Management Tools of Cost Controlling at the Gas Transportation

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Journal of Internet Banking and Commerce, July 2016, vol. 21, no. S4
Special Issue: Government and Business Regulation: Regional and Sector
Characteristics
Edited By: Mihail N. Dudin
Management Tools of Cost Controlling at the Gas
Transportation Enterprise
VERA VLADIMIROVNA PLENKINA*
Federal State Budget Educational Institution of Higher Education,
Industrial University of Tyumen, 625000, Tyumen, Volodarskogo St., 38,
Russian Federation, Tel: +7(3452)481734;
Email: plenkina534671@mail.ru
AYAPBERGEN TAUBAYEV
Karaganda Economic University of Kazpotrebsoyuz, 100009, Karaganda,
Akademicheskaya St., 9, Russian Federation
OLGA VIKTOROVNA LENKOVA
Federal State Budget Educational Institution of Higher Education,
Industrial University of Tyumen, 625000, Tyumen, Volodarskogo St., 38,
Russian Federation
Abstract
The importance of controlling in modern conditions is defined. A brief overview of the
main evolutionary stages in the development of the theory and methodology of
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controlling is provided. The expediency of projection of the concept of controlling on the
cost management system at the gas transportation enterprise is justified. The paper
points at the grouping of controlling methods in general scientific methods, methods of a
number of individual sciences, and specific methods, which are offered to divide into
general management methods and methods of cost controlling. The author’s
systematization of enterprise-wide management tools of controlling is provided,
depending on the most significant areas of activity of the enterprise, management
functions, levels of the management hierarchy and the nature of implemented targeted
enterprise systems. The cost management methods are structured by management
functions and stages of production and sales. The authors point at the predominant
classification of each method into strategic and operational tools. The recommendations
for further practical use of the presented systematization are provided.
Keywords: Controlling; Costs; Gas Transportation Enterprise
© Vera Vladimirovna Plenkina, 2016
INTRODUCTION
At the moment, a lot of efforts of the foreign and domestic experts [1-3] are focused on
the development and improvement of a system of controlling. Controlling has become
extremely popular with the owners and managers of enterprises focused on the longterm success, as it offers the information and analytical support to management in the
turbulent state of the economic environment. In addition, the interest in this
phenomenon is caused by the ability of the system of controlling to timely identify "weak
signals" from the internal and external processes, analyze them and develop measures
for the company adaptation to future changes, thus protecting it from possible losses
and negative consequences.
If we turn to the development of the controlling concept in Russia, it would be desirable
to note that the cost initially acted as the object of controlling. However, the controlling
was initially understood only as cost accounting [4]. In the evolution of the concept of
controlling, the variety of functions gradually expanded. At a certain stage of
development, costs were no longer the sole object of controlling, and now, as
mentioned above, the management theory is dominated by the theory according to
which controlling is management of control. In this case, notably, the cost management
system as a whole virtually was not considered as the object of controlling. The cost
controlling is defined as its specific element only in the latter of the presented
classification tables. But according to the position of the authors of this approach, they
understood cost controlling only as accounting and control functions.
Another interesting fact is that the types of controlling are distinguished in the scientific
literature depending on the activities of the organization, but the authors of this typology
confined to division into controlling in commercial organizations and controlling in
commercial banks only, while the features of the internal structure of the company and
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the particular conditions of its functioning are not taken into account.
The authors also believe that due to a high degree of importance of the cost in the
activities of the gas transportation organizations [5] and the above-mentioned properties
and capacities of controlling, it is advisable to project the concept of controlling on the
cost management system of the gas transportation enterprises. To do this, the cost
controlling must be considered as a separate category representing a holistic,
comprehensive, integrated system (concept) based on a synthesis of management tools
and methods that promote cost efficiency and, consequently, ensure flexibility and
sustainability of the company in general.
In this case, the proposed subsystem of the cost controlling must be filled with the
appropriate management tools structured by levels of the management hierarchy,
functional areas and the nature of targets (operational or strategic).
