPI = EV / AC. The earned value is the value of the work completed as per the planned schedule and budget. The CPI measures the cost efficiency of a project or activity. A CPI of 1 indicates that the project or activity is on budget. A CPI greater than 1 indicates that the project or activity is under budget. A CPI less than 1 indicates that the project or activity is over budget. For example, if the earned value of a project is $100,000 and the actual cost is $90,000, then the CPI is 1.11, which is favorable. If the actual cost is $110,000, then the CPI is 0.91, which is unfavorable.
3. Cost variance percentage (CVP): This is the percentage of the cost variance to the planned cost of a project or activity. It can be calculated as CVP = (CV / PC) x 100%. The CVP measures the magnitude of the deviation from the budget. A CVP of 0 indicates that the project or activity is on budget. A positive CVP indicates that the project or activity is under budget. A negative CVP indicates that the project or activity is over budget. For example, if the cost variance of a project is $10,000 and the planned cost is $100,000, then the CVP is 10%, which is favorable. If the cost variance is -$10,000, then the CVP is -10%, which is unfavorable.
4. Cost variance analysis report: This is a document that summarizes the results of the cost-variance analysis and provides explanations and recommendations for the management and stakeholders. It typically includes the following elements:
- A summary of the project or activity objectives, scope, schedule, and budget
- A table or chart that shows the planned cost, actual cost, cost variance, cost performance index, and cost variance percentage for each task or component of the project or activity
- A narrative that describes the causes and effects of the cost variances, such as changes in scope, delays, errors, quality issues, resource availability, market conditions, etc.
- A list of action items or corrective measures to address the cost variances, such as revising the budget, rescheduling the tasks, reallocating the resources, improving the quality, negotiating with the suppliers, etc.
- A conclusion that evaluates the overall cost performance of the project or activity and provides recommendations for future improvement.
Key Concepts of Cost Variance Analysis - Cost Variance Analysis: A Key Tool for Budget Control and Performance Evaluation
3.How to Calculate the Expected Cost of a Project or Activity?[Original Blog]
One of the most important aspects of project management is cost estimation. cost estimation is the process of predicting the amount of resources, time, and money that a project or activity will require. Cost estimation helps to plan, budget, and control the project, as well as to evaluate its feasibility, profitability, and risk. However, cost estimation is not an exact science, and there are many factors that can affect the actual cost of a project or activity. Therefore, it is essential to use appropriate methods and tools to estimate the cost as accurately as possible, and to account for different scenarios and contingencies that may arise.
There are various methods and techniques that can be used to estimate the cost of a project or activity, depending on the level of detail, accuracy, and complexity required. Some of the most common methods are:
1. Analogous Estimating: This method uses the historical data and experience from similar past projects or activities to estimate the cost of the current one. This method is simple, fast, and inexpensive, but it relies on the availability and quality of the data, and the similarity and comparability of the projects or activities. For example, if a company has built a website for a client in the past, and the cost was $10,000, it can use this information to estimate the cost of building a similar website for another client, with some adjustments for the differences in scope, quality, and complexity.
2. Parametric Estimating: This method uses statistical models and formulas to estimate the cost of a project or activity based on one or more parameters or variables that affect the cost. These parameters can be derived from historical data, industry standards, or expert judgment. This method is more accurate and reliable than analogous estimating, but it requires more data and analysis, and it may not account for all the factors that influence the cost. For example, if a company knows that the average cost of painting a room is $2 per square foot, it can use this parameter to estimate the cost of painting a room that is 100 square feet, by multiplying $2 by 100, which gives $200.
3. Bottom-Up Estimating: This method involves breaking down the project or activity into smaller and more detailed components or tasks, and estimating the cost of each component or task individually. Then, the cost of each component or task is aggregated to obtain the total cost of the project or activity. This method is more accurate and comprehensive than analogous and parametric estimating, but it is also more time-consuming, complex, and costly. It also requires more information and expertise about the project or activity. For example, if a company wants to estimate the cost of developing a software application, it can divide the project into phases, modules, features, and functions, and estimate the cost of each element based on the resources, time, and quality required.
