Cost reduction

Cost reduction is the process used by organisations aiming to reduce their costs and increase their profits, or to accommodate reduced income. Depending on a company’s services or products, the strategies can vary. Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project^[1] or the construction of a building.^[2] In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels.^[3]

^ Barton, J. A. et al., Design determines 70% of cost? A review of implications for design evaluation, Journal of Engineering Design, Volume 12, published 1 March 2001
^ Designing Buildings Wiki, Cost control in building design and construction, last updated 15 August 2021, accessed 11 September 2021
^ McKinsey & Company, A smarter approach to cost reduction in the public sector, published 8 June 2018, accessed 19 April 2024

[1] Barton, J. A. et al., Design determines 70% of cost? A review of implications for design evaluation, Journal of Engineering Design, Volume 12, published 1 March 2001

[2] Designing Buildings Wiki, Cost control in building design and construction, last updated 15 August 2021, accessed 11 September 2021

[3] McKinsey & Company, A smarter approach to cost reduction in the public sector, published 8 June 2018, accessed 19 April 2024

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