METHODOLOGY
The goals and objectives of cost controlling are achieved through the implementation of
specific methods and tools [6] that ensure timely control, coordination and regulation of
activities of a gas transportation enterprise, as well as allow to shorten the response
time of the economic mechanism to the change of internal and external environment,
reduce administrative risks of mistake in selecting a vector of the administrative impact.
Currently, there are many methods of controlling [7-10], which generally can be divided
into the following groups:
1. group of the controlling methods – general science: observation, comparison,
analysis, synthesis, systemization, identification of patterns, forecasting, etc.
2. group of the controlling methods of a number of individual sciences, which use
planning, accounting, analysis, etc.
3. group of the controlling methods – specific, which can be divided into general
management methods and methods of cost controlling.
In this case, the selection and practical implementation of the tools appropriate for the
conditions of functioning of a particular enterprise are often complex. In order to
facilitate this choice, methodical approaches to the construction, filling and
implementation of the controlling system can be grouped according to the most
significant areas of activity of the enterprise or managerial functions. In addition, the
existing methodological tools can be systematized through the levels of administrative
hierarchy and nature of the implemented targets of the enterprise. These two criteria
make it possible to identify the nature of the system of controlling implemented by the
organization: operational or strategic. The author’s systematization of the tools of
corporate controlling of commercial structures is shown in Table 1.
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Table 1: Classification of the tools of controlling.
Function
Goal-setting
Analysis
Methods, techniques, tools
Management level
JSC
LTD Line
(holding)
level
- analysis of the existing s
system of the company
objectives and strategies to
achieve them; comparative
analysis of the missions and
goals of the organization and
its competitors;
- "tree of objectives";
s
s
- SMART method;
s
s
o
- modeling of production and s
s
o
economic system; simulation
models;
Can be used in
cost controlling
With regard to
goals in costs
construction
of
the
scenarios of development;
- time series analysis,
extrapolation of trends;
methods
of
expert
estimations, "Delphi" method,
brainstorming;
- Ishikawa diagram (for the
construction of the goals
structure on the basis of the
identified problems);
- GAP-analysis (analysis of
strategic gaps);
- construction of mental
maps;
- cognitive modeling
- McKinsey "7S" model;
s
s
-
With regard to
the
cost
management
system
+
s
o
o
+
s
s
-
+
s
s
o
+
s
s
-
+
s
-
-
s
s
-
-
product
life
cycle;
technologies; organizations
- comparative analysis "goals
– target – fact – optimization
– deviation";
- SEC - selection of strategic
economic centers;
- SNW analysis (identifying
strengths and weaknesses);
s
s
-
+
s
s/o
o
+
s
-
-
s
s
-
+
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- M. Porter's model of value
chain;
- analysis of the functional
areas
(cuts)
of
the
organization
(marketing,
finance,
production,
personnel,
organizational
culture);
- methods of sociometry;
- analysis of the structure of
information and document
flow;
- analysis of business
processes;
- R. Ohmae's model of
management analysis;
- PRaM-analysis (analysis of
the parameters of the
resource component and
management
in
the
organization);
- function value analysis;
- LOTS method of analysis;
- life cycle of the industry;
- analysis of "force fields" by
I. Ansoff;
- STEP (PEST) analysis;
study
of
reviews,
newsletters,
reports,
systematic
monitoring,
analysis
and
statistical
assessment,
creation
of
scenarios;
- concept of driving forces;
Porter's
model
of
competitive
forces
("competitive ring")
- map of strategic groups –
display of various competitive
positions of rival firms in the
industry;
- analysis of key success
factors (KSF);
- comparison of the value
s
s
s
+
s
s
s
+
s
s
s
s/o
o
s
o
o
s
-
-
-
o
-
s
s
s
o
-
o
-
s
s
s
s/o
o
s
s
-
-
s
-
-
s
s
-
s
s
-
+
+
+
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Planning
-6-
chain of the organization and
competitors;
- position analysis; creation
of a competitive profile;
- formation of the profile of
the environment in the
organization;
- analysis of the industry
environment;
- benchmarking;
- method of calculation of the
amount of coverage;
- analysis of bottlenecks;
- analysis of the volume of
orders,
areas
of
sale,
discounts;
- variance analysis;
- ABC analysis;
- investment analysis;
- analysis of the risk of
entrepreneurial activity;
- analysis of business
processes;
- etc.
