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sir there’s this line in my kaplan study text which states that
“care must be taken to assess managers on controllable factors only.”
how do we categorize costs increasing due to inflation? Nominal costs are uncontrollable, right?We’ll just look at real costs
If it is the manager who decides whether or not to incur the cost (whether to incur the expense or which supplier to use) then it is a controllable cost. It is the actual amount that is paid that is controllable including any inflation.
(The terms ‘nominal’ and ‘real’ costs are not relevant terms for Paper PM, only for Paper FM (for completely different reasons)).
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