CostManagementTraining

8/20/2019 CostManagementTraining

1/109

Training Agenda/Objectives

• Day 1: Cost Management Overview – Understanding of why managing costs are important, Army’s

overall objectives, the process of Cost Management, how itdiffers from Budget, and key cost terms

• Day 2: Cost Object Definition

– Understanding of an !", how to build a Cost Model, and thevarious cost objects within a Cost Model #e$g$ organi%ation,products, job orders, etc$&

• Day 3: Assignment of Costs – Understanding of cost allocations'assignments, how to chose

which to utili%e when, how to valuate the results of theassignments #(td$ vs Actual&, and rate creation

• Day 4: Anaysis and !e"orting – Understanding of the results of the Cost Model and how various

types of analysis and decisions are supported

)*+-p


2/109

Day 2 Objective # Agenda

Day 2: Cost Object Definition• Understanding of an !", how to create a cost model

and each of the cost objects supported within the costmodel-

Lesson 1. !" nabler - Lesson 2 . Costing Conceptual)esign

- Lesson 3. Cost Centers- Lesson 4. Activity /ypes- Lesson 5 . Cost lements- Lesson 6 . 0B( lements- Lesson 7 . 1rders- Lesson 8 . Business "rocesses

- Lesson 9. (tatistical 2ey 3igures-

)*+-p*


3/109

FOUND A WAY TO

SAVE A M LL ON

DOLLARS BY

SPEND NG ONLY

$10,000.

THE $10,000 WOULD

COME OUT OF MY

BUDGET BUT THE

SAV NG WOULD GO

NTO SOMEONE ELSE’S

BUDGET. T’S NOT

THE

CH EF

OF

STAFF

M GHT

NOT

AGREE.

THAT’S WHY

HE S NOT

NV TED TO

THE

MEET NGS.

FEAS BLE

.

$Modified%

)*+-p4


4/109

&esson 1: '!( 'naber

Objective$s%:• /o understand what 5!"6 stands for and

how it can support the Army’s Cost

Management culture

)*+-p7


5/109

'n)anced Abiity to Ca"t*re Cost

C*stomer / (rod*ct• +rigade

• Tenant•

Command

Cost assigned Directy or ,ndirecty

• -ea"on .ystem

• ('O / (M

•

Co*rse

Heavy

X X

Light Stryker

FCS

XUA

X

Heavy

X X

Light Stryker

FCS

X

UA

Heavy

X X

Light Stryker

FCS

X

UA

UA

X

X

SUST

X

SUST

SUST

PersonnelMilitary -$ / SoldierCivilian -$ / FTEContrator - $ / FTE

!ase S"##ort$ / Servie$ / !rigade$ / nstallation %S&M' !(S'

E)*&' FP+

Training %nd+$ / St"dent Trng,ay $ / Co"rse ,ay

Training %Unit+$ / Mile$ / Flying Ho"r$ / ea#on Syste.

E"i#.ent$ / !rigade - )e0 $ / !rigade -Conversion&atio1 S##t$ / !rigade $

Fore 2eneration$ to &eset$ to Train$ to ,e#loy

X

SUST

X

SUST

SUST

Cost Objects1rgani%ational

ntities

!eal "roperty '

8uipment"rogram ' "roject /ask ' Activity

(pecial vent or

9nitiative

0'+. $.A(%Cost Coectors

Cost Centers Assets ' !eal

state 1bjects"roject ' 0B( Business "rocess 9nternal 1rder

Army 'am"es

: 9nstallation

: Brigade: (chool: )irectorate

: +ab

: Building: /raining !ange

: 0eapon (ystem

: Ac8uisition

: !)/ "roject: M9+C1; "roject: (ystem /est

: (ervice (upport

"rogram #(("&: 9nstructional Course: !epair "rocess

: /est !un

: B!AC

: /raining vent: Mandatory

/raining

: (upport to

1lympics

)*+-p


6/109

• Armys (*r"ose is to (rovide O"erationa Managers wit) !eevant

Tr*e Cost ,nformation to Ma5e .o*nd 'conomic Decisions • Met)odoogies to Meas*re Cost $0A.A+ 64%

- Activity +ased Costing

- 7ob Order $'vent% costing- (roject $wit) -+.% costing

- .td8 $(rod*ct% costing

- Ot)ers

• !e9*ires a .ystem to at)er Cost Data and (rovide Anaytica,nformation

Many ways to Meas*re CostMet)odoogy vs .ystem

Adoc

0inancia!e"orts

,nde"endentCost Modes

,ntegratedCost Management

Army

Traditional view (Inputs) Cost iew (!ro"ess).aaries ; ,ss*e (ro"erty ; 4=>

.*""ies 44> !eceive/T*rn?,n (ro"erty @2>

Contracts 4 Maintain (ro"8 +oo5 2@>

Trave 1@> .tore (ro"erty 13B>

Trans"ortation 1> Administrative .*""ort >

;B2B> B2B>

Traditiona vs8 Cost iew $eam"e%

)*+-p=


7/109

'!(s e" to .treamine # ,ntegrate t)e (rocesses #.ystems (roviding t)e 0oowing +enefits:

• 9ncreases "roductivity Across 1rgani%ations

• 9mproves (tandardi%ation > fficiency of "rocesses

• 9ncreases Access, Consistency > /ransparency of)ata

• "rovides Collaboration Across Business )omains• "rovides 9/ conomies of (cale

• nhances Analytics > 9mproves Accuracy of )ata

'nter"rise !eso*rce (anning $'!(%'!( +enefits

)*+-p?


8/109

nd User "resentation +ayer )ata0

ar

ehousingAn

alytics

Commercia Off t)e .ef .ystem t)at

,ntegrates A 0acets of t)e +*siness

'nter"rise !eso*rce (anning $'!(%

@ 3 B (

)*+-p


9/109

nd User "resentation +ayer )ata0

arehousingAn

alyticsnd User "resentation +ayer


Budget Accounting(*bic

.ector

•

'!( 0*nctionaity ,ntegrates Management Acco*nting $CostManagement% wit) t)e 0inancia # +*dget Acco*nting

Cost Management

,ntegrated wit) 0inance #+*dget Acco*nting

)*+-p


10/109

Budget Accounting(*bic.ector

nd User "resentation +ayer


Cost(anning

CostControing

CostAnaysis

CostAcco*nting

CostManagement(rocess

'!(s $e8g8

0'+.% 'nabeT)e Cost

Management(rocess

Cost Management,ntegrated wit) 0inance #+*dget Acco*nting

)*+-p


11/109

+, +*siness ,nteigence

• 1ptimi%ed for )ata Dtraction• Analytical "rocessing• ;ear realEtimeF trending analysis

• (liceEnEdice reporting #pivot&

Cost By!eport

Unit Cost!eport

)etailed+abor !eport

0, G 3inancial Acct$ > Mgmt$

0M G 3unds Acct$ > Mgmt$

CO G Cost Acct$ > Mgmt$

MM G Materials Mgmt$and "rocurement

((' G "roperty, "lant >8uipment H"M, "(, !, AAI

.D G (ales > !eimbursables

'CC 'nter"rise Centra Com"onent

• 1ptimi%ed for )ata 9nput• /ransaction "rocessing• !ealEtimeF recon analysis

• (tructured reporting

0'+. .ystem Com"onents

)*+-p


12/109

.im*taneo*s E"date

0, G 3inancial Acct$ > Mgmt$

0M G 3unds Acct$ > Mgmt$

CO G Cost Acct$ > Mgmt$

MM G Materials Mgmt$and "rocurement

((' G "roperty, "lant >8uipment H"M, "(, !, AAI

.D G (ales > !eimbursables

'CC 'nter"rise Centra Com"onent

• 1ptimi%ed for )ata 9nput• /ransaction "rocessing• !ealEtimeF recon analysis• (tructured reporting

(!

