ACTIVITY BASED COST MANAGEMENT

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ACTIVITY BASED COST MANAGEMENT
Departmental View
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Topics

• ABC/M Implementation in DOI - perspectives
• FY05 DOI ABC Initiatives
• Demonstration of the Departmental ABC/M System

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• ABC/M Implementation in Department of the Interior

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Current Status

• Collecting ABC data across entire Department
• Implementing at different stages of maturity
• BLM, OSM, FWS, NBC, OST, OHA, MMS, BOR have
  mature systems
• BIA, NPS, USGS and most Dept. offices still
  refining processes
• Operating DOI ABCM system all modules
  (Performance, Cost, Dashboard)
• Working data validation issues
• Viable performance measure reporting
• Cost data summarizes correctly
• Content of bureau cost extract files meets Dept
  format

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Data Usage

• Current
• Data is beginning to be used for decision-making
  must continue to improve
• quality of data
• Litigation data provided to Sec Norton for FY05
  budget hearings
• Future
• Support quarterly reviews cost of achieving
  end-outcome goals/marginal
• cost of performance
• Unit cost of performance cost of doing work
  against key performance
• measures understanding the cost of achieving a
  targeted level of
• performance what results from the work done
• Support budget build analysis of resource
  requests communicate with OMB
• Reengineering/benchmarking not costing
  activity-specific tasks

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Departmental ABC/M Perspective

• Present summary level view of cost against
  Strategic Plan end-outcome goals
• View the data and ask questions about what the
  data seems to indicate
• Understand the work captured under the DOI ABC
  work activities at
• Departmental level and bureau level
• Acknowledge that the bureaus have detail about
  work performed

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• FY05 ABC/M Initiatives

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FY05 ABCM Initiatives
Prepare for migration to FBMS

• Develop stable hierarchy/structure for relating
  DOI ABCM activities
• and Bureau ABCM activities
• Develop process for capturing ABC data in FBMS

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DOI/Bureau ABCM Work Activity Consistency
Understand the work that the DOI Activities and
the bureau activities capture
Bureaus have task level information about the DOI
Activities Work activities should contain
similar tasks Work activities should produce
similar outputs Work activities should map to
the same DOI Activity
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Consistency in Mapping
DOI Activity A DOI Activity B
BLM Activity A BOR Activity A FWS
Activity A NPS Activity A OSM
Activity B BIA Activity B FWS
Activity A1
Consistent
Consistent
Inconsistent
- Validate mapping - Verify bureau-unique -
Realign to correct inconsistency
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Consistency in DOI/Bureau Activity Definitions
DOI Activity A DOI Task A1 DOI Task A2
DOI Task A3 DOI Task A4
(new) DOI Task A5
BLM Activity A BOR Activity A FWS Activity A NPS
Activity A BLM Task A1 BOR Task A1 FWS
Task A1 NPS Task A1 BLM Task A2 BOR Task
A2 FWS Task A2 NPS Task A2 BLM Task A3
BOR Task A3 FWS Task A3 (new) NPS Task A3
BOR Task A4 FWS Task A4 FWS Task A5
Dissimilar tasks

• Validate descriptions
• Level out task lists i.e. (1) add tasks A3-A5
  to NPS Activity A ,
• establish Task A3 as baseline task that all
  bureau activity definitions
• must contain, (2) include all bureau tasks in
  DOI activity definition. DOI
• activity definition becomes repository of
  bureau activity definitions

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Consistency in DOI/Bureau Activity Outputs
Example of Bureau activities with multiple
outputs (1) If bureau output is important to
track at DOI, create a new DOI activity for the
bureau output (2) If bureau output does not
align with output for DOI Activity A, determine
if work associated with incongruent output can
be realigned to another DOI Activity where work
and output are more congruent
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Consistency in DOI/Bureau Activity Outputs
No agreement on outputs
Invalid DOI output
Example Invalid DOI output replaced by valid
bureau output
Example Inconsistent DOI and bureau outputs
bureaus and DOI agree on new output B4 all
populate new output (note output B4 could
be Output B1, B2 or B3 if all agree)
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ABC Coding in FBMS
Structure B Bureau indicator AA
Budget activity SS Budget sub-activity PP
Budget program element or earmark FF
(future expansion) . physical separator
from ABC code ABC Bureau ABC code
funding
Present in all transactions Size of field can
accommodate ABC codes Available for FM tables,
General and Budgetary Ledger postings Associates
work done with funding for work Funding codes
and ABC codes entered separately to improve
integrity of work activity coding
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Bureau ABC Code Xwalk to DOI ABC Code
R3 Functional Area Bureau ABC Code (Input GL
transaction Object class, cost Center, etc.)
Business Warehouse Xwalk Table Maps Bureau
ABC Code to DOI ABC Code (Controlled centrally at
Dept)
Business Warehouse DOI ABC Code (ABC reporting)
Manual input
Derived
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OSM Litigation Cost Mapping/Data Entry (Actual
Xwalk Example)
Key in funding, line of Business, and OSM ABC
Code
Derived DOI ABC Code
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ABC Reporting in FBMS
N Dimensional Relational data cube in Business
Warehouse
Cascading from summary to individual transactions
Efficiency Effectiveness measures
ABC transactions
Activities to Goals
Trend analysis
Activity costs Across bureaus
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FBMS ABC/M Deployment

• BearingPoint workshops w/OS and bureaus Feb-Apr
  05
• Capture departmental/bureau ABC/M and
  performance reporting reqmts
• BearingPoint proposal to develop FBMS ABC/M mid
  Apr 05
• FBMS ABC/M development FY05-06
• FBMS ABC/M deployment TBD

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Departmental ABC/M System Demo