Cost Awareness of Financial Operations
in Theater
Army Day 2010
June 2, 2010
Steve Bagby - MG Phil McGhee – COL Sawyers
In Tune with Army Financial Management
Agenda
 Operationalizing Cost Management
 Cost Education and Training
 Cost Management - Policy / Guidance / GFEBS
Support
 Resource Informed Requirement Processes
 USARCENT Financial Management Operations
 Financial Management School
 GFBES Sustainment Training Products
 Cost Management and Cost Accounting Courses
In Tune with Army Financial Management
1
Cost Culture - Cost Management
Single Use
Estimated
Future Cost
Persistent
Use
Expected &
Actual Cost
Universal Use
Planned &
Actual Cost
Cost Informed
Decision
Making
Continuous
Improvement
Cost-Benefit
Analysis
Cost Managed
Enterprise
Cost Culture
Cost War
Cost War High
Cost War Full Spectrum
Insurgency
Intensity Conflict
Operations
Starting here
(some work is being done)
Role Based,
Org Based,
Output Based
Control
TARGET
In Tune with Army Financial Management
2
Cost Management
Cost Planning
– Operational managers
set cost targets and
efficiency goals
– Plan cost based on
outputs produced
Cost
Planning
Resource Informed
Decisions
– Take action based on
analysis and external
demands
– Change targets
– Change resources
– Change quantity / quality
Full Cost Measurement
– Accurate, timely and relevant data
– Connecting operational output/performance
data to financial data
– Allocate Overhead, Unfunded Costs,
Indirect Support
Cost
Accounting
Cost
Management
Process
Cost
Controlling
Cost Analysis
– Variances
Cost
– Trends and forecasting
Analysis
– Product, service or activity
cost by expense (labor,
material, contracts, etc…)
– Understanding full costs of
organizations, operations,
products and services
– Comparison Analysis &
Benchmarking
In Tune with Army Financial Management
3
Cost Management Enablers
Policy & Guidance
Training (Operational & Resource Mgrs)
Cost Management 101
- Cost Management Overview
- Cost Object (ERP) Definitions
- Cost Flow Methods
- Cost Analysis and Reporting
Tools
ARMY COST MANAGEMENT
MATURITY MODEL
GFEBS – Cost Management Training
These courses are either computer-based or
instructor-led training classes to learn how to
operate within the GFEBS cost module.
Cost Management Certificate Course
The program of instruction (POI) is designed to
teach the fundamentals of cost management with a
view to developing a cadre of Army personnel who
are professionally knowledgeable, analytically
competent, and personally motivated to serve as
proactive change agents within their respective
Enterprise line and staff organizations.
Self Study-Cost Management Community of
Practice
https://www.us.army.mil/suite/page/593701
Cost Management Courses in all Professional
Development Programs
Version 10: 4 June 2008
Integration with Quality / Productivity
Improvement
5.0
Enterprise
Perspective
4.0
Knowledge Sharing
/ Best Practices
3.0
2.0
Data
Quality
1.0
Leadership
Commitment
0.0
Workforce
Competencies
Process
Integration
Accountability
/ Performance Mgmt
Actual
Acceptance & Attitude
Target
In Tune with Army Financial Management
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Cost Informed Decisions
Cost Benefit Analysis
Costs
Benefits
The Value of Cost Benefit Analysis:
 Supplements professional experience and judgment
with sound analytical techniques
 Ability to make better resourced-informed decisions
 Results in a strong “value proposition”
Generate
Capability
Gaps /
Requirements
Decision
Forums/ Approval
Formal
Thinking
Domains
Top Down Initiatives
Force Design Update
QDR/TAA/Portfolio – Business Area
Reviews
Army Campaign Plan Process
Concept Plan (TDA Updates)
JCIDS /AROC
Basis of Issue Plan
AoA Studies
Acquisition Process
Installation/MILCON/Sustain
Unit/Institutional Training
AMC/G4 Depot /Sustainment/Ammo
ONS/JUONS/Rapid Transition
Various
FD
POM / BES
Manning
SA/CSA
VCSA
SA/CSA
AROC /JROC
ORDAB
SAG/Other
Milestones
MILCON IPT
Train’g Plan
AMC
AR2B/AROC
Equipping
Training
Sustaining
Organizing
Installation
In Tune with Army Financial Management
5
USARCENT Financial Management Operations
Theater Army Financial Management Report
Specified Tasks
• Manage Title 10 funds
• Resource OEF/OIF
Imperatives
• Visibility
• Accountability
• Transparency