4. Three-Point Estimating: This method uses three different estimates to calculate the cost of a project or activity: the most optimistic estimate (O), the most pessimistic estimate (P), and the most likely estimate (M). These estimates can be obtained from historical data, expert judgment, or other methods. Then, the cost of the project or activity is calculated using a weighted average formula, such as the PERT (Program Evaluation and Review Technique) formula, which is: $$C = \frac{O + 4M + P}{6}$$
This method accounts for the uncertainty and variability of the cost, and provides a range of possible outcomes. However, it also depends on the quality and validity of the estimates, and the assumptions and biases that may affect them. For example, if a company estimates that the cost of a project can range from $50,000 to $150,000, with a most likely value of $100,000, it can use the PERT formula to calculate the cost as: $$C = \frac{50,000 + 4 \times 100,000 + 150,000}{6} = 91,667$$
These are some of the most common methods of cost estimation, but there are also other methods and techniques that can be used, such as expert judgment, contingency analysis, risk analysis, learning curve analysis, and simulation. The choice of the method depends on the purpose, scope, and complexity of the project or activity, as well as the availability and quality of the data, the level of accuracy and detail required, and the time and resources available. Cost estimation is an iterative and dynamic process that should be updated and refined throughout the project or activity lifecycle, as more information and feedback are obtained. Cost estimation is a vital skill for project managers and stakeholders, as it helps to make informed decisions, optimize the use of resources, and achieve the project or activity objectives.
How to Calculate the Expected Cost of a Project or Activity - Cost Scenario Simulation: How to Create and Test Different Cost Assumptions and Contingencies
4.How to Monitor and Measure the Performance and Variance of Your Projects and Activities?[Original Blog]
Cost control is the process of ensuring that the actual costs of a project or activity are within the planned budget. It involves monitoring the performance and progress of the project or activity, measuring the variance between the actual and planned costs, and taking corrective actions if necessary. cost control is an essential part of cost management, which aims to optimize the use of resources and achieve the desired outcomes. In this section, we will discuss how to monitor and measure the performance and variance of your projects and activities, and what tools and techniques you can use to do so. We will also provide some insights from different point of views, such as the project manager, the sponsor, the customer, and the team members.
Some of the steps involved in cost control are:
1. Establish a baseline. A baseline is a reference point that represents the original plan or budget for the project or activity. It includes the scope, schedule, and cost parameters that are agreed upon by the stakeholders. A baseline serves as a basis for comparison and evaluation of the actual performance and variance. To establish a baseline, you need to define the work breakdown structure (WBS), the cost accounts, the cost estimates, and the contingency reserves.
2. Track the actual costs. Actual costs are the costs that are incurred during the execution of the project or activity. They include the direct costs, such as labor, materials, equipment, and subcontractors, and the indirect costs, such as overhead, administration, and quality control. To track the actual costs, you need to collect and record the cost data from various sources, such as invoices, receipts, timesheets, and reports. You also need to update the cost accounts and the project management software with the latest cost information.
3. Measure the performance and variance. Performance and variance are the indicators of how well the project or activity is meeting the baseline. Performance is measured by using metrics such as earned value, which is the value of the work completed, and schedule performance index (SPI), which is the ratio of earned value to planned value. Variance is measured by using metrics such as cost variance (CV), which is the difference between earned value and actual cost, and cost performance index (CPI), which is the ratio of earned value to actual cost. To measure the performance and variance, you need to calculate the earned value, the planned value, the actual cost, and the corresponding metrics for each cost account and the whole project or activity.
4. Analyze the causes and impacts of variance. Variance can be positive or negative, depending on whether the actual cost is lower or higher than the earned value. Positive variance means that the project or activity is under budget, while negative variance means that it is over budget. However, variance is not always bad or good, as it may be caused by various factors, such as changes in scope, quality, risks, assumptions, or market conditions. To analyze the causes and impacts of variance, you need to identify and evaluate the factors that contributed to the variance, and assess the effects of the variance on the project or activity objectives, deliverables, stakeholders, and resources.
