1. Joint CMG/PCMGLenhardt & Colton, LLC Activity Based Cost Management Joint CMG/PCMG Meeting October 17, 2000

2. Joint CMG/PCMGLenhardt & Colton, LLCSlide 2 Agenda –Background of ABCMary Prescott –ABC in Program SupportPete Lenhardt –Moving from ABC to ABMPete Lenhardt –Q&AAll

3. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 3

4. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 4 Current Status

5. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 5 Status, cont.

6. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 6 Perceived Cost Actual Cost

7. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 7 Activity Based Cost Management “Activity-Based” Activity Based Costing Activity Based Management

8. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 8 InputOutputActivity Resource $ End Cost Objectives ProjectsOfferingsCustomers Demands An Activity-Based Approach Exploit the “Process Model” of Work

9. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 9 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? Activity Based Management How well are we meeting our objectives? Activity Based Performance Measures How can we institutionalize improvements? Activity Based Budgeting How do we know what to improve? Activity Based Continuous Improvement How can we better manage capital projects? Activity Based Project/Resource Management Activity Based Solutions Problem? Solution! How much does it really cost? Activity Based Costing Activities Outputs Resources Activity Analysis Inputs

10. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 10 Partial Activity List—OTS

11. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 11 How much does it cost? On which activity do we spend the greatest amount of resources? Activity Cost Pareto Report

12. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 12 How much does it cost to… manage and administer our primary (core) activities? Secondary Activities

13. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 13 How much does it cost… to complete one unit of output? Dollars Per Output Summary

14. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 14 Activity Dictionary Entry

15. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 15 TS1—Produce a PS&E Package Normalization Criteria

16. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 16 TS1—Produce a PS&E Package Normalization Factors

17. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 17 TS1—Produce a PS&E Package Hours Per Output Type

18. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 18 TS1—Produce a PS&E Package Dollars Per Output Type 1.0X

19. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 19 TS1—Kinds of Resources per Output

20. October 17, 2000 Joint CMG/PCMGLenhardt & Colton, LLCSlide 20 From ABC to ABM Identify improvement opportunities Reduce NVAImprove VA Develop process controls Non-financial process reports Process Controls Current ABC Project Identify Resources Develop ABC Information Identify outputs and CPO Identify Activities ABC info for strategic decisions Strategic Information Develop action plans Improvement Project Status Reports Process Improvements Incorporate in new budgets Activity Based Planning & Analysis Resource Controls Cost, Quality, Time (CQT) Performance Measures