• 0, ? Fone• 0M ? Commitment• CO ? Fone

(O

• 0, ? Fone• 0M ? Obigation• CO ? Fone

!

• 0, ? '"ense/A(• 0M ? '"endit*re• CO ? '"ense

(ay

• 0, ? A(/Cas)• 0M ? Disb*rsement• CO ? Fone

)*+-p*


13/109

&esson 1: -ra"?E"

• An !" is an enabler to Cost Management5Culture6 by providing the technology necessary

• /he Army Cost Model is being designed into@3B( which utili%es the (A" !" application

• /he !" application has a transactionalcomponent and an analytical component

• /he transactional component has realEtime

integration for the various valuestreams'modules

)*+-p4


14/109

&esson 2: CostingConce"t*a Design

Objective$s%:

• /o understand the approach to developingthe costing conceptual design to support

the Cost Management "rocess using the@3B( !" application$

)*+*-p


15/109

Costing Conce"t*a Design

Budget Accounting

(*bi

c.ector

nd User "resentation +ayer -)ere t)e information is enteredGstoredG *sedG and "resented

Cost(anning

CostControing

CostAnaysis

CostAcco*nting


ow t)e information is enteredGstoredG *sedG and "resented

-)at/-)y information is enteredGstoredG *sedG and "resented

..(A. Manage 1C9 9nventory

..(+: 9ssue1C9 to (oldier

..(C: 9ssueClothing to 9nitial

/raining (oldier

..(D: Accept

1C9 /urnE9ns

..(': !eceive> "rocess

(hipments

..(0: Manage

Chemical )efense

8uipment

Centra,ss*efaciity

C,!

CFT!

Civilian

Employees

Contractors

+rigade

HHH

T!ADOC

III

+rigadeJJJ

8 8 'tc8

Miitary

&abor

De"reciation

Director of&ogistics%

M,&!

0* CostOrganiKations

0* Cost(rod*ct/.ervices

0* CostC*stomers

Military

Labor

)*+*-p*


16/109

• /he translation of the business objectives, needs,and re8uirements into a management decisionsupport model #Cost Model&

• A monetary valuation of the economic goods and

services of the organi%ation G full burden cost flows• 5/he Continuum6 G maturation over years #eD$ from

3t$ Jackson goElive through all rollEouts and beyond,increased accuracy of cost flows through betterdata&

/he CC) influences'defines the setEup of tools providing

cost management information, e$g$ @3B(, @C((, )ata

0arehouses, etc$

-)at is t)e CostingConce"t*a DesignL

)*+*-p4


17/109

• Management information re8uirements G 0hat type ofdecisions to support, when, for who, etc$ #e$g$9nsource'1utsource, Contract'1/, etc$&

• Cost objectives necessary to support the informational

needs #((" 3ocused, Brigade, etc$&• /he Cost 1bjects G 0hat does it cost to'for'ifK$L• Cost 1bject !elationships G flows of goods and

services from'to'between•

arious /echni8ues for reflecting the relationships E Nbased, 8uantity #"lan'Actual, such as A/AA"( Ors&,variances, etc$

-)at ,nf*ences t)e CCDDeveo"edL

)*+*-p7


18/109

Centra ,ss*efaciity

C,

!

Cost Center/!eso*rce (oo

CFT

!

Civilian

Employees

Contractors

iitary

abor

reciation


M,&

!


CCD Cost Mode

Military

..(A. Manage 1C9 9nventory

..(+: 9ssue

1C9 to (oldier


/raining (oldier

..(D: Accept

1C9 /urnE9ns

..(': !eceive

> "rocess

(hipments

..(0: Manage

Chemical )efense

8uipment

..(s (rovided


+rigadeHHH

T!ADOC III

+rigadeJJJ

8 8 'tc8

Cost Center

0* CostC*stomers

T)e transationof t)e b*siness

objectivesGneedsG and

re9*irementsinto a

managementdecision

s*""ort mode

$Cost Mode%

)*+*-p<


19/109

Centra ,ss*efaciity

C,

!


CFT

!

Civilian

Employees

Contractors

iitary

abor

reciation


M,&

!


..(A. Manage

1C9 9nventory

..(+: 9ssue

1C9 to (oldier


/raining (oldier

..(D: Accept

1C9 /urnE9ns

..(': !eceive

> "rocess

(hipments

..(0: Manage

Chemical )efense

8uipment

..(s (rovided


+rigadeHHH

T!ADOC III

+rigadeJJJ

8 8 'tc8

Cost Center

0* CostC*stomers

CCD Cost Mode

Military

A monetaryva*ation of

t)e economicgoods andservices of

t)eorganiKation

f* b*rden

cost fows

mat*rationover years

)*+*-p=


20/109

Army Cost Mode Conce"t

Cost Center

Asset / '9*i"ment

(roject / (rogram

,nterna Order

-+. / -or5 Order

OrganiKation ? &aborG MateriasG .*""ies

! e s o u r c e s

1 u t p u t s

(antG (ro"erty # '9*i"ment

+*iding (rojectG -ea"on .ystem

.ervicesG 'vents $..(G Co*rse%

7ob $.et of Tas5s% Maint # !e"air

)*+*-p?


21/109

• !eso*rce Centric

– Cost Centers H1rgsI

– !esource "ools'Activity

/ypes H/ypes of +abor,

Machine, (P3/I – Cost lements H+abor,

/ravel, tc$

– Business "rocess H(ervicesI

• (rod*ct/.ervice Centric

– "rojects'vents #eD$ Minor

ConstructionK&

– 1rders #eD$ 0ork,

Maintenance, (ervice,"roduction, CustomersK$&

• !es*ts Centric

– !esults (egments

#Customers of your

products'services&

CC$e8 Dir/Div%

+(!

(!OD

(#&

!(.'!

,O

(!O7

Cost Object Ty"es

C'

)*+*-p


22/109

• 9dentification of (ubject Matter Dperts from eachof the core business providers

• (chedule meetings with each area’s keystakeholder#s& and (M representatives

• Conduct Analysis workshops• @ather !esults and valuate• /ranslate the business objectives, needs, and

re8uirements into a management decision supportmodel, i$e$ the CC)

• 3eed information to system supportingmanagement model #e$g$ @3B(&

ow is t)e CCDDeveo"edL

)*+*-p


23/109

• !eview of 9MC1M stated objectives on web siteand already identified products'services #C+(&

• 9MC1M OP 9nterviews of C+( representatives

• (elect and visit bases and conduct analysisworkshops H3t$ Jackson, 3t$ +ewis, 3t$ "olk,

Aberdeen "roving @roundsI

• @ather and review org charts, /)A, etc$

• 0ork with 9nstallation !M representative tocollect information re8uired

• !ecogni%e all installations are different

ow is t)e CCD Deveo"edfor ,MCOML

)*+*-p


24/109

•

,n"*ts into t)e Anaysis – 1rgani%ational (tructure – +ist of +ocations – +ist of )ata 3eeds and 9nput – +ist of 1perational (ystems – Current Cost !eports

• Anaysis O*t"*ts – 1rgani%ation

• !evamp 1rg (tructure• Conceptual )esign

– "rocess• 1rgani%ational Business

"rocess• Management Accounting

"rocesses – /echnology

• 9nterface 9nventory• !eports and 3orms• Customi%ations

Anaysis -or5s)o"s

)*+*-p


25/109

Centra ,ss*efaciity

C,

!


