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n IMFO : Official Journal of the Institute of Municipal Finance Officers - Is cost management important in the Municipal Environment
In the commercial environment, companies apply competitive strategies to ensure they render the best service at the lowest cost with the aim of increasing their market share and ultimately increasing their share prices.
In the municipal environment there are no direct competitors for the provision of services in most cases, however, similar strategies need to be employed by municipalities to minimise cost of service provision so that the services backlog can be addressed in the shortest time possible. Municipalities must strive to give residents more value for money by providing good quality services at low cost (which will equate to the best cost provider strategy as applied in business strategy). Cost containment strategies will create the capacity to accelerate service delivery. In order to successfully implement cost containment strategies, it is essential that accurate and timely management information is available regarding cost drivers. An effective cost management system is, therefore, a critical component in the service delivery value chain.
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