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Activity Based Cost Management

Activity Based Cost Management. Joint CMG/PCMG Meeting October 17, 2000. Agenda. Background of ABC Mary Prescott ABC in Program Support Pete Lenhardt Moving from ABC to ABM Pete Lenhardt Q&A All. Current Status. Status, cont. Perceived Cost. Actual Cost.

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Activity Based Cost Management

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  1. Activity Based Cost Management Joint CMG/PCMG Meeting October 17, 2000

  2. Agenda • Background of ABC Mary Prescott • ABC in Program Support Pete Lenhardt • Moving from ABC to ABM Pete Lenhardt • Q&A All Lenhardt & Colton, LLC

  3. Lenhardt & Colton, LLC

  4. Current Status Lenhardt & Colton, LLC

  5. Status, cont. Lenhardt & Colton, LLC

  6. Perceived Cost Actual Cost Lenhardt & Colton, LLC

  7. Activity Based Cost Management • “Activity-Based” • Activity Based Costing • Activity Based Management Lenhardt & Colton, LLC

  8. Resource $ Input Activity Output End Cost Objectives Offerings Customers Projects Demands An Activity-Based Approach • Exploit the “Process Model” of Work Lenhardt & Colton, LLC

  9. Solution! Problem? How much does it really cost? Activity Based Costing Activity Analysis Activity Based Management How do we know what to improve? Activity Based Continuous Improvement Resources How well are we meeting our objectives? Activity Based Performance Measures Activities Activities Activities Inputs Outputs How can we institutionalize improvements? Activity Based Budgeting How can we better manage capital projects? Activity Based Project/Resource Management Activity Based Solutions • What does “it” cost? • What is the annual cost of Construction Management? • What is the cost of a “typical” bridge design? • How much does it cost to prepare a “complex” PS&E package? Lenhardt & Colton, LLC

  10. Partial Activity List—OTS Lenhardt & Colton, LLC

  11. Activity Cost Pareto Report How much does it cost? On which activity do we spend the greatest amount of resources? Lenhardt & Colton, LLC

  12. Secondary Activities How much does it cost to… manage and administerour primary (core) activities? Lenhardt & Colton, LLC

  13. Dollars Per Output Summary How much does it cost… to complete one unit of output? Lenhardt & Colton, LLC

  14. Activity Dictionary Entry Lenhardt & Colton, LLC

  15. TS1—Produce a PS&E Package • Normalization Criteria Lenhardt & Colton, LLC

  16. TS1—Produce a PS&E Package • Normalization Factors Lenhardt & Colton, LLC

  17. TS1—Produce a PS&E Package • Hours Per Output Type Lenhardt & Colton, LLC

  18. TS1—Produce a PS&E Package • Dollars Per Output Type 1.0X Lenhardt & Colton, LLC

  19. TS1—Kinds of Resources per Output Lenhardt & Colton, LLC

  20. Performance Measures Cost, Quality, Time (CQT) Process Controls Identify Resources Develop process controls Non-financial process reports Identify outputs and CPO Strategic Information Identify Activities Develop ABC Information ABC info for strategic decisions Identify improvement opportunities Process Improvements Reduce NVA Improve VA Improvement Project Status Reports Develop action plans Resource Controls Incorporate in new budgets Activity Based Planning & Analysis Current ABC Project From ABC to ABM Lenhardt & Colton, LLC

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