CFT

!

Civilian

Employees

Contractors

Miitary

&abor

De"reciation


M,&

!


..(A. Manage

1C9 9nventory

..(+: 9ssue

1C9 to (oldier


/raining (oldier

..(D: Accept

1C9 /urnE9ns

..(': !eceive

> "rocess

(hipments

..(0: Manage

Chemical )efense

8uipment

..(s (rovided


+rigadeHHH

T!ADOC III

+rigadeJJJ

8 8 'tc8

Cost Center

0* CostC*stomers

CCD Cost Mode

Military

!es*ts of t)eAnaysis

-or5s)o"s areaggregated and

*tiiKed togenerate t)eCost Mode

)*+*-p


26/109

&esson 2: -ra"?E"

•

@3Bs is the technology to support Cost Managementand where the information is captured, stored, used, anddisplayed$ /he Cost Management "rocess defines howCost Management is supported$ /he CC) #Cost Model&is what cost Management information will be provided to

support management decisions• /he CC) is the translation of management objectives,

with the valuation of the goods and services, andmatures in scope and accuracy over time$

• /he output of the CC) and Analysis 0orkshop findingsis a Cost Model to be built into @3B(

)*+*-p*


27/109

N*estion 6 1

• 0hat are some of the benefits of an !"L

'!(s e" to .treamine # ,ntegrate t)e (rocesses # .ystems(roviding t)e 0oowing +enefits:

• 9ncreases "roductivity Across 1rgani%ations

• 9mproves (tandardi%ation > fficiency of "rocesses

• 9ncreases Access, Consistency > /ransparency of )ata

• "rovides Collaboration Across Business )omains

• "rovides 9/ conomies of (cale

• nhances Analytics > 9mproves Accuracy of )ata

)*+*-p4


28/109

N*estion 62: -)at are t)et)ree Com"onents of a

Costing Conce"t*a Design

Budget Accounting(*bic.ector

nd User "resentation +ayer -)ere t)e information is enteredGstoredG *sedG and "resented

Cost(anning

CostControing

CostAnaysis

CostAcco*nting


ow t)e information is enteredG storedG*sedG and "resented

-)at/-)y information is enteredG storedG*sedG and "resented

..(A. Manage

1C99nventory

..(+: 9ssue

1C9 to(oldier

..(C: 9ssueClothingto9nitial

/raining(oldier

..(D: Accept

1C9 /urnE9ns

..(': !eceive

> "rocess

(hipments

..(0: Manage

Chemical)efense

8uipment

Centra,ss*efaciity

C,!

CFT!

Civilian

Employees

Contractors

+rigade

HHH

T!ADOC

III

+rigadeJJJ

8 8 'tc8

Miitary

&abor

De"reciation

Director of &ogistics%

M,&!



0* CostC*stomers

Military

Labor

)*+*-p7


29/109

&esson 3: Cost Centers

Objective$s%:• /o understand what the Cost Center cost

object represents, key definition criteria

#guiding principles&, uses, and howdefined for the Cost Model

)*+4-p


30/109

0*nd Center A.F

(erforms0*ndsManagement

Cost Centers

C)G DO& C)G D(- C)G !M C)G M-!

Cmdr8 Ofs8 ."ecia .taff

Cost Center ro*"s

Costing .tarts wit) Cost Centers

)*+4-p*


31/109

.A0M?C' Army Cost ModeCost Center Definition

Cost Center Definition:

A cost center is a responsibility center that incurs costs and has a managerwho is accountable for those costs.

• /his definition lends itself to multiple varied utili%ations of the cost center

object to reflect the costs of an organi%ation• 3urther criteria'principles along with the Cost Center’s purpose must be

utili%ed to better indicate when a Cost Center is appropriate• /he purpose of the Cost Center object is to serve as the base for the

management optimi%ation model G the model utili%ed to reflect thebusiness, it’s inputs, conversions, and outputs in order to support

management decisions• /he Cost Center is the first cost object to be defined for the Cost Model• /o support the appropriate definition of a Cost Center within an entity,

@uiding "rinciples should be considered

)*+4-p4


32/109

.A0M?C' Army Cost Mode*iding (rinci"es for Cost Centers

(rinci"e 61:Materiaity

• cost center costs needs to be significant in relation to all costs to be captured• seemingly insignificant costs could be represented within its own cost center if re8uired by

eDternal regulations

(rinci"e 62:&ife ."an

• /he life span of a Cost Center crosses multiple years• short term life spans indicate a project or event versus a Cost Center

(rinci"e 63:Contro

• there must be a manager who is responsible for controlling the cost of the Cost Center andthe cost management processes. planning, performing, decisions support and correctiveactions, measurement of efficiency' effectiveness of the outputs of the Cost Center

(rinci"e 64:6 'm"oyees$if &abor!eated%

• ideally < to* employees based on industrial psychology research• sensitive personal information may be apparent for cost centers with only one employee,

such as payroll$ /o date, within the government, display of payroll related information hasnot been highly guarded$ Oowever with the introduction of "ay Banding, it will eventuallybecome necessary to protect salary information$

• a cost center could have tens to hundreds of employees if the costs represented a smallportion of total costs unless aggregated, employees performed the same type of work,followEon cost assignments accuracy is not impacted by the aggregation, and management

transparency at a subElevel is not re8uired for corrective actions

(rinci"e 6


33/109

.A0M?C' Army Cost ModeCost Centers Eses

• (eo"e !eated: e$g$ !M1 office

• 0aciities !eated: e$g$0arehouses, Oospitals, 1ffice(pace

• '9*i"ment !eated: e$g$ CitriDfarm accessing @3B(,Cranes'/rucks

• +ended: e$g$ miD of resourceswithin a organi%ation, e$g$ehicles and Mechanics

!MO

+*iding 1

Fetwor5 Admin

os"ita 1

'9*i"ment

Motor (oo

)*+4-p<


34/109

Cost Center Creation

• (@1 used as start for defining Cost Centers per 9nstallation

• !eview of /)A and interviews at each base reveal branchesand sections that are also added to the list of Cost Centers

• /enant organi%ations and !"As #e$g$ buildings& are also definedas Cost Centers to develop the final Cost Center list to beloaded to @3B(

+*iding 18FfromA.C,(.

)*+4-p=


35/109

Cost Center ,nformation0'+. Cost Center Attrib*tes

Cost Center Co*ntry

aid 0rom / To 7*risdiction

Fame (O +o

Descri"tion (osta Code

Eser !es"onsibe (O +o (osta Code

(erson !es"onsibe $.O .ymbo% !egion

De"artment $(D Major/Minor% &ang*age >ey

Cost Center Category Tee")one 1.tandard ierarc)y Tee")one 2

Com"any Code Teebo F*mber

+*siness Area Tee F*mber

0*nctiona Area 0a F*mber

Tite Teete F*mber

Fame 1 (rinter Destination

Fame 2 Data Comm*nication &ine F*mber

Fame 3 E,C Code

Fame 4 OE,D

o*se F*mber and .treet DM,. ,D

&ocation City TDA (aragra")

District 0DC $0*nction Designator Code%

)*+4-p?


