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PO5.4 - Cost Management

This topic is intended to enable collaboration and sharing of information to facilitate a better understanding and approach to implementing this COBIT control objective based on the risk, value and guidance provided by its corresponding control practices.

COBIT Control Objective PO5.4 - Cost Management is contained within Process Popup Manage the IT Investment

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Cost Management

Implement a cost management process comparing actual costs to budgets. Costs should be monitored and reported. Where there are deviations, these should be identified in a timely manner and the impact of those deviations on programmes should be assessed. Together with the business sponsor of those programmes, appropriate remedial action should be taken and, if necessary, the programme business case should be updated.

View value and Risk Drivers  help

Hide value and Risk Drivers help


Value Drivers

  • Accurate and timely identification of budget variances
  • Maximised and cost-efficient utilisation of IT resources
  • Consistently priced service delivery
  • Transparent IT value contribution
  • Business understanding of actual cost and benefit of IT
   Risk Drivers
  • Misspending of IT investments
  • Inappropriate service pricing
  • IT value contribution not transparent

View Control Practices  help

Hide Control Practices  help

  1. Define a framework that defines which costs are included in IT, how they are allocated across budgets and projects, and how they are captured. The framework should also define how to analyse, report (to whom and how) and use the budget control and benefit management processes.
  2. Ensure proper authority and independence between the individuals who capture, analyse and report financial information, and the IT budget holders.
  3. Establish timescales for the operation of the cost management process in line with budgeting and accounting requirements. Within IT projects, the timescales for cost management are structured according to the deliverables timetable.
  4. Define a method for the collection of relevant data to identify deviations for:
    • Budget control between actuals and budget
    • Benefit management of:
        – Actuals vs. targets for investments for solutions, possibly expressed in terms of ROI, not present value (NPV) or internal rate of return (IRR)
        – The actual trend of service cost for cost optimisation of services (e.g., defined as cost per user)
        – The actual trend of service portfolio cost for service delivery productivity improvements
        – Actuals vs. budget for responsiveness and predictability improvements of solutions delivery
    • Cost distribution between direct and indirect (absorbed and unabsorbed) costs
  5. Define the systems from which the data are collected (financial accounting systems, time recording systems, IT asset registers, asset utilisation records, etc.).
  6. Define how costs are consolidated for the appropriate levels in the organisation and how they will be presented to the stakeholders. The reports provide information to enable the timely identification of required corrective actions.
  7. Instruct those responsible for cost management to capture, collect and consolidate the data, and present and report them to the appropriate budget, project or programme owners. Budget analysts and owners jointly analyse deviations and compare performance to internal and industry benchmarks. The result of the analysis provides an explanation of significant deviations and the suggested corrective actions.
  8. Ensure that the appropriate level of management reviews the results of the analysis and approves suggested corrective actions.

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10 Jun 2013
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Early bird deadline has been extended: save over US $350 when you register by 1 May. Learn from industry-leading IT experts at Insights 2013. This is a unique opportunity to discover revolutionary new ideas at the world’s premier business event.
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16 Sep 2013
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2013 EuroCACS / ISRM
London, England
Stay on top of the trends and opportunities of the dynamic technology industry at EuroCACS/ISRM 2013 in Berlin—the leading European conference for IT audit, assurance, security and risk professionals. Save over US $200 when you register by 22 July!
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30 Sep 2013
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Conferencia Latinoamericana
Medellín, Colombia
La Conferencia Latinoamericana CACS/ISRM 2013 en Medellín, Colombia es la conferencia principal latinoamericana para los profesionales de auditoría, riesgo y seguridad de la información. Ahorre más de EE.UU. $ 100 si se inscribe antes del 7 de agosto!
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14 Oct 2013
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Boston, MA, USA
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6 Nov 2013
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Las Vegas, NV, USA
North America ISRM is a multidimensional event featuring security and risk content, and the security programs, tools and the resources you need to be responsive to industry changes.
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