Activity-Based Cost Management in Government: Second Edition

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Management Concepts Inc., 2006 - Business & Economics - 384 pages
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Be more confident in your decisions and have the ability to predict the type and level of resources you’ll need to meet future demands!

Activity-Based Cost Management in Government, 2nd Edition makes it easy to understand the behavior and economics of your cost structure. Determine the true costs of your processes, outputs and outcomes so that you can achieve optimal performance.

Written in easy-to-understand language and clearly illustrated, Gary Cokins’ Activity-Based Cost Management in Government, 2nd Edition provides the financial techniques to:

  • Identify the advantages of Activity-Based Cost Management versus traditional costing methods to improve productivity and increase value.
  • Understand why output costs are high and what drivers cause those levels.
  • Learn what it truly costs to serve different types of internal and external end-users and citizens.
  • Predict future expense levels with Activity-Based Planning and Activity-Based Budgeting.
  • Learn how to design, construct, and implement an effective Activity-Based Cost Management system.
  • Explore how and why managerial accounting is evolving into managerial economics.

Bonus! Includes over 100 robust illustrations often described as “the best pictures that people have ever seen for communicating the concepts” behind Activity-Based Cost Management in government.

 

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Contents

The Utility of ABCM in Government Some Opening Comments
1
POLITICAL PRESSURES TO HOLD DOWN COSTS
2
AN EXCESSIVE FOCUS ON FUNCTIONS
3
THE EVOLUTION OF BUDGETS
4
REMOVING THE BLINDFOLD OUTPUTS NOT JUST RESOURCESEXPENDITURES
7
ONE CITYS BENEFITS FROM ABCM
11
BUT OUR DEPARTMENT DOES NOT HAVE OUTPUTS
12
ABCM USES AND SOME PITFALLS
14
ORGANIZATIONAL DIRECTION TRACTION AND SPEED
190
WHAT IS PERFORMANCE MANAGEMENT?
191
MANAGEMENTS QUEST FOR THAT ELUSIVE MAGIC PILL IMPROVEMENT PROGRAM
192
THE ROLES OF STRATEGY MAPS AND THE BALANCED SCORECARD
193
PERFORMANCE MANAGEMENT IS AN ITERATIVE PROCESS
194
WORK ACTIVITIES AND THEIR COSTS ARE FOUNDATIONAL TO A PERFORMANCE MANAGEMENT SYSTEM
196
THE QUEST FOR A COMPLETE SOLUTION USING BUSINESS INTELLIGENCE
197
HOW DO YOU KNOW IF YOU ARE PERFORMING WELL?
198

