Explanation
According to the CTSC Exam Content Manual, avoidance cost is one of the metrics used to measure the value created by the procurement function1.Avoidance cost is defined as the value created by reducing or eliminating cost increases sought by suppliers over and above prevailing baseline cost1.Avoidance cost is also known as cost avoidance, which is a proactive measure to prevent unnecessary expenses or losses2.Avoidance cost is different from cost savings, which is the value created by reducing the actual cost paid to suppliers below the prevailing baseline cost1.Cost savings is also known as hard cost savings, which is actualized, quantifiable and verifiable3.