36/109

.A0M?C' Army Cost ModeCost Center ierarc)y

• 9n addition to defining the Cost Centers and the attributeinformation for each individual Cost Center, the CostCenters need to be identified on a standard hierarchy

• /here is a single standard hierarchy which every Cost

Center will reside on to ensure that all costs can bereported from a single hierarchy

• Alternative hierarchies can be defined as needed tomeet management objectives

)*+4-p


37/109

Cost Center ierarc)yCreation

• (tart with (@1 structure• Dpand to accommodate lower

levels identified specific to theinstallation

)*+4-p


38/109

Cost Center ierarc)y

• Complete lower level hierarchy and generateinto @3B( load sheet

)*+4-p


39/109


)*+4-p


40/109


)*+4-p*


41/109

&esson 3: -ra"?E"

•

Acost center

is a responsibility center that incurs costsand has a manager who is accountable for those costs

• Costs of the cost center are material in nature #worthcapturing vs the cost of capturing&

• A cost center has a long life span of more than year#typically years& and has a manager responsible for theresources consumed and the outputs produced by thecost center

• very cost center resides on the standard cost center

hierarchy• Alternative cost center hierarchies can eDist as well

)*+4-p4


42/109

N*estions:

$ A cost center is a cost object used tocapture any costsLo /rue

o 3alse

*$ A cost center is utili%ed to capture the

revenues generated by the outputs of anorgani%ationo /rue

o 3alse

H

H)*+4-p7


43/109

N*estions:

4$ A cost center can be assigned to morethan standard hierarchyL

o /rue

o 3alse

7$ /here is a cost center for every fund

center #A(;&o /rueo 3alse

H

H

)*+4-p<


44/109

&esson 4: Activity Ty"es

Objective$s%:• /o understand what the Activity /ype cost

object represents, key definition criteria

#guiding principles&, uses, and howdefined for the Cost Model

)*+7-p

.A0M C' A C t M d


45/109

.A0M?C' Army Cost ModeActivity Ty"e Definition

Activity Type Definition: An Activity Type is a cost object that represents a group of resources within aCost Center. These resource groups have capacity and a unit of measure suchas: labor hours, machine hours, square footage, etc. Activity Types areconsumed and utilized to the produce the products and services of theorganization.

• /he term activity type is often confused with an activity, of the ActivityEBased Costing approach G however it does not represent an activity$ Activities are generally identified with a verb, e$g$ "ick 9tems, "ack BoD,(hip "allet

• A more appropriate translation is !esource "ool, e$g$ groups of like kindresources within an organi%ation that perform an activity such as /COO!, (U" O!, MACO!

• Activity /ypes have a rate'output associated are the utili%ation ofcapacity to perform 5work6 to generate a product'service, e$g$ /CO O!Q R'Or

)*+7-p*

.A0M C' A C t M d


46/109

.A0M?C' Army Cost ModeActivity Ty"e Eses

(eo"e e8g8 !MO

– Manager > Analyst

!MO

M! !

AF&I !

Motor (oo

'C !

M'C !

+ended e8g8 Motor (oo – Mechanic > ehicle

Cost Center Activity Ty"e

)*+7-p4

.A0M C' A C t M d


47/109

.A0M?C' Army Cost Mode*iding (rinci"es for Activity Ty"es

(rinci"e 61:,nterc)angeabiity

• Meets the interchangeability criterion which re8uiresthat the attributes of two or more resources be suchthat they can be substituted for each other withoutimpacting the cost and ability to produce the output

(rinci"e 62: .imiar • be of a similar technology

(rinci"e 63:!es"onsibiity

• the responsibility of one manager or team

(rinci"e 64:omogeneo*s

• their costs must conform with the homogeneityprinciple, e$g$ be similar in the resources theyconsume

(rinci"e 6


48/109

.A0M?C' Army Cost ModeActivity Ty"e Eses

• Capture Capacity or "lanned 1utput, e$g$ grandma works* Ors or machine runs4


49/109

• Activity /ypes facilitate capacity management and there

are various types of capacity #e$g$ "roductive, ;onE

"roductive, 9dle'Dcess, etc$&

• Activity /ypes provide the capacity information re8uired

to optimi%e the conversion of inputs to generate the most

outputs G meeting the 5fficiently6 portion of the Cost

Management definition

• Activity /ypes are defined as master data, however they

eDist only in conjunction with a Cost Center – Activity /ype S MACO! is assigned to Cost Center and Cost

Center * resulting in CC'MACO! and CC*'MACO! each of

which holds their own rate, their planned output, captures

actuals, etc$

Ca"acity Management

)*+7-p=

.A0M C' A C t M d


50/109

.A0M?C' Army Cost Modeow Activity Ty"es are Defined

• /he project and production related areas are familiarwith the concepts of labor and e8uipment rates and oftenhave std$ rates for charging level of effort for like kindresources to work on an order, e$g$ 93(

• 93( shop rates are reviewed and then grouped'eDpandedupon into like kind resources

• 8uipment Activity /ypes are defined based on a reviewand grouping of e8uipment, e$g$ )ump /ruck =/

• ehicle Activity /ypes are defined based on @(Aclassification into groupings

)*+7-p?


51/109

Activity Ty"esFon?&abor 'am"es

Controlling

Area

Activity

Type

Valid-From

Date

Valid To

Date General Name Description Activity Unit

Army 20047 0!!2000 2!"!#### T$ACT%$ C$&'$ ($

Army 2004) 0!!2000 2!"!#### T$ACT%$ '%AD*$ ($

Army 2004# 0!!2000 2!"!#### T$ACT%$ &(**' AG$+ ($

Army 200,4 0!!2000 2!"!#### T$A+'*$ 2,T ($

Army 200,, 0!!2000 2!"!#### T$A+'*$ F'AT*D!T+'T ($

Army 200,. 0!!2000 2!"!#### T$A+'*$ /*&*$ C'*AN$ ($

Army 200,7 0!!2000 2!"!#### T$*NC(*$ ($

Army 200,) 0!!2000 2!"!#### &*'D*$ ($

Army "0000 0!!2000 2!"!#### G0-07.F ($

Army "000 0!!2000 2!"!#### G2-,,"4 ($

Army "0002 0!!2000 2!"!#### G4-0"#)F ($

Army "000" 0!!2000 2!"!#### G4-,2#7# ($

Army "0004 0!!2000 2!"!#### G4-,")2 ($

Army "000, 0!!2000 2!"!#### G42-0,#4D ($

)*+7-p

.A0M C' Army Cost Mode


52/109

.A0M?C' Army Cost Modeow Activity Ty"es are Defined

• Current +abor definitions from 1"M, )1+, ;("( arereviewed #e$g$ @(, 0@, ;("(&

• +abor series'categories, bands #e$g$ G 7 depending onlabor classification&, and type of work #e$g$ regular

versus overtime& generate starting point for labor activitytypes

ControllingArea

ActivityType

Valid-FromDate

Valid ToDate General Name Description Activity Unit

Army 00"2 0!!2000 2!"!#### ACC UDG*T G$1 $G Acconting And dget Grop $G ($

Army 00"" 0!!2000 2!"!#### ACC UDG*T G$1 $G2 Acconting And dget Grop $G2 ($

Army 00"4 0!!2000 2!"!#### ACC UDG*T G$1 $G" Acconting And dget Grop $G" ($

Army 00", 0!!2000 2!"!#### ACC UDG*T G$1 $G4 Acconting And dget Grop $G4 ($

Army 00". 0!!2000 2!"!#### ACC UDG*T G$1 %T Acconting And dget Grop %T ($

Army 00"7 0!!2000 2!"!#### ACC UDG*T G$1 %T2 Acconting And dget Grop %T2 ($

Army 00") 0!!2000 2!"!#### ACC UDG*T G$1 %T" Acconting And dget Grop %T" ($

Army 00"# 0!!2000 2!"!#### ACC UDG*T G$1 %T4 Acconting And dget Grop %T4 ($

)*+7-p

0 t . t


53/109

0aces to ."aces toActivity Ty"es

• /he Cost Center and Activity /ype will be updated on the)C"( accounting information as the default CostCenter'Activity /ype for an employee