SWOT analysis;
SPASE analysis;
I.
Ansoff's
matrix
"product/market";
Thompson-Strickland's
matrix;
- G. Steiner's model;
- D. Abel's model;
- M.I. Kruglov's model;
- comparison of growth rates
and market share –BCG
matrix;
- GE – McKinsey model
(comparison
of
market
attractiveness
and
competitiveness);
Shell-DPM
model
(comparison
of
industry
attractiveness);
Hofer-Schendel
model
s
-
-
s
-
-
s
-
-
s
-
s
o
o
+
+
-
o
o
o
o
+
+
s
s
s
s
s/o
s/o
s
s
o
o
-
+
+
+
s
s
s
s
s
s
s
-
-
s
-
-
s
s
s
s
-
-
s
-
-
s
-
-
s
-
-
+
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(analysis of the market
evolution);
- ADL-LC model (analysis of
the industry life cycle –
competitive advantages);
- "BCG outsourcing matrix";
- P. Karalich's model of
booking analysis;
- MCC matrix (mapping
enterprise mission and core
business competencies for
compliance);
- Marakon Associates' matrix
of profitability;
- Dibb-Simkin's model;
- PIMS model;
- business planning;
- methods of investment
planning;
- budgeting;
- Balanced Scorecard system
and
system
of
key
performance indicators;
- methods of cost planning,
pricing
methods
of
network
planning
- method of calculation of the
amount of coverage;
- etc.
Organization - methods of organizational
projecting:
-- methods of projecting
works (original projecting,
model projecting, computeraided projecting)
- -projecting methods
- methods of performing
works
- reengineering, engineering,
optimization
of
business
processes
Note: s: Strategic, o: Operational.
s
-
-
s
s
s
-
-
s
s
-
s
s
-
s
s
s
s
s
s
-
s
s
s/o
s
o
-
+
-
s/o
o
+
-
o
o
+
-
o
o
+
s
s/o
o
-
o
o
s
s
-
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This table contains the systematization of the range of the basic controlling tools. This
classification may be complemented by other methodological techniques. The authors
do not claim the completeness of this set. In addition, the table shows the author's
vision of the possibility of using individual controlling tools at different levels of the
management hierarchy in such complex structures as a gas transportation holding
company. In this case, the study of a large number of scientific and methodological
sources gives an indication of the preferential nature of a certain tool (strategic or
operational). As can be seen from the table, some tools can be used to make both
strategic and operational decisions. Moreover, the last column of the table shows the
possibility of the use or transformation of each of instructional techniques for cost
management (controlling).
From the perspective of the author's logic, it is possible to consider the specific cost
management methods in the course of the study (Table 2).
Table 2: Systematization of cost management methods by functions.
Cost
management
method
1
Absorption
costing
Direct costing
Standard cost
АВС costing
CVP
analysis
(cost–volume–
profit analysis)
Target costing
Kaizen costing
Cost killing
LCC analysis
VCC method
Cost
benchmarking
Just-in-time
Function
cost
analysis
Value chain
Budgeting
Simple method of
cost planning and
accounting
Management functions
goalanalysis planning control motivation accounting
setting
2
3
4
5
6
7
o
o
o/s
o
o
s
o/s
o
o
o
s
o
s
s
s
s
s
o
s
s
s
s
s
o
s
s
s
s
s
s
s
o
s
s
s
s
o/s
o/s
o/s
o/s
o/s
o/s
o/s
o/s
o/s
o/s
o
s
o
o
s
o
o
o
o
o
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Custom
cost
accounting
method
Process
cost
accounting
method
Concentration
cost accounting
method
Standard method
o
of cost planning
and accounting
Analysis of the
o/s
cost
structure
(vertical)
Horizontal
o/s
(comparative)
cost analysis
Factor analysis
o/s
АВС and XYZ
o/s
analysis
Bottleneck
o
analysis
Cost summation
method
Cost
allocation
method
Cost elimination
method
Proportional
method
Combined
method
Custom method
Process method
Note: s – strategic, o – operational
-9-
o
o
o
o
o
o
o
o
o
o
o
Analysis of the major cost management tools allows to say that there are complex
technologies that allow to implement several management functions at the same time,
while there are also narrowly focused ones. These tools can also be divided by the
stages of production and sale of goods (works, services) (Table 3).