5. Take corrective actions. Corrective actions are the actions that are taken to bring the project or activity back on track or to minimize the negative impacts of variance. They may include revising the scope, schedule, or cost estimates, requesting additional funds or resources, negotiating with the stakeholders, implementing quality improvements, mitigating risks, or terminating the project or activity. To take corrective actions, you need to develop and implement a cost control plan that outlines the actions, responsibilities, timelines, and expected outcomes. You also need to communicate the plan to the stakeholders and monitor the results.
Some of the tools and techniques that can help you with cost control are:
- cost management software. cost management software is a software application that helps you plan, track, measure, analyze, and control the costs of your projects and activities. It allows you to create and update the baseline, the cost accounts, the cost estimates, and the contingency reserves. It also allows you to collect and record the actual cost data, calculate the performance and variance metrics, generate reports and charts, and perform what-if scenarios and forecasts. Some examples of cost management software are Microsoft Project, Oracle Primavera, and SAP Project System.
- Variance analysis. Variance analysis is a technique that helps you compare the actual and planned costs, and identify the sources and reasons of variance. It involves calculating the cost variance (CV) and the cost performance index (CPI) for each cost account and the whole project or activity, and analyzing the results. It also involves performing root cause analysis, which is a method of finding the underlying causes of variance, and impact analysis, which is a method of estimating the consequences of variance. Variance analysis can help you determine the status and health of your project or activity, and decide whether corrective actions are needed or not.
- Earned value management (EVM). Earned value management (EVM) is a technique that helps you measure the performance and progress of your project or activity, and forecast the future outcomes. It involves calculating the earned value (EV), the planned value (PV), the actual cost (AC), and the corresponding metrics, such as schedule variance (SV), schedule performance index (SPI), cost variance (CV), cost performance index (CPI), estimate at completion (EAC), estimate to complete (ETC), and variance at completion (VAC). EVM can help you determine whether your project or activity is on schedule and on budget, and how much it will cost and how long it will take to complete.
- Trend analysis. Trend analysis is a technique that helps you monitor the changes and patterns in the performance and variance metrics over time. It involves plotting the metrics on a graph or a chart, and observing the direction and slope of the trend lines. trend analysis can help you identify the trends and anomalies in your project or activity, and predict the future performance and variance. It can also help you evaluate the effectiveness of your corrective actions, and adjust them if necessary.
How to Monitor and Measure the Performance and Variance of Your Projects and Activities - Cost Management Framework: How to Organize and Structure Your Cost Management Activities and Functions
5.Defining Actual and Planned Costs[Original Blog]
One of the key aspects of cost variance analysis is to understand the difference between actual and planned costs. actual costs are the expenses that have been incurred or will be incurred for a project or activity. Planned costs are the estimated or budgeted costs that have been allocated for a project or activity. Comparing actual and planned costs can help project managers and stakeholders to identify and explain the causes of cost variance, as well as to take corrective actions if needed. In this section, we will discuss how to define actual and planned costs, and what factors can affect them.
Some of the steps involved in defining actual and planned costs are:
1. Identify the cost elements and categories. Depending on the nature and scope of the project or activity, there may be different types of costs involved, such as labor, materials, equipment, overhead, etc. These costs can be further classified into direct and indirect costs, fixed and variable costs, sunk and opportunity costs, etc. It is important to define the cost elements and categories clearly and consistently, as they will affect how the actual and planned costs are measured and reported.
2. Determine the cost baseline and budget. The cost baseline is the approved version of the planned costs that serves as a reference point for measuring cost performance. The cost baseline can be derived from the project scope, schedule, and resources, as well as from historical data and expert judgment. The budget is the authorized amount of money that is available for spending on the project or activity. The budget may include contingencies and reserves to account for uncertainties and risks. The budget may also be subject to changes and revisions throughout the project or activity lifecycle.
3. Collect and record the actual costs. The actual costs are the expenses that have been incurred or will be incurred for the project or activity. The actual costs can be obtained from various sources, such as invoices, receipts, timesheets, contracts, etc. The actual costs should be recorded and tracked in a timely and accurate manner, using a consistent accounting system and format. The actual costs should also be aligned with the cost elements and categories that have been defined earlier.
