Cost analyst

A cost analyst

Description

Cost analysts prepare regular costs, budgeting analyses and reports in order to contribute to the overall cost planning and forecasting activities of a business. They review and reconcile key balance sheets and identify new opportunities to save costs.

The duties of a cost analyst include, but are not limited to:

  • Tracking costs for new products or services throughout the development process to ensure that they remain within budget parameters
  • Collaborating with engineers, designers, or other professionals to develop new products or services that meet customer needs while keeping costs low
  • Researching and analyzing data regarding costs of materials, labor rates, equipment prices, and other factors that affect product costs
  • Recommending cost reduction strategies that can be applied to new projects to keep them within budget parameters
  • Analyzing costs associated with production processes, labor rates, machinery costs, raw materials costs, overhead expenses, etc.
  • Conducting cost analyses on new or existing products to determine the cost of producing and marketing them
  • Working with manufacturing managers to identify ways to cut costs without compromising quality or efficiency
  • Preparing reports that track the costs of projects over time, including estimates of future costs if certain conditions hold true
  • Developing cost models that predict how changes in pricing or other factors might affect sales of a product or service.

Working conditions

Cost analysts work in a variety of settings, including manufacturing and service industries, government agencies, and accounting and consulting firms. They typically work regular business hours, although they may occasionally work overtime to meet deadlines.

Cost analysts typically work on teams with other analysts, accountants, and financial managers. They may also interact with engineers, marketing personnel, and other professionals to gather data and information about the costs of products, services, and projects.

Other titles

The following job titles also refer to cost analyst:

cost and budget analyst
cost recovery estimator
cost accounting clerk
quantity surveyor
cost accountant
cost accounting officer
cost estimator

Minimum qualifications

Employers generally prefer to hire candidates who have a bachelor’s degree.

Construction cost analysts typically need a bachelor’s degree in a related field, such as construction or engineering. Manufacturing cost analysts typically need a degree in business or finance.

Some employers prefer candidates who have a master’s degree in business administration with a concentration in finance or engineering. Relevant coursework includes accounting, business law, economics, finance, mathematics, statistics and computer programming.

ISCO skill level

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

  • the nature of the work performed in an occupation in relation to the characteristic tasks and duties
  • the level of formal education required for competent performance of the tasks and duties involved and
  • the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Cost analyst is a Skill level 4 occupation.

Cost analyst career path

Similar occupations

These occupations, although different, require a lot of knowledge and skills similar to cost analyst.

budget analyst
financial controller
manufacturing cost estimator
budget manager
corporate treasurer

Essential knowledge and skills

Essential knowledge

This knowledge should be acquired through learning to fulfill the role of cost analyst.

  • Financial department processes: The different processes, duties, jargon, role in an organisation, and other specificities of the financial department within an organisation. Understanding of financial statements, investments, disclosing policies, etc.
  • Liquidity management: The theory and practices around the management of liquidity in a company with the aim of facilitating meeting obligations with thirds parties without compromising the smooth functioning of the company nor incurring in substantial losses.
  • Cost management: The process of planning, monitoring and adjusting the expenses and revenues of a business in order to achieve cost efficiency and capability.
  • Company policies: The set of rules that govern the activity of a company.

Essential skills and competences

These skills are necessary for the role of cost analyst.

  • Prepare cost-plus pricing models: Make up cost and pricing models on a regular basis by taking into account the cost of materials and supply chain, personnel and operating costs.
  • Provide cost benefit analysis reports: Prepare, compile and communicate reports with broken down cost analysis on the proposal and budget plans of the company. Analyse the financial or social costs and benefits of a project or investment in advance over a given period of time.
  • Synthesise financial information: Collect, revise and put together financial information coming from different sources or departments in order to create a document with unified financial accounts or plans.
  • Interpret financial statements: Read, understand, and interpret the key lines and indicators in financial statements. Extract the most important information from financial statements depending on the needs and integrate this information in the development of the department’s plans.
  • Evaluate budgets: Read budget plans, analyse the expenditures and incomes planned during certain period, and provide judgement on their abidance to the general plans of the company or organism.
  • Perform cost accounting activities: Execute the cost related activities and operations within the accounting activities such as standard cost development, average pricing analysis, margin and cost ratio analysis, inventory control, and variance analysis. Report the results to management and advise on possible courses of action to control and reduce the costs.
  • Control of expenses: Monitor and maintain effective cost controls, in regards to efficiencies, waste, overtime and staffing. Assessing excesses and strives for efficiency and productivity.
  • Assess financial viability: Revise and analyse financial information and requirements of projects such as their budget appraisal, expected turnover, and risk assessment for determining the benefits and costs of the project. Assess if the agreement or project will redeem its investment, and whether the potential profit is worth the financial risk.