MULTIPLE VIEWS OF COSTS ARE EMPOWERING
16
DOWNSIZING PUBLIC EMPLOYEES
17
WHY CHANGE NOW?
19
Understanding ABCM A Few Basic Truths
23
WHAT IS ABCM?
24
A Better Gauge than Benchmarking with Blinders
27
Help in Improving Requests for Proposals
28
WHAT ABCM IS NOT
29
LET HOW AND WHY DRIVE THE EFFORT
30
DIFFERENCES AND SIMILARITIES AMONG ABCM USERS
32
Servicebased vs Productbased Organizations
34
EXAMPLES OF ABCM IN GOVERNMENT
37
If ABC isthe Answer What Is the Question?
51
HOW DO COST DRIVERS WORK?
54
WHAT ARE COSTS?
57
HOW DOES ABCM INTERSECT WITH TRADITIONAL COST ACCOUNTING?
58
WHY THE INCREASED INTEREST IN ABCM?
61
HOW DOES ABCM YIELD MORE ACCURACY?
62
WHAT ARE DRIVERS?
65
WHY IS MINIMIZING THE SIZE OF THE ABCM SYSTEM IMPORTANT?
70
WHAT IS THE EXPERIENCE OF MATURE USERS?
72
WHY ARE ATTRIBUTES KEY?
73
WHY FOCUS ON BEHAVIORAL CHANGE?
74
WHAT IS MAKING ABCM CHEAPER AND MORE USEFUL?
75
HOW ABOUT THE FUTURE?
76
Fundamentals What Is ABCM?
79
The Standard Four Stages of Cost Management Systems
81
The FifthStage Cost Management System
83
THE CHRONOLOGICAL HISTORY OF ABCM
84
AN OVERARCHING FRAMEWORK OF MANAGERIAL ACCOUNTING
87
MEASURING AND USING COST DATA IN MANAGERIAL ACCOUNTING
88
Cost Measurement
90
Cost Uses
94
THE EXPANDED ABCM CROSS
98
Expanding the TwoStage ABCM Cross Model
102
Identification and Treatment of Organizational Sustaining Costs
107
Tips on Identifying and Classifying Activity Drivers
109
THE SIX ADVANCES IN ABCM MODEL DESIGN AND THINKING
113
2 General Ledger and Fund Accounting Data Require Transformation
115
4 Leveling or Disaggregation Brings about a ThreeDimensional ABC Cross
118
5 Increasing Emphasis on Predictive Costing and Budgeting
119
6 Shortened Time Interval between ABCM Recalculations
120
Internal Shared Service Providers
121
Why Establish a Shared Service Provider?
123
Ground Rules for Shared Services
125
Migrating from the Basic to the Marketplace Model
126
A Prominent Shared Service
128
The Role of ABCM with Shared Services
131
CHOICE OR BLEND?
133
ABCM and Earned Value Management EVM
134
Varying Cost Assignment Approaches
135
LOCAL OPERATIONAL VS ENTERPRISEWIDE STRATEGIC ABCM
147
An Example of a Local ABCM Model
148
Revealing the Differences in Costs of Cost Objects Outputs
150
Applications of Local ABCM
152
WHERE DOES ABCM FIT IN?
153
How Can Suppliers Counter This Power Shift?
155
ABCM TO THE RESCUE
157
The Need for Extended Enterprise
158
Mutual Trust Brings Mutual Cost Savings
161
THE CRITICAL ROLE OF ABCM
164
WHO BENEFITS FROM THE COST SAVINGS?
166
Using ABCM Attributes to Assess Quality and Value
167
The Analysts Dream
168
The Popular Attributes
170
APPLYING ABCM ATTRIBUTES FOR QUALITY MANAGEMENT
174
A Renewed Emphasis on TQM
175
Why is Traditional Accounting Failing TQM?
176
HOW DO YOU CATEGORIZE DIFFERENT QUALITY COSTS?
178
GOALS AND USES FOR THE COQ INFORMATION
182
QUANTIFYING THE MAGNITUDE OF THE COSTS OF QUALITY
184
Decomposing COQ Categories
187
Performance Management Using Strategy Maps and the Balanced Scorecard
189
WHAT IMPEDES ORGANIZATIONAL PERFORMANCE?
199
POOR ALIGNMENT OF STRATEGIES WITH MEASURES
200
STRATEGY MAPS PROVIDE CONTEXT FOR THE SCORECARD
203
WHO SHOULD DEFINE AND CONSTRUCT THE STRATEGY MAP EXECUTIVES OR EMPLOYEES?
205
COLLECTING THE ACTUAL KPIS DISPLAYING SCORES AND COMPARING TO TARGETS
206
CASCADING MEASURES TO PROVIDE EMPLOYEES LINE OF SIGHT
208
ABCM CALCULATED RESULTS PROVIDE A SUBSET OF KPIs
210
MEASURES ALIGN EMPLOYEE BEHAVIOR WITH THE STRATEGY
211