4. compare the actual and planned costs. The comparison of the actual and planned costs can be done at different levels of detail and frequency, depending on the needs and preferences of the project managers and stakeholders. The comparison can be done using various methods and tools, such as variance analysis, earned value analysis, trend analysis, etc. The comparison can help to identify and quantify the cost variance, which is the difference between the actual and planned costs. The cost variance can be positive or negative, indicating that the actual costs are either lower or higher than the planned costs, respectively.
Some of the factors that can affect the actual and planned costs are:
- Scope changes. Changes in the project or activity scope can have a significant impact on the actual and planned costs. Scope changes can result from changes in the requirements, specifications, deliverables, quality standards, etc. Scope changes can increase or decrease the actual and planned costs, depending on whether they add or remove work, resources, or complexity.
- Schedule changes. Changes in the project or activity schedule can also affect the actual and planned costs. Schedule changes can result from delays, accelerations, rework, etc. Schedule changes can increase or decrease the actual and planned costs, depending on whether they extend or shorten the duration, or change the sequence or timing of the work and resources.
- Resource changes. Changes in the project or activity resources can influence the actual and planned costs. Resource changes can result from changes in the availability, quantity, quality, or cost of the labor, materials, equipment, etc. Resource changes can increase or decrease the actual and planned costs, depending on whether they increase or decrease the efficiency, productivity, or utilization of the resources.
- Risk events. Risk events are uncertain occurrences that can have a positive or negative effect on the project or activity objectives, including the cost objectives. Risk events can result from internal or external factors, such as technical issues, human errors, natural disasters, market fluctuations, etc. Risk events can increase or decrease the actual and planned costs, depending on whether they create or eliminate opportunities or threats.
Example: Suppose a project has a planned cost of $100,000 and a budget of $110,000. The project consists of four phases: A, B, C, and D. The planned costs for each phase are: $20,000 for A, $30,000 for B, $40,000 for C, and $10,000 for D. The actual costs for each phase are: $18,000 for A, $35,000 for B, $50,000 for C, and $8,000 for D. The total actual cost for the project is $111,000. The cost variance for each phase and for the whole project can be calculated as follows:
- Cost variance for phase A = Actual cost - Planned cost = $18,000 - $20,000 = -$2,000 (negative, indicating that the actual cost is lower than the planned cost)
- Cost variance for phase B = Actual cost - Planned cost = $35,000 - $30,000 = $5,000 (positive, indicating that the actual cost is higher than the planned cost)
- Cost variance for phase C = Actual cost - Planned cost = $50,000 - $40,000 = $10,000 (positive, indicating that the actual cost is higher than the planned cost)
- Cost variance for phase D = Actual cost - Planned cost = $8,000 - $10,000 = -$2,000 (negative, indicating that the actual cost is lower than the planned cost)
- cost variance for the whole project = Actual cost - Planned cost = $111,000 - $100,000 = $11,000 (positive, indicating that the actual cost is higher than the planned cost)
Some of the possible explanations for the cost variance are:
- Scope changes: The project scope may have changed during the execution of the project, resulting in more or less work, resources, or complexity. For example, phase B may have required more deliverables or quality standards than originally planned, increasing the actual cost. Phase D may have reduced some of the work or resources that were planned, decreasing the actual cost.
- Schedule changes: The project schedule may have changed during the execution of the project, resulting in delays, accelerations, rework, etc. For example, phase C may have experienced some delays due to technical issues or human errors, increasing the actual cost. Phase A may have been completed ahead of schedule due to improved efficiency or productivity, decreasing the actual cost.
- Resource changes: The project resources may have changed during the execution of the project, resulting in changes in the availability, quantity, quality, or cost of the labor, materials, equipment, etc. For example, phase B may have used more or less resources than planned, or the resources may have been more or less expensive than planned, increasing or decreasing the actual cost. Phase D may have used more or less resources than planned, or the resources may have been more or less expensive than planned, increasing or decreasing the actual cost.
