Cost analysis is the process of evaluating the potential risks and benefits of a proposed project, contract or expenditure. Cost analysts have an important role to play in helping organizations to make sound financial decisions and implement effective investment strategies. This profession is suitable for individuals with excellent analytical skills, a high level of attention to detail and background in accounting or finance.
What Do Cost Analysts Do?
The typical duties of cost analysts include:
- Monitoring how a company spends its money to detect over or underspending
- Analysing the company’s financial statements to determine whether it is allocating its resources properly
- Analyzing the profitability of investment projects
- Compiling and submitting financial information to senior managers for decision-making purposes
- Helping the company to develop cost minimization or profit-maximization strategies
- Holding presentations to interpret graphs and technical information to managers.
Source: Education Portal
Many cost analysts work full-time, from 9am to 5pm, Monday through Friday. They typically work in an office environment where they interact with computers and calculators. However, cost analysts may work outdoors when visiting project sites.
With outdoor work comes the exposure to harsh weather conditions and the need to wear protective clothing.
The following table provides the annual salaries for cost analysts:
Beginning cost analyst
$40,000 - $55,000
Experienced cost analyst
$56,000 - $68,000
Cost analysis manager
Source: Payscale US
Education and Training
To qualify for employment as a cost analyst, you need at least an associate’s degree in:
- Business Administration
The courses commonly cover topics such as financial planning, business statistics, and organizational behavior and ration analysis, all which mold students into competent costs analysts.
Before completing your degree, preferably during the second or third year of study, it is beneficial to secure an internship, which can help you to gain some hands-on experience.
Important Skills and Abilities
To become a competent cost analyst you need:
- Strong analytical skills to perform accurate evaluations
- Strong attention to detail skills to spot minor errors during analysis
- Good math skills – the job involves working with figures
- Good report writing skills
- Good IT skills to use cost analysis software effectively
- The ability to concentrate for long periods without tiring
- Good organizational skills
After getting employed, your employer might give you additional training to enhance your knowledge of the company’s accounting systems and financial decision-making processes.
Since the performance of the company’s projects can either make or break your career, it is important to focus on pursuing advanced education to enhance your competence and career progression chances. One of the best ways to do this is by earning a professional certification such as:
Other career progression strategies include:
- Obtaining a master’s degree in cost estimating and analysis
- Joining professional associations, such as the Society for Benefit-Cost Analysis
Since all public and private organizations use funds on a day-to-day basis, qualified costs analysts can find a job in any company. The top employers are:
- Building and equipment contractors
- Construction firms
- Telecommunication companies
- Companies in the oil and gas industry
With vast experience and advanced education, you can be hired as cost analysis manager, a position that will enable you to head the cost analysis department and supervise other analysts and cost technicians. You can also start an independent cost analysis consulting firm.
According to the U.S Bureau of Labor Statistics, the cost estimation and evaluation and analysis profession will grow by 26 percent between 2012 and 2022, significantly faster than the 11 percent average for all careers. This can only mean one thing –as long as you attain the required qualifications, a job will find you!