Optional knowledge and skills

Optional knowledge

This knowledge is sometimes, but not always, required for the role of cost analyst. However, mastering this knowledge allows you to have more opportunities for career development.

  • Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.

Optional skills and competences

These skills and competences are sometimes, but not always, required for the role of cost analyst. However, mastering these skills and competences allows you to have more opportunities for career development.

  • Support development of annual budget: Support the development of the annual budget by producing base data as defined by the operations budget process.
  • Advise on tax planning: Advise on appropriate strategies to include taxes in the overall financial plan in order to reduce the tax load. Advise on questions related to tax legislation and provide advise on the possible implications that decisions in financial matters can cause in a tax declaration. Advise on questions concerning things such as the creation of a company, investments, recruitments, or company successions.
  • Enforce financial policies: Read, understand, and enforce the abidance of the financial policies of the company in regards with all the fiscal and accounting proceedings of the organisation.
  • Carry out tendering: Place the request for a quotation to the organisation requesting a tender, then perform the work or supply the goods agreed with them during the tendering process.
  • Execute analytical mathematical calculations: Apply mathematical methods and make use of calculation technologies in order to perform analyses and devise solutions to specific problems.
  • Manage payroll reports: Maintain personnel records as well as payroll reports. Record evaluations, promotions or disciplinary actions.
  • Create a financial plan: Develop a financial plan according to financial and client regulations, including an investor profile, financial advice, and negotiation and transaction plans.
  • Prepare financial statements: Collect, entry, and prepare the set of financial records disclosing the financial position of a company at the end of a certain period or accounting year. The financial statements consisting of five parts which are the statement of financial position, the statement of comprehensive income, the statement of changes in equity (SOCE), the statement of cash flows and notes.
  • Analyse transportation costs: Identify and analyse transportation costs, service levels and availability of equipment; make recommendations and take preventive/corrective measures.
  • Calculate production costs: Calculate the costs for every production stage and department.
  • Analyse financial performance of a company: Analyse the performance of the company in financial matters in order to identify improvement actions that could increase profit, based on accounts, records, financial statements and external information of the market.
  • Manage inventory: Control product inventory in balance of availability and storage costs.
  • Exert expenditure control: Analyse expenditure accounts against the income and usages of different company units, companies, or organisms at large. Recommend usage of financial resources in efficient manners.
  • Disseminate information on tax legislation: Provide advise on the possible implications for companies or individuals on decisions regarding tax declaration based on tax legislation. Advise on the favourable tax strategies that could be followed depending on the needs of the client.
  • Negotiate supplier arrangements: Reach an agreement with the supplier upon technical, quantity, quality, price, conditions, storage, packaging, send-back and other requirements related to the purchasing and delivering process.
  • Explain accounting records: Provide additional explanation and disclosure to staff, vendors, auditors, and to any other instance about the way accounts were recorded and treated in the financial records.
  • Create a financial report: Finalise project accounting. Prepare an actual budget, compare the discrepancy between the planned and actual budget, and draw final conclusions.
  • Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.

ISCO group and title

2411 – Accountants


References
  1. Cost analyst – ESCO
  2. Cost Estimators : Occupational Outlook Handbook – U.S. Bureau of Labor Statistics
  3. Cost Analyst Job Description: Salary, Duties, & More – ClimbtheLadder
  4. Featured image: Photo by fauxels
Last updated on August 6, 2022

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