- Risk events: The project may have encountered some risk events during the execution of the project, resulting in opportunities or threats. For example, phase C may have faced some external factors, such as natural disasters or market fluctuations, that increased the actual cost. Phase A may have benefited from some internal factors, such as technical innovations or human ingenuity, that decreased the actual cost.
Defining Actual and Planned Costs - Cost Variance: How to Analyze and Explain the Differences Between Your Actual and Planned Costs
6.Identifying and Addressing Potential Cost Risks[Original Blog]
One of the key aspects of cost avoidance is to identify and address potential cost risks before they become actual costs. Cost risks are uncertainties that may affect the planned budget, scope, schedule, or quality of a project or a business activity. Cost risks can arise from various sources, such as market fluctuations, technical issues, human errors, legal disputes, natural disasters, or external factors. If not properly assessed and mitigated, cost risks can result in cost overruns, delays, rework, or loss of reputation.
To avoid or minimize the impact of cost risks, it is essential to perform a risk assessment and mitigation process, which involves the following steps:
1. Identify the potential cost risks. This step requires a thorough analysis of the project or activity objectives, assumptions, constraints, resources, stakeholders, and environment. The aim is to identify all the possible sources of uncertainty that may affect the cost performance. Some common techniques for identifying cost risks are brainstorming, checklists, interviews, surveys, historical data, expert judgment, and risk breakdown structure.
2. Analyze the probability and impact of each cost risk. This step involves estimating the likelihood and the consequences of each cost risk occurring. The probability can be expressed as a percentage, a frequency, or a qualitative rating (such as high, medium, or low). The impact can be measured in terms of cost deviation, schedule delay, quality degradation, or stakeholder satisfaction. Some common techniques for analyzing cost risks are probability and impact matrix, expected monetary value, sensitivity analysis, and monte Carlo simulation.
3. Prioritize the cost risks. This step involves ranking the cost risks according to their significance and urgency. The aim is to focus on the most critical and relevant cost risks that require immediate attention and action. Some common techniques for prioritizing cost risks are risk score, risk register, risk map, and Pareto analysis.
4. Develop and implement risk mitigation strategies. This step involves selecting and applying the appropriate actions to reduce the probability and/or impact of the cost risks. The risk mitigation strategies can be classified into four categories: avoid, transfer, reduce, or accept. Avoidance means eliminating the source of the risk or changing the plan to avoid the risk. Transfer means shifting the responsibility or the burden of the risk to a third party, such as an insurance company, a contractor, or a supplier. Reduction means taking measures to decrease the likelihood or the severity of the risk, such as improving the design, enhancing the quality, increasing the resources, or strengthening the controls. Acceptance means acknowledging the existence of the risk and being prepared to deal with its consequences, such as setting aside a contingency reserve, developing a contingency plan, or communicating the risk to the stakeholders. Some common techniques for developing and implementing risk mitigation strategies are risk response plan, risk owner assignment, risk action tracking, and risk monitoring and review.
By following these steps, one can effectively identify and address potential cost risks and achieve cost avoidance or minimization. Some examples of cost risks and their mitigation strategies are:
- A cost risk of increasing material prices due to inflation or supply shortage can be mitigated by avoiding the use of expensive or scarce materials, transferring the risk to the supplier through a fixed-price contract, reducing the material consumption through optimization or recycling, or accepting the risk and adjusting the budget accordingly.
- A cost risk of technical failure due to complexity or uncertainty can be mitigated by avoiding the use of unproven or unreliable technology, transferring the risk to the contractor through a performance-based contract, reducing the technical risk through testing or prototyping, or accepting the risk and developing a backup or recovery plan.
- A cost risk of human error due to lack of skills or experience can be mitigated by avoiding the assignment of unqualified or inexperienced staff, transferring the risk to the subcontractor through a quality-based contract, reducing the human error through training or supervision, or accepting the risk and implementing a quality assurance or control system.
Identifying and Addressing Potential Cost Risks - Cost Avoidance: How to Avoid or Minimize Unnecessary or Unwanted Costs