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Table 3: Systematization of cost management methods by stages of production and
sale of goods (works, services).
Production
of
goods,
Cost management
Goods
Inventory performance
of
method
delivery
works, provision of
services
1
2
3
4
Absorption costing s
s/o
o
Direct costing
o
o
o
Standard cost
s/o
s/o
s/o
АВС costing
s
s
s
CVP
analysis
(cost–volume–
s
s
s
profit analysis)
Target costing
s
s
s
Kaizen costing
o
o
o
Cost killing
VCC method
Cost
benchmarking
Just-in-time
Function
cost
analysis
Value added chain
Budgeting
Standard method
of cost planning
and accounting
Analysis of the
cost
structure
(vertical)
Factor analysis
АВС and XYZ
analysis
Bottleneck
analysis
Custom method
Sale
and
Servicing
marketing
5
s
o
s/o
s
6
s/o
o
s/o
s
s
s
s
s
o
s
s
s
s
s
s
s
s
o
s
s
s
s/o
s
s/o
s/o
o
o
o
o
o
s/o
s/o
s/o
s/o
s/o
s
o
s
o
s
o
s
o
s
o
o
o
o
o
o
o
o
o
o
o
s/o
s/o
s/o
s/o
s/o
s/o
s/o
s/o
s/o
s/o
o
o
o
o
o
o
o
o
o
o
Integration of the presented systematizations may allow to build a multidimensional
structuring of management tools with subsequent superimposition on the added value
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chain of all levels and structure deepness, for example, by cost components. For
example, it is possible to identify the most important elements of cost and types of work
at the preliminary stage, and subsequently proceed with the search for reserves to
enhance the cost-effectiveness in the context of management functions. It should again
be noted that you should not entirely focus on the presented controlling tools, since they
are not benchmark but still can serve as a basis for further development of a more
detailed classification of methodological controlling tools.
RESULTS
The authors obtained a set of management controlling tools in the course of the study.
At the same time, company-wide methodology and specific methods of cost controlling
were considered separately. It was proposed to carry out a multidimensional structuring
of the methods by management functions (goal-setting, analysis, planning,
organization), by levels of management hierarchy (holding, joint-stock company as part
of the holding, the linear production management – performance level). However, it is
important to divide the considered tools into strategic and operational. It was suggested
to base the classification of the cost controlling methods on the typology of cost
management methods, which, in turn, are proposed to differentiate in the context of
management functions (goal-setting, analysis, planning, control, motivation,
accounting), as well as by the stages of production and sale of goods (works, services).
The possibility of the complex use of the proposed arsenal of management tools was
stated.
DISCUSSION
Consideration of the possibility of adaptation of the individual controlling tools to
peculiarities of functioning of various industrial enterprises can be found in the writings
of many domestic and foreign authors. This usually refers to company-wide controlling
tools, while the authors propose the allocation of a separate subsystem – cost
controlling – and its filling. Moreover, in recent years, the various studies have been
devoted to the consideration of controlling procedures with respect to specific
management functions [10-17]. Meanwhile, this paper attempts to consider the arsenal
of management capacities of controlling systematically, from different points of view. Of
course, the further specification, supplement of the methodological foundations of
controlling, and their subsequent modification are possible. However, this will be a
subject of further research by the authors.
CONCLUSION
The stated purpose of the study – the development of typologies of controlling tools in
relation to the complex gas mainline enterprises – has been achieved. The observed
variety of existing management tools, fragmentation of their use on industrial
enterprises, and insufficiently full use of controlling capacities at the executive level led
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to conducting of multidimensional structuring of appropriate methodological tools by the
object level of management impact, functional areas of management as part of strategic
or operational goal-settings. The use of the formed set of tools will enhance the quality
of decision-making (validity, timeliness, etc.) in the field of cost management.
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