• /o determine the Activity /ype for each person an

eDercise of mapping people #3aces& to cost centers#(paces& occurred, and then an Activity /ype is assigned

• /he Activity /ype is associated with the A/AA"( entry fortime tracking or via the work order confirmation process

#confirmations associate labor and nonElabor activitytypes to the work order supported

)*+7-p

&esson 4 -ra" E"


54/109

&esson 4: -ra"?E"

• An Activity Ty"e is a cost object that represents a groupof resources within a Cost Center$ /hese resourcegroups have capacity and a unit of measure such as.labor hours, machine hours, s8uare footage, etc$ Activity/ypes are consumed and utili%ed to the produce the

products and services of the organi%ation$• /here are several guiding principles for the definition of

an Activity /ype which should be considered

• /he Activity /ype is the cost object which supports

capacity management• ach person will be assigned their default activity type

based on ;("(, 0@, @(, cost center assigned, etc$

)*+7-p

N ti


55/109

N*estion:

(rinci"e 61:,nterc)angeabiity

• Meets the interchangeability criterionwhich re8uires that the attributes oftwo or more resources be such thatthey can be substituted for eachother without impacting the cost andability to produce the output

(rinci"e 62:.imiar

• be of a similar technology

(rinci"e 63:!es"onsibiity

• the responsibility of one manager orteam

(rinci"e 64:omogeneo*s

• their costs must conform with thehomogeneity principle, e$g$ be similar

in the resources they consume

(rinci"e6


56/109

&esson


57/109

.A0M?C' Army Cost ModeCost 'ement Definition

Cost Element Definition: A Cost lement is the lowest level component for classifying costs and revenues!as negative costs" of a resource and indicates the category#type associated witha posting !e.g. allocation type, revenue, e$pense"

•

@3B( replaces the concept of 1!s with @+ Accounts in 3inancials#39&, Commitment 9tems in Budgeting #3M& and Cost lements in CostManagement #C1&

• 3or every ">+ related @+ Account there is a corresponding CostlementF revenue accounts are reflected as negative cost elements

)*+


58/109

.A0M?C' Army Cost Mode*iding (rinci"es for Cost 'ements

(rinci"e 61:'ternaAignment

• Alignment to support eDternal reporting re8uirements for financial reporting of"'+ items$

(rinci"e 62:Trans"arency

• "rovide the lowest level of transparency necessary for managingrevenues'eDpenses not already supported within another data element

0ig)t

ote

Mea

,ndivid*a Transactions

Trave

Manage Traveby Cost Center

Trave

OM+ ObjectCass 21 ? Trave

)*+


59/109

.A0M?C' Army Cost ModeCost 'ement Eses

• Capture actual Costs #eDpenditures, imputed costs,allocations, etc$&

• "lan Cost by resources #mployee T&, groups ofresources #/CO Or Activity /ype&, organi%ations #CostCenters&, or products'services

• !eporting of individual eDpense categories or groupedtogether to support internal #management& and eDternal#1MB'(39(& reports

• Move costs from one org'location to another. e$g$ similarto some 5cost transfers6 currently performed

• "rimary #consumed from outside& versus (econdary#consumed from inside&

• Maintain debit'credit integrity for eDpense relatedpostings within the Controlling component of @3B(

)*+


60/109

•

Dpenditures eDternally sourced,such as most of today’s 1!s#eDcluding the *?s&

• /ypically #but not necessarily e$g$,depreciation& indicative of cash outflows

• (tart with the U(@+ indicator, suchas = or =7 for eDpenses

• Are a . match with the @eneral+edger Account utili%ed for 3inancial

Accounting

(rimary Cost 'ements

C,

!

Cost Center: C,0

Miitary

&abor

Director of&ogistics $DO&%

M,&

!

)1+ (upport RRR

Materia ;;;

&abor RRR

Contracts ;;;

Trave ;;;

Military +abor RRR

3acilities RRR

'am"es:- =$B Civilian Base "ay E 3ullEtime "ermanent- =$B4 Civilian Base "ay E 1ther than 3ullEtime "ermanent- =$*/ /) /ravel- =$*


61/109

• Assigned'service fees to an object for

consuming products'services providing byanother object$ #e$g$ *?7 (hop (tock&

• ;onEcash outlays #would have occurredwith the "rimary Cost lement posting

• (tart with a series preface to indicate that

they are not associated with the @eneral+edger, e$g$ internal only

• /here are multiple types of secondary costelements to support allocations, chargeouts, overhead surcharges, etc$

.econdary Cost 'ements

C,

!

Cost Center: C,0

Miitary

&abor


M,&

!

Material RRR

+abor RRR

Contracts RRR

/ravel RRR

DO& .*""ort ;;;

Miitary &abor ;;;

0aciities ;;;

'am"es:- $*?7 MA/!9A+ (O1" (/1C2- 4$ +AB1! COA!@ E !@- 4$1/ +AB1! COA!@ E 1/- 7$


62/109

Cost 'ements 'am"e

C,

!

Cost Center : C,0

Miitary

&abor


M,&

!

=$*=VV Material RRR

=$B 3ullE/ime "erm RRR

=$*


63/109

.A0M?C' Army Cost Modeow Cost 'ements are Defined

• 3or "rimary Cost lements. – (tarted with 1!s for both pay and nonEpay

– valuated information embedded in code'1!

– )etermined if another @3B( data element could hold that info

and collapsed where possible #e$g$ CE/ype, endor, /ype of9nterest "ayment&

– !eviewed eDternal reporting re8uirements such as 1MB 1bjectClasses, U(@+, (39( mappings

– 0hen a @+ Account it determined a "rimary Cost lement is also

created with the eDact same code – 1nce live, new "rimary Cost lements are typically rarely added

and as needed to support eDternal reporting

)*+


64/109

'O! crosswa5 to & Disc*ssion

•1!s will no longer be used in @3B(F yet, the same informationpreviously maintained through 1!s will be supported via differentmethods


65/109

.A0M?C' Army Cost Modeow Cost 'ements are Defined

• 3or (econdary Cost lements. – )etermined types of cost allocations' assignments to be

supported #assumed all possible in @3B(&

– )etermine internal management reporting detail needs,continues to eDpand with maturity

– 9dentified impacts for budget'nonEbudget relevant in fundsmanagement

– (econdary Cost lements are constantly being added asassignments'allocations are updated'changed in order to provide

transparency for management reporting

)*+


66/109

Cost 'ement ro*"s

• Cost lements can be grouped together to

support – #eportin$% e$g$ all labor related primary cost

elements into a group called "ayroll +abor

– #e"on"iliation% e$g$ the primary cost elementused to procure shop stock with the secondary

cost element used to allocate shop stock tomanage the under'over absorption

– &llo"ations% e$g$ allocating a combination ofcost elements to multiple receivers

– 'ierar"ies% e$g$ by creating cost elementgroups within cost element groups a hierarchy

is generated which can be utili%ed to meet 1MB1bject Class and (39( reporting re8uirements

OM+

OCs

1181

1183

118<

118@

11

12

13

21

)*+


67/109

&esson


68/109

N*estions

• A serviced received from another Army command will berepresented by a secondary cost elementLo /rueo 3alse

•

+abor costs are always primaryLo /rueo 3alse

• A cost element groups can be grouped to generate a

hierarchyLo /rueo 3alse

H

&esson B: -+. 'ements


69/109

&esson B: -+. 'ements

Objective$s%:• /o understand what the "roject 0B(

lement cost object represents, uses, and

how defined for the Cost Model

)*+=-p

.A0M?C' Army Cost Mode


70/109

.A0M C' Army Cost Mode(roject # -+. 'ement

DefinitionProject Definition:

An object used to plan, collect, monitor and control costs for large scale time%based events in &roject 'ystems, when e$tensive scheduling and resourcemanagement capabilities are required. &rojects have a definite start and end.

