Sri Lankan organisations wasted an average amount of 4% of revenue every year, according to a new study by the Chartered Institute of Management Accountants (CIMA). Among the most common causes for losses were projects which were cancelled after their inception – with 38% admitting to wasted costs in this area – followed by delayed projects (66%) and overpaying for goods and services (26%).
CIMA polled more than 2,000 finance professionals, of which 59% admitted their organisations lack any kind of strategy to drive cost competitiveness. A further 48% of respondents claimed there is little to no mandate within their organisations to drive down costs when making day-to-day decisions.
Proving that there is gap between expectation and reality, 80% of respondents believed that promoting a cost conscious culture was the responsibility of their executive team. But in stark contrast, the results revealed that only 27% have a board member tasked with maintaining cost competitiveness.
Looking at the lack of encouragement within Sri Lankan organisations to change bad habits, 21% of respondents claimed that employee incentives are poorly designed to encourage cost control; 12% believing cost containment strategies are ineffective. A further 21% think that technology and data analytics are poorly used within their organisations.
Peter Spence, CIMA’s head of performance management research said: “The balancing of short- and long-term objectives requires the engagement of management accountants, who have a keen understanding of the drivers of cost, risk and value across the organisation’s value chain. CIMA members have never been more relevant in ensuring sustainable success in today’s volatile business world, where there is uncertainty around every corner.”