Cost Avoidance
Finance
Cost Avoidance
Prevention or deferral of a future cost increase that would otherwise have occurred.
Examples
- 01Repairing a gearbox before it fails is reported as cost avoidance of EUR 45,000, the estimated cost of a breakdown and lost production.
- 02The controller lists cost avoidance separately from real savings in the monthly report, because it does not reduce the budget.
- 03A cost avoidance claim is accepted only if the team can show what would have happened and what it would have cost.