Guidelines on Cost Capitalisation

What is cost optimization?

Cost optimisation is an initiative of an entity which aims to inculcate the culture of being business-
focused, continuous discipline in driving reduction of spending and cost while maximizing the value
creation of business in each activity and project/ investment.

Why is cost optimization important?

- Reduce the unnecessary cost or wastage in operation of a business.
- Prioritise and optimize the resource allocation.
- Improve the competitiveness of an entity.
- Increase the market share in an open or deregulated environment from the resulted
competitive pricing.
- Maximise the creation of value to our shareholders.

Guidelines on cost optimisation

All cost saving should be in the form of:
(i) efficient use in resources as demonstrated by the effort to achieve the targeted
outcome with lesser resources to keep the operating expenses lean; or
(ii) deliverables via internal expertise instead of outsourcing; or
(iii) full deployment and utilization of existing technology; or
(iv) saving via intensive negotiation without compromising the quality of outcome; or
(v) effective compliance of regulations such as legal, tax, safety, environmental…etc

Examples of cost optimization initiatives as follows:

(a) Travelling for meeting is replaced by Skype meeting or video conferencing;
(b) Bundle discount obtained from works or services awarded to same vendors;
(c) Staff entitlement not utilised;
(d) Works or services done by internal resources that lead to cancellation of tender/
contract;
(e) Increase in staff efficiencies and reduce the reliance on outsourced contractors;
(f) Tax saving absorbed by contractors;
(g) Effective insurance scheme via negotiation;
(h) Accurate project execution schedule to minimise negative carrying;
………….etc

The above list is not exhaustive and shall include any other cost optimisation initiatives of
similar nature.