Work Breakdown Structure WBS! Definition:

()' elements are activities in the &roject used for planning and updating costdata. 'ome e$amples of ()' lements are: Tas*s, &artial tas*s that are further subdivided, and wor* pac*ages.

)*+=-p*



71/109

.A0M C' Army Cost Mode-+. 'ement Eses

• "rojects and 0B( lements are master data elements of the"roject (ystem #"(& will be utili%ed to support project oriented areassuch as environmental, maintenance, !>), !)/>, etc

• "( will be utili%ed to replace the 93( functionality and will utili%e"rojects' 0B( lements as cost objects for tracking the costsassociated with repairs

• ven though 0B( lements are master data for the "( module of@3B( they are cost objects for the Cost Model and fully integratedwithin the Controlling module

• (ince the )"0 area will already be working with the 0B( lementcost object to support maintenance planning and orders, the C+((("s for the )"0 related (ervices will be represented as 0B(

lements• ach )"0 related C+( ((" will have a 0B( lement for capturing

costs• ;ew 0B( lements will be generated to support aboveEC+( level

(("s

)*+=-p4

.am"e -+.


72/109

.am"e -+.'ements Defined

&''& (roj8 Def

-+.

'ement -+. .)ort descri"tion $1st tet ine%

)"0 (11 E C+(* $ H7I 9M"!1) @!1U;)(4 $$ H7AI @!A(( CU//9;@ A;) /!9MM9;@ (!9C(4 $$* H7BI /! "!U;9;@ > B!U(O'(O!UB /!9M (!9C(4 $$4 H7CI @!1U;)( !"A9! (!9C(4 $$7 H7)I )B!9( !M1A+ (!9C(4 $$< H7I +A;)(CA"9;@ MA9;/;A;C (!9C(

4 $$= H73I !M1A+ 13 @!A(( C+9""9;@( A;) +A(4 $$? H7@I "!91)9C +A0; /!A/M;/ (!9C(4 $$ H7OI /! !M1A+ (!9C(* $* H7I U;9M"!1) @!1U;)(4 $*$ H7AI 39! C1;/!1+ 31! M9((91;E((;/9A+ A!A(4 $*$* H7BI !1(91; C1;/!1+ 13 /'!'M A!A('C!9/ 9;3!4 $*$4 H7CI 39! C1;/!1+ (!9C( 31! 1/O! A!A(4 $*$7 H7)I MA9;/ 13 0/+A;)(* $4 H77I OA/9;@'C11+9;@ (!9C(4 $4$ H77AI 1"!A/ C;/!+ OA/ "+A;/( > )9(/ ((* $7 H7


73/109

&esson B: -ra" E"

• 0ork Breakdown (tructure #0B(& lement is a costobject defined and maintained within a "roject residing inthe "roject (ystems #"(& module

• 0B( lements are cost objects and therefore fully

integrated within the Controlling module for use withinthe Cost Model

• 0B( lements will be utili%e to support 93( likefunctionality

• )"0 related C+( (("s will be generated as 0B(lements

• AboveE+evel C+( for reimbursables will be created as a0B( lement to facilitate the billing process

)*+=-p?

N*estions


74/109

N*estions

• A 0B( lement is #check all that apply&Lo master data of the controlling moduleo a component of a "roject

o utili%ed to support )"0 related (("so support reimbursables

)*+=-p

&esson @: Orders


75/109

&esson @: Orders

Objective$s%:• /o understand what the 1rder cost object

represents, key definition criteria #guiding

principles&, uses, and how defined for theCost Model

)*+?-p



76/109

.A0M C' Army Cost ModeOrder Definition

"rder Definition:

+rders are cost objects used to plan, collect, monitor, and settle the costs ofspecific jobs and tas*s. +rders are used to monitor the costs of short term projects and event#job costing.

)*+?-p*



77/109

yOrder Ty"es

• /here are various 1rder /ypes which are utili%ed todistinguish the purpose of the 1rderF such as, – (ales 1rders #located within the (ales and )istribution module&

and used for revenue'reimbursables – "roduction 1rders #located in "roduction "lanning module& and

used for manufacturing #e$g$ uniforms, ammo& – Maintenance 1rders #located in "lant Maintenance module& and

used for maintenance #e$g$ 93('MaDimo related functionality& – 9nternal 1rders #located in the Controlling module& and used for

event costing such as marketing'recruiting campaigns, 2atrina,

(pecial 1lympics, projects not re8uiring the rigor of a "roject(tructure

• All 1rders are cost objects and included in the CostModel regardless of which @3B( module creates the1rder

)*+?-p4



78/109

y*iding (rinci"es for ,nterna Orders

(rinci"e 61: Time0rame

• 1rders are short term in nature

(rinci"e 62:&ot .iKe

• 9nternal 1rder have a lot si%e of F therefore intended to represent a singleevent not multiple occurrences

(rinci"e 63:!even*es

• Main revenue collection cost object within the controlling module when C1E"Ais not utili%ed

(rinci"e 64:Coectors

• 9nternal orders are not intended to replace the rigor of the "roject'0B(lement structure, e$g$ collectors versus project management objects

)*+?-p7



79/109

y,nterna Order Eses

• Collect revenues which are not associated with (ales1rders$ 1rder /ype W39; has been created to capturemiscellaneous revenues such as gains, interest, etc$

• Capture oneEtime events which management wants tohave visibility into, e$g$ hurricane 2atrina, the annual 9M9

conference, presidential visit to an installation, (pecial1lympic support, etc$

• Manage small projects not re8uiring formal "rojectManagement controls such as planning'scheduling, pertand gant charts, etc$

• !epresent products'services such as (("s, /rainingClasses, etc$• 3acilitate cost assignments'transfers within the Cost

Model, e$g$ internal bill between organi%ations

)*+?-p<

Cost Centers vs ,nterna Orders


80/109

Cost Centers Internal +rders

Cost Coection 1ngoing 1perations )iscrete, /ime Based vents

Time (eriod 9ndefinite' +ong /erm )efinitive Beginning and nd

Owners)i" of!eso*rces

Maintains responsibility of thepeople'e8uipmentF i$e$people are always assigned to acost center'organi%ation

"eople can be assigned to work on butare not assigned to an 9nternal 1rder

.tat*s$!ea/.tatistica%

Always real, but can receivestatistical postings #informationonly G can not be further allocated&

Can be defined as !eal or (tatistical$(tatistical 1rders receive informationalpostings only for cost reporting butcannot further allocate

ro*"ing O"tions (tandard Oierarchy and can begrouped

Can be groupedF no (tandard Oierarchyre8uirement

7AA

A+A(

.ystem

Org 1

Org 2

!ecr*itingTF

.C 2.C 1

)*+?-p=

,nterna Orders vs -+. 'ements


81/109

Internal +rders !ro,e"t-./ le*ents

Cost Coection )iscrete, /ime Based vents (ame

Time (eriod )efinitive Beginning and nd (ame

Owners)i" of!eso*rces

"eople can be assigned to work onbut are not assigned to an 9nternal1rder

(ame

.tat*s$!ea/.tatistica%

Can be defined as !eal or(tatistical$ (tatistical 1rdersreceive informational postings onlyfor cost reporting but cannotfurther allocate

(ame

ro*"ing O"tions Can be groupedF no (tandardOierarchy re8uirement

"roject'0B( lements is a structuredhierarchy

Fetwor5s ;ot Applicable "rovides how the work is performed#routing&

Controing +imited status management Advanced status management, projectreporting and controlling

0inancia Contros Collector Budgeting and Controlling

)*+?-p?