THE PERFORMANCE MANAGEMENT FRAMEWORK FOR VALUE CREATION AND RESULTS
212
AN AUTOMOBILE ANALOGY FOR PERFORMANCE MANAGEMENT
215
YOU CANT HAVE ONE WITHOUT THE OTHER
216
Activitybased Budgeting Myth or Reality?
217
USER DISCONTENT AND REBELLION
218
SOME PERSPECTIVES ON COST ESTIMATING
222
ABCM AS A SOLUTION FOR ACTIVITYBASED PLANNING AND BUDGETING
223
AN EXAMPLE
226
ABPB AND CAPACITY
228
MOVING FROM ACTIVITYBASED PLANNING ABP TO ACTIVITYBASED BUDGETING ABB
229
TOPDOWN FUNDING VERSUS BOTTOMUP BUDGETING
232
WHAT COMES FIRSTABC OR ABPB?
234
STRATEGIC RESOURCE PLANNING AND BUDGETING SRPB TAKING IT UP A NOTCH
235
A Second Look at Closed Loop ABPB
240
The Link to Strategy and to Performance Management
242
IMPLEMENTATION CONSIDERATIONS
244
A Framework for Balancing and Integrating Cost Performance and Risk Management
247
RISK AND RISK MANAGEMENTDEFINING OUR TERMS
248
RISK MANAGEMENT IN THE DEPARTMENTS OF DEFENSE AND HOMELAND SECURITY
250
FILLING THE RISK MANAGEMENT GAP
251
THE INTEGRATION OF ABCM AND PERFORMANCE MEASURES IN RISK MANAGEMENT
253
Implementing ABCM through Rapid Prototyping
255
ABCM IS PERFECTLY OBVIOUSAFTER THE FACT
256
Eighteen Holes of Golf on a Polo Horse
258
Building the First ABCM ModelTap Dance Now Waltz Later
260
A Key to Getting Desired Results
262
TEACH THEM TO FISH AND THEY CAN FISH FOREVER
263
Constructing and Populating ABCM Model 0The Starting Point
265
Analyzing Model 0 to Get BuyIn
268
A Communication Plan
269
ABCM MODEL DESIGN AND ARCHITECTURE FOR SPECIAL CASES
270
BASIC FACTORS
271
RightSizing the System
272
Examples of ABCM in the Public Sector
275
AN INTRODUCTION TO PUBLIC SECTOR CASE STUDIES
276
CASE STUDIES
277
US Office of Rural Economic and Community Development
280
US Army Fort Riley
281
City of Philadelphia Department of Streets
284
US Navy NAVAIR
286
US Veterans Benefits Administration
291
US Forest Service
295
Department of Interior US Fish Wildlife Service
296
US Department of Defense Military Family Housing
299
US Small Business Administration
305
UruguayMunicipal Development and Management Program
306
ABCM IS GETTING INSTITUTIONALIZED IN THE PUBLIC SECTOR
307
Seven Mistakes that Prevent Employee Buyin
309
LETTING EMPLOYEES THINK ABCM IS JUST A FAD
310
OVERRELYING ON EXECUTIVE MANAGEMENT BUYIN
311
HAVING ACCOUNTING PUSH THROUGH ABCM
312
An ABCM Project Champion with FireintheBelly
313
HAVING EARLY AND UPFRONT TRAINING THAT IS POORLY CONCEIVED
314
ABCM integrates with Other Software Tools
317
BUSINESS PROCESS AND MISSION IMPROVEMENT TOOLS
318
PRODUCTCUSTOMERCHANNELLOCATION COSTING
321
The Future of Government
325
Business Will Nudge Government to Understand Costs
326
Managerial Accounting Will Support Managerial Economics
327
HOW MUCH DO ACADEMICS AND UNIVERSITIES SUPPORT ABCM?
331
US Reform Commissions
335
Federal Regulations
337
ABC Software
341
Index
347
Copyright

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About the author (2006)

 Gary Cokins, CPIM is an award-winning, internationally recognized expert, speaker, and author in advanced cost management and performance improvement systems. Gary Cokins was the lead author of the acclaimed An ABC Manager's Primer, sponsored by the Institute of Management Accountants (IMA) and the Consortium for Advanced Manufacturers-International (CAM-I). His other books include Activity Based Cost Management: An Executive Guide, and his latest work, Performance Management: Finding the Missing Pieces to Close the Intelligence Gap.

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