Scribd
Upload
200 views

Total Cost Management (TCM) Is The Name Given by

Total cost management (TCM) is a process that applies cost engineering skills across portfolio, program, and project management. It was introduced by AACE International in the 1990s to provide an integrated methodology for strategic asset management. TCM maps the process from identifying performance issues to completing projects that modify or add new assets. It addresses managing multiple related projects and optimizing asset portfolios through project portfolios. TCM frameworks guide cost control and reduction across the entire value chain to support business objectives.

Uploaded by

Methun Prashanth
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
200 views

Total Cost Management (TCM) Is The Name Given by

Total cost management (TCM) is a process that applies cost engineering skills across portfolio, program, and project management. It was introduced by AACE International in the 1990s to provide an integrated methodology for strategic asset management. TCM maps the process from identifying performance issues to completing projects that modify or add new assets. It addresses managing multiple related projects and optimizing asset portfolios through project portfolios. TCM frameworks guide cost control and reduction across the entire value chain to support business objectives.

Uploaded by

Methun Prashanth
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Total cost management 

(TCM) is the name given by AACE International to a process for applying the
skills and knowledge of cost engineering. It is also the first integrated process or methodology for
portfolio, program and project management. AACE first introduced the concept in the 1990s and
published the full presentation of the process in the "Total Cost Management Framework" in 2006. [1]

Contents
 [hide]

1 Overview

2 Total Cost Management

Framework

3 References

4 Further reading

5 External links

[edit]Overview

Traditionally, the field of project management begins with the "initiation" of a project. The most well known
treatment of the project management process is included in the Project Management Institute's Project
Management Body of Knowledge (PMBOK). However, the PMBOK does not address what happens
before a project is initiated; i.e., how does a project come into being?, how is the project identified and
decided upon among other operating, maintenance, or investment options available to an enterprise.
Total Cost Management maps the process upstream of project management. In TCM, what precedes
project management is referred to as "strategic asset management" or more traditionally, "portfolio and
program management". A unique element of the TCM process is that it integrates all the steps that an
organization must take to deploy its business strategy. This includes monitoring and becoming aware of a
performance issue with an asset in its asset portfolio (i.e., capital asset base), to completing a project and
delivering a modified or new asset to the company's portfolio. It also addresses managing multiple
projects as a program or project portfolio.

TCM has found its widest audience in the companies that make large capital investments in fixed capital
assets through construction projects (e.g., oil and gas, chemical, pharmaceuticals, utilities, etc.).
However, the process is industry generic and is finding wider use in IT, software and other companies.

[edit]Total Cost Management Framework


In 2006, AACE published their Total Cost Management Framework- An Integrated Methodology for
Portfolio, Program and Project Management.[2] In this tested and proven methodology, portfolios of assets
are optimized through the use of portfolios of projects, using project management as a delivery system, to
support and enhance large, strategic or operational programs [3] in support of the business and strategic
objectives of the organization.

The TCMF Methodology, while not available yet under open source licensing, is made freely available
online for anyone to download at no cost through the AACE website.[4]

ntroduction
In the market-oriented economy, organizations are striving to offer customers maximum value at
minimum possible price. Since they have more control over cost than price, the obvious option is to
turn towards cost management to address the seemingly paradoxical situation of offering more value
at lesser price and still maintain profitability.

This call on cost management required an integrated approach, involving both strategic and
operational areas, a system that pervaded through the organization, horizontally as well as vertically.
Total Cost Management (TCM) rose to this call.

What is TCM?
Total Cost Management is a company-wide systematic and structured approach, which provides a
holistic framework to control, reduce and eliminate costs, throughout the value chain. This process of
managing the financial outcome of activities encompasses all operations, internal and external. 

For these reasons, TCM is one of the most powerful tools that corporations can wield in their quest for
competitive advantage.

Issues addressed by TCM


Does your existing system provide reliable information to answer the following —?

 Which are your profitable customer segments?

 What are your product costs and their profitability?

 How well informed are your sourcing decisions?

 Do your cost go up despite cost cutting efforts?

 Can you reduce your price and yet increase customer value?

If not, turn to TCM.

"If you cannot measure, you cannot manage"


Cost measurement is the key to manage costs. Good practice in Total cost management, involves
accounting and applying cost information to provide relevant cost and performance measurement with
an objective of enabling organizations to deliver increased value to customers 

Cost measurement also facilitates better understanding of application of resources in the activities,
behavior of products / processes and ultimately the profitability achieved 
TCM tools can be applied to achieve the objective of cost management through precise cost
measurement 

You might also like