How To Identify Undesired Changes In Planned Costs And Keep Them Under Control

Years ago, I was involved in a cost saving project for a major airline. I vividly remember when the senior executive asked me if I could find out the reasons behind an unexpected increase in crew costs compared with the annual plan. They couldn't figure it out.

I rushed to collect as much information as possible, searching high and low, left and right, and managed to prepare the best answer I possibly could at that time.

He looked pleased, but deep in my heart I knew that it was not completely right - so much data but not of the kind that can truly answer this question. There was a missing part in management reports that would explain what distorts planned costs to make it more clear what needs to be done to squeeze these unwanted distortions to a tolerable level.

At the time, I was not aware of the impact this question would have on my career. The idea about adding the missing part into management reports never left my mind and in many ways shaped my future work. 

Had I known then what I know today, I would tell him that:

Root causes of events that trigger increase in costs have to be recognised and necessary corrections made on the go.

To get there you should focus on the most costly disruption events.

You need to start with numbers and from there, let the events and people involved be your guide.

They will lead you, sometimes through rocky roads, to otherwise invisible cost origins that are enforcing or weakening the outcome.

If you do this, you will create new bridges of communication, and people will start understanding their roles in a new way.

The answer to your question about reasons behind undesired changes in crew or any other cost will then become available to you directly and constantly.