82/109

yow ,nterna Orders are defined

• valuate Job'vent Costing related "roducts'(ervicesand determine which will be supported by an operationalmodule and eDclude those #e$g$ maintenance orders&

• !eview remaining products'services to determine how to

be grouped for identifying 9nternal 1rder /ypes• W((" 9nternal 1rder type was created and an 9nternal

1rders for each nonE)"0 area C+(E(("

• W((" 9nternal 1rder numbers are autoEgenerated on

creation• /he ((" value is stored in a field on the 9nternal 1rder

to support reporting by (("

)*+?-p

'am"e ,nterna Orders


83/109

'am"e ,nterna Orders

1rder /ype 1rder )escription

!esponsible

Cost Center

Dternal

1rder ;o$

W39; 3, 9;/!(/ !;U > +1((

W39; 3* 1/O! 39;A;C9A+ !;U > +1((

W39; 34 /AV > 1/O! !;U

W39; 37 @A9;( > +1(( 13 A((/'9;(/'B1!!10

W39; 3< @A9;( > +1(( 13 U;!A+9W)'1/O!

W39; 3? )99);) )9(/!9BU/91;

W39; 3 COA;@( 9; ACC/@'AC/UA!9A+ +9AB9+9/W39; 3 U;MA/CO) )9(BU!(M;/(

WU3+ &.CCAA

W((" !M1/ (9/ 3)9;@ *ABM=, *)

W((" /A21U/ )9;9;@ )o)'C9 CA(O *ABM=, *O

W((" 9; O1U( )9;9;@ )o)'C9 CA(O *ABM=, *@

W((" /A21U/ )9;9;@ BA( *ABM=, *3

W((" 9; O1U( )9;9;@ BA( *ABM=, *

W((" /A21U/ )9;9;@ (92 *ABM=, *CW((" 9;O1U( )9;9;@ (92 *ABM=, *B

W((" C/!+ )9!C/91; 31! 311) "!1@!AM *ABM,*= *A

)*+?-p

&esson @: -ra"?E"


84/109

" "

• +rders are cost objects used to plan, collect, monitor,and settle the costs of specific jobs and tasks$ 1rdersare used to monitor the costs of short term projects andevent'job costing$

• /here are multiple order types which are used for variousfocused purposesF e$g$ (ales 1rders, Maintenance1rders, 9nternal 1rders, etc$

• 9nternal 1rder /ype W((" will include all nonE)"0 C+(E

(("s• 9nternal 1rders provided a subEview of the costs within a

Cost Center or a cross Cost Center view

)*+?-p*

N*estions


85/109

N

• An 9nternal 1rder is interchangeable with Cost CenterLo /rueo 3alse

•

+ike a Cost Center, 9nternal 1rders can capture costsonlyLo /rueo 3alse

• 9nternal 1rders can be identified as statistical#informational only& or real #capture and transfer costs&Lo /rueo 3alse

H

H

)*+?-p4

&esson Q: +*siness (rocess


86/109

Objective$s%:• /o understand what the Business "rocess

cost object represents, key definitioncriteria #guiding principles&, uses, and howdefined for the Cost Model

)*+-p



87/109

+*siness (rocess Definition

Business Process Definition: A business process is a cost object used to capture costs of cross%functional!cost center" activities.

• Business "rocesses are the 5work6 being performed by the Cost

Center'Activity /ypes• /ypically related to an action such as a 5verb6, e$g$ "ick 9tems, "ack

BoDes, (hip "allet• Are an eDpression of the capacity utili%edF but do not hold capacity

themselves

)*+-p*

.A0M?C' Army Cost Mode idi ( i i f + i (


88/109

*iding (rinci"es for +*siness (rocess

(rinci"e 61:

Anaytica

• Utili%ed when management needs more insight into 5what6 the resource pools

are doing in order to make process improvement decisions

(rinci"e 62:Detai

• )efined in areas where further detail is necessary to support costEtoEserving acustomer

(rinci"e 63:+iing

• Mechanism for making crossEfunctional #cost center& charging of a single rate

(rinci"e 64:Ca"acity

• Utili%ed to represent the consumption of capacity, not the capacity itself #e$g$ no

59dle6 activity'business processes&

r

DC 1

r

DC 2

(ic5

(ac5

.)i"

(ic5

(ac5

.)i"

(ic5

(ac5

.)i"

(ic5

(ac5

.)i"

C*st1

C*st2

(ic5

(ac5

.)i"

r

r

DC 2

DC 1

C*st1

C*st2

C*st1

C*st2

C*st1

C*st2

r

DC 3

)*+-p4

Activity Ty"es vs


89/109

+*siness (rocesses

&"tivit Tpes /usiness !ro"esses (&"tivities)

.co"e /he resource pool performing thework

/he work being performed

!eations)i" toCost Center

Can never stand alone without acost center

Multiple Cost Centers can provideresources to the process

Ca"acity 9s the capacity provided to perform

the work

9s the utili%ation of capacity while

performing the work

!ates Always has a rate associated Can have a rate associated

ro*"ing O"tions Can be grouped for reporting #e$g$ All labor related&

(tandard Oierarchy re8uired and canbe grouped into alternate hierarchies

)*+-p7



90/109

+*siness (rocess Eses

• Used to support activityEbased costing initiatives

• 3or utili%ation of a single consolidated rate of a similaractivity performed across several cost centers

• !epresent repetitive services that are not 1rder based#e$g$ "rocess Oelp )esk /icket&

)*+-p<

.A0M?C' Army Cost Mode + i ( d fi d


91/109

ow +*siness (rocesses are defined

• Most of 9MC1Ms (("s would typically be Business"rocesses, however since processes should notreceive a primary posting, these were created as 0B(lements and 9nternal 1rders

•

0hen desired to charge a rate'per, to the receivingcustomer'tenant, a business process was identifiedFe$g$ (BC *< G Central 9ssue 3acility and (BC *4 G

Ammunition (upply (ervices based onT9ssues'!eturns

)*+-p=

.A0M?C' Army Cost Mode+ i ( .td i )


92/109

+*siness (rocesses .td8 ierarc)y

• /here is a Business "rocess (td$ Oierarchy to which allbusiness processes must be assigned when created$

• /he currently defined Business "rocess Oierarchygroups processes into (ervices, this will be augmented

as other commands are included into the Cost Model• Additionally, alternative hierarchies can be generated as

needed

• @roups of processes can also be generated to support

adEhoc reporting or cost allocations

)*+-p?