• Oversight
• Controls
DoD Resources
FM/Contract Systems
Mgmt/System Accts
Theater FM Initiatives
• FM/Contracting systems
• Cost culture
• Cost of war
• FM doctrine
Cost Analyst Team
Link end-to-end processes
Model and analysis
Effect major cost drivers
Lean Six Sigma Team
Lean out inefficiencies
Banking Team
Materiel Enterprise
Maximize e-commerce
Strategic Partners
$714M Cost Avoidance
FY10
Monthly Disbursements
$396M
Credibility
v2 as of 18 APR10
Exceptional Stewardship
• Performance metrics
• Resource informed
• Cost savings
• Cost avoidance
• Process efficiencies
• Near cashless Theater
$1,148M
$434M Cost Savings
91% EFT Payments
Confidence
1 % Goal
9% Cash Payments
Trust
6
GFEBS Sustainment Training Products
The US Army Financial Management School will implement GFEBS financial management training
products no later than 1 OCT 2011 in order to sustain FM Community knowledge and skills
Instructor Led Training
Cost Management (80 hrs)
Financials (80 hrs)
GFEBS
PM
Training
(53
Courses)
Non FM
Roles
Training
Support Packages
Distributed Learning (dL)
GFEBS Essentials (20 hrs)
Reimbursables (20 hrs)
Funds Management (24 hrs)
Spending Chain (50.5 hrs)
Project Systems (8 hrs)
dL Products
Technical Training
Principles Cost Act/Mgmt (120 hrs)
Education
Intermediate Cost Act/Mgmt (120 hrs)
GFEBS Material
w/in Legacy Courseware
(AIT, NCOES, OES, Functional Courses)
In Tune with Army Financial Management
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Cost Management (CM)
within Professional Military Education
FM BOLC
Course:
Purpose: • Provide CM foundation.
• Introduce cost concepts and
terms.
• Describe the Army’s cost
culture.
• Relate CM to GFEBS
capabilities.
Audience: 2nd Lieutenants
Length: 8 Hours
•
•
Content: •
•
•
Cost Management (CM)
Cost Culture within the Army
Cost Terms and Concepts
Cost Benefit Analysis (CBA)
Practical Exercise
FMCCC
• Introduce advanced Cost
Accounting and CM concepts.
• Cost Benefit Analysis (CBA)
case study.
• Develop communications skills
to influence leaders decisions.
Captains
16 Hours
•
•
•
•
•
•
Cost Management (CM)
Cost Accounting (CA)
Cost Benefit Analysis (CBA)
Practical Exercise
Cost Decision Briefings
Intensive Group CBA Exercise
In Tune with Army Financial Management
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Cost Management (CM)
Functional Courses
Principles of
Cost Accounting & Management (PCAM)
Course:
Intermediate
Cost Accounting & Management
(ICAM)
Purpose:
• Offer a basic cost management and cost
accounting functional course
• Provide underlying cost accounting (CA)
and CM principles, theories, and
application.
• Prepare military and DA civilians to
leverage CM tools within GFEBS
• Build on the PCAM course and provide
more advanced CA and CM concepts.
• Provide an increased focus on analysis,
reporting, and communication skills.
• Provide the knowledge necessary to fully
leverage the CM and analytic tools within
GFEBS.
Target Audience:
SGT, LT, CPT, entry level CP 11 Personnel
SSG, SFC, CPT, mid level CP 11 Personnel
3 Weeks
3 Weeks
Math dL Prep Course
Math dL Prep Course, PCAM
•
•
•
•
•
•
•
•
•
•
•
•
Course Length:
Prerequisites:
Course Content:
Cost Management Principles
Cost Term/Concepts
Cost Accounting
Cost Benefit Analysis
Variance Analysis
Practical Exercises
Cost Management
Cost Accounting
Cost Management Paper
Cost Management Briefings
Cost Benefit Analysis
Intensive Case Studies/Exercises
In Tune with Army Financial Management
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Cost Management and Cost Accounting
“Achieving Readiness at Best Value”
Soldier Support Institute
Principles of
Cost Accounting and Management
Intermediate
Cost Accounting and Management
PCAM
• Cost Terms
• Cost Concepts
• Fundamentals of Cost
Acct. and Cost Mgmt
• Practical Exercises
Cost Management Certificate Course
ICAM
CMCC
• Cost Flow Methods
• Analysis and Reporting
• Practical Exercises
• Complex Case Studies
LT
SGT
Naval Postgraduate School
CPT
SSG
• Managerial Costing
• Operations Management
• Cost Control
• Organizational Development
MAJ
SFC
LTC / COL
MSG / SGM
End State:
FM Community possesses the knowledge and skills necessary
to leverage cost management and cost accounting
In Tune with Army Financial Management
17