In times of economic difficulty and greater financial pressures on organisations of all sizes, issues such as cost management, budget and the decisions they make in these areas become increasingly important. Regardless of the type of company, understanding the way in which cost concepts work and how they should be applied in the specific organisation is central to adding value to any business. Consideration will also be given to the area of budgeting and how the setting of specific budgets can be used to alter the behaviours of those making management decisions (Kirzner, 1979)^[1].

One of the sectors that has given particular attention to this area of cost control and budgeting is that of the construction industry. Award winning house builder, Redrow, has found that its ability to manage costs in such a way that it can pass this on in the form of cheap housing has assisted in recovering from the current downturn in the construction industry, as a whole (Vosselman, 2006)^[2].

Cost management is clearly important for companies at all times, but becomes particularly crucial during times of economic turmoil. Understanding where exactly the costs are being spent and how this expenditure can be better used, for the benefit of the company, is vital. In this report, the issue of cost concepts will first be considered, looking at the key ways in which an organisation can account for its costs; it will then move on to consider budgetary concerns related to these cost concepts and will finally look at the way costs and budgets can be managed to ensure maximum efficiency. All of these issues will be analysed with reference to housing giant, Redrow, and the way that its position is being managed (Ryan, 1995)^[3].