&esson Q: -ra"?E"


93/109

• A usiness pro"ess is a cost object used to capturecosts of crossEfunctional #cost center& activities

• !eflect the utili%ation of capacity of a resource pool#activity type&

• Can have a rate associated supporting a R'peroccurrence of the process being charged to the receiver

• Must be assigned to the Business "rocess (td$Oierarchy but can also be assigned to alternative groups

for reporting

)*+-p

N*estions


94/109

• A Business "rocess is interchangeable with an Activity/ypeo /rueo 3alse

• A Business "rocess is #check all that apply&Lo /he 5work6 being performedo Consumes output of the resource pools'activity typeso Must have a rate associatedo Are for oneEtime occurrenceso (upport benchmarking

H

)*+-p

&esson : .tatistica >ey


95/109

0ig*res

Objective$s%:• /o understand what the (tatistical 2ey

3igure represents, uses, and how definedfor the Cost Model

)*+-p

.A0M?C' Army Cost Mode.t ti ti > 0i $.>0% D fi iti


96/109

.tatistica >ey 0ig*re $.>0% Definition

Statistical #ey $i%ure Definition: A 'tatistical ey -igure is a piece of information about the cost object it isassigned to, e.g. -T for a cost center, telephones, etc.

•

/here are two types of statistical key figures. G ied value E 3iDed values are carried forward from the periodposted to all subse8uent posting periods for the year

G Total value E /otal values eDist only for the period posted

6 eadco*nt

6 0T'

(1 (2 (3 (4 (< 8

12 12 24 24 24 24

1 1 18< 2

CC 61===

)*+-p*



97/109

.tatistica >ey 0ig*re Eses

• As a basis #cost driver& for cost assignments,e$g$ T telephones to allocate out the phone bill

• /o measure performance, e$g$ T surveys (23can be planned for the year and then actuals

captured to report progress• /o calculate a unit cost rate in unit cost report$

/his report is designed specifically for the Armyand allows for some or all of the costs on the

cost object selected to be divided by the (23 onthat cost object to calculate a Unit Cost rate ofthe (23, e$g$ R'meal

)*+-p4

.A0M?C' Army Cost Mode. f


98/109

ow .>0s are defined

• valuated the C+(• )etermined the 5work load6 measure

within C+( is an appropriate

representation of (23• (23s have to be associated with a cost

object and the information must then be

captured and maintained #directly or via9(! or some other system feed&

)*+-p7

..( -or5oad 'am"eC&. .+C 2< C,0


99/109

C&. .+C 2< ? C,0

@3B(

)*+-p<

&esson : -ra"?E"


100/109

• A tatisti"al e i$ure is a piece ofinformation about the cost object it is assignedto, e$g$ T 3/ for a cost center, T telephones,etc$

•

/here are two types of (23sF 3iDed which preEpopulates the same data for each period untilchanged and /otal which represents the totalvalue of that (23 for that period only

• Utili%ed as cost drivers'basis for cost allocationsand performance reporting

• Must be assigned to a cost object

)*+-p=

N*estions


101/109

• /here is a limited number of (23s that can be assignedto a Cost 1bjectLo /rueo 3alse

$ ------- statistical key figure varies each period$

*$ ------- statistical key figure is static from theperiod of entry through to the end of the year$

H

)*+-p?

&esson 1=: Ca"t*ring Costs


102/109

Objective$s%:• /o understand how actual costs will be

captured against the cost objects definedwithin the Cost Model

)*+-p

0'+. Cost Objects& D t ' t


103/109

vs &egacy Data 'ements&egacy Data 'ement (*r"ose 0'+. Cost Objects

'ements of !eso*rce $'O!% ? B=== .eries '"enses # !even*es (rimary Cost 'ements

Cost Transfers $e8g8 'O! 2@==%Cost Movement $+*dgetaryand non?+*dgetary%

.econdary Cost 'ements

CommandG DirectorateG +ranc)G Enit OrganiKationa 'ntity Cost Centers

Civiian / Miitary (ay $e8g8 C?Ty"eG !an5%

!eso*rce (oo $e8g8 &aborG

'9*i"% Activity Ty"es

(oint Acco*ntsG 0*nctiona

Cost Acco*ntsG Acco*nt

(rocessing Codes $A(Cs%

$e8g8 ,nstaation .ervicesG 0aciity

CodesG 7ob OrdersG ordersG "rojectsG etc8%

,nterna Orders ,nterna Orders

(rocesses/activities +*siness (rocesses

(rojects / -+. 'ements (rojects / -+. 'ements

,nfrastr*ct*re $e8g8 0aciityG

!oads%!ea 'state Objects

&egacy Data 'ement (*r"ose 0M Master Data

(rogram 'ementG MD'(G Ac9*isition / !DT' (rograms+*dget / (rogram &eveMgmt

0*nctiona Area

MandatesG 'armar5sG Con?O"s ."ecia (rojects 0*nded (rogram

)*+-p*

Cost Mode Cost Objects


104/109

Centra ,ss*efaciity

C,

!


CFT

!

Civilian

Employees

Contractors

iitaryabor

reciation


M,&

!


..(A. Manage

1C9 9nventory

..(+: 9ssue

1C9 to (oldier


/raining (oldier

..(D: Accept

1C9 /urnE9ns

..(': !eceive

> "rocess(hipments

..(0: Manage

Chemical )efense

8uipment

..(s (rovided


+rigadeHHH

T!ADOC III

+rigade

JJJ

8 8 'tc8

Cost Center

0* CostC*stomers

Military

• /he initial costrecognition is theprimary posting#primary costelement&

• Costs flow throughthe Cost 1bjects ofthe model #e$g$secondary costelements& usingvarious cost

assignments'allocations

)*+-p4

(rocess for Ca"t*ring Cost


105/109

Cost

Center

Material

"ayroll

(upplies

8uipment

Business"rocess

Activity Ty"es:• +abor "ools• 8uipment usage

• 3acility usage

1rders#9nternal,(ales,Maint$&

"roject 0B(lement

'"ense 'ements OrganiKations (rod*cts # .ervices

+M"@C((EA

)C"( A/AA"(0M/)9MO!(

0A03

3CM"Card

@3B(3iDed

Assets )epreciation

)/( /ravel O"erationa .ystems: • (23 Cost )river T• (23 Cost )river T*

)*+-p7

0'+. ,nterfaces !183


106/109

DC(.

ATAA(.-MT

-A-0

Credit Cards

DT.

Cost Center Activity Ty"es:• +abor "ool usage• 8uipment usage

• 3acility usage

1rders#9nternal, Job0ork&

"roject 0B(lement

)*+-p<

Cost 'am"e


107/109

ATAA(.

-A-0

(*rc)aseCards

DT.

2A+M==B< Ammo .*""y (oint

Fame Cost 'ement Act*as N*antity

DC(.

-A!.

1=14< N*aity Ass*ranceG

,ns"ect # rading !2

1=1


108/109

• /he cost objects define the structure of where the actualcosts are posted against

• Actual costs are reflected first as the primary costelement postings in the Cost Model, then as secondaries

as they are assigned'allocated through the cost model• Many interfaces to legacy applications will eDist to

generate the primary postings into the model• As @3B( releases occur, more and more interfaces will

be accommodated for capturing both dollars and nonEfinancial operational measures

)*+-p?

N*estion


109/109

ou survived )ay *L G CongratulationsX

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CostManagementTraining