| Selected Projects |
Project Scope and Benefits |
| GOVERNMENT INDUSTRY |
| Department of Education, Federal Student Aid (FSA) - Activity-Based Costing and Management (ABC/M) cost model that developed unit costs of processes and services delivered as part of the General Accounting Office requirements for a performance based organization (PBO). The ABC model serves as the source for cost data, a platform on which to monitor key financial performance indicators, and an input for the Presidents Management Agenda (performance management) requirements. |
Despite the challenges of model conversion, redesign, and rollout took 5 months; developed clear and measurable total and unit costs of processes associated with each FSA loan program including origination, servicing, liquidation, and the various direct and indirect costs that comprise these processes. |
| State of Maryland Department of Motor Vehicles (DMV) – Process Cost and Strategic Budgeting model for the Business Licensing and Consumer Services Department to assist DMV with understanding the current processes and productivity rates associated with delivering services for business licenses. |
Model was used as a decision support tool to evaluate licensing pricing and fees and to drive process changes. Some of the model findings include:
- Only one Business License has a fee which exceeds the costs of processing and regulation.
- New applications unit costs greatly exceed the fee per license, which was due in part to the costs of processing applications that did not result in a license issued and paid.
- The cost of an initial site visit is close to $380 which exceeds many of the new license fees. Approximately 122 site reviews were completed that did not result in an application of new applications.
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US Navy, Navy Recruiting Command - Supply chain model that integrates total and unit cost of processes, capacity relationships (ratios of recruiters, processors, regional support, and headquarter overhead to recruits), and attrition rates. The recruitment model will be used as a planning model and as a stage to drive Lean Six Sigma projects and pilot studies across the 26 Navy Recruiting Districts (NRDs). |
Modeled 26 Navy Recruiting Districts, Regional HQ, and Central HQ in 6 months; complete model of the over 52,000 recruits who fall into different classes, all of which are comprised of variations in processes and costs. Two models were designed - a historical model which can be updated each year, and a planning model which forecasts for the next year. |
| INDUSTRY |
Top Automobile Manufacturer in Germany - The automobile manufacturer needed a tool to integrate disparate systems to provide an integrated and accurate cost for interior components. Interiors are comprised of individually purchased or manufactured parts across a complex supply chain. The client was able to gain invaluable supply chain information including:
- Accurate total and unit cost for the auto interior components by supply chain vendor (information that could not be obtained directly from its ERP systems);
- Determine impact of cost increases of certain supply chain components on the resulting interior total and unit costs, as well as on the resulting automobile unit by type or class;
- Continuously maintain visibility of the impact of changing supply chain costs and shifts in order to stay ahead of profit margin expectations; and,
- A model for planning labor capacity and profitability.
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The resulting multi-year model is used to plan the usage of labor (FTEs needed in each department). This yearly calculation exercise used to be very labor intensive and took several months. With the model they achieved the same results in a matter of hours. The model is also used for (internal) profitability analysis of products (components going into the complete assembly of any car). Because the fully allocated cost of products were never calculated except in the planning stage, the results of this analysis were very surprising and caused some major re-defining of internal rates and a renewed interest in monitoring actual cost as opposed to budgeted unit cost for management decisions. |
| Top European Telecommunications Company - The telecommunications industry has special challenges when it comes to cost and operational performance management. The product is almost always IT intensive and capacity in nature. Accurately tracing the components of integrated telecommunications network components is a tedious job. This particular client was managing cost via ERP data imported in Excel. The sheer volume of the data became a job within itself. The CostControl methodology and tool integrated the data and provided several views of costs (direct, with shared support functions, and with overhead or sustaining) which provided the client with actionable management information - decision support tools that were used to analyze outsourcing, supply chain provider bids, performance projects, and investment decision impacts. |
The resulting enterprise model is used for executive and business unit cost management, planning, and strategic project selection and measurement. The model is also used for internal geographical service line benchmarking and resource placement. |
| Top International Banking/ Financial Institution- An international bank was in need of a method to accurately cost and monitor the performance of its services and processes associated with its investment portfolio. The resulting CostControl methodology and model accurately mapped all of the services provided by the financial institution including retail banking and investment management to the resources to determine a capacity relationship as well as an automated way to monitor the unit costs and its fixed and variable components. The financial institution uses the model results as part of its quarterly performance review and planning process. |
The resulting corporate performance model is used quarterly to monitor cost performance and specifically manager variable costs. The model is also used to plan for budgeting and capital improvements across the various branches and offices. |
| HEALTH CARE AND MEDICAL INDUSTRY |
Vernon Memorial - Management of a rural hospital was approached by an HMO asking the hospital for a negotiated, lower cost per patient for maternity patients in return for being the hospital of choice for all of its maternity cases. After considering the offer the management of the hospital found itself in a predicament. They could not determine if it would benefit or if would lose money on every such patient at the negotiated rate.
The hospital had a large amount of data, but not the right information to guide its strategic direction and operational issues. It had records of budget and actual expenditures by department and the gross revenue for every procedure for every patient. Management could not, however, determine the profitability of any department or of its six clinics located in communities in the area.
The CostPerform model cuts through the myriad of financial and patient data to provide Hospital Management with timely information to determine:
- That all but one of its remote clinics cost more to operate than it generated in revenue;
- Certain specialties previously believed to be significant profit centers were only marginally profitable;
- Profitability was significantly impacted by a few payers - reimbursement rates were not adequate to cover costs;
- That its operating room and related services capacity was substantially in excess of usage.
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The findings of the CostPerform model led to changes in accounting methods to book discounts to specific patients and procedures to sharpen the profitability information available to better assess HMO requests for special pricing. The information is being used to evaluate whether to focus on specific service lines for growth or to refer some
DRGs to other medical facilities. The hospital will continue the use of CostPerformT in evaluating the next year's performance to understand relative service line profitability trends over time and to evaluate the effects of changes in incoming patient problems and changes in staffing. |
| Nuffield Hospital Group - Nuffield is a group of 40 hospitals in Britain that needed an efficient method to manage performance across the hospital group and constantly manage the changing landscape of treatment demand. CostPerform quickly developed a model that provided cost visibility across the group, including a method of benchmarking. |
The Nuffield Group of Hospitals has actively used the CostControl performance system to monitor and manage costs, benchmarking comparisons to monitor efficiency, and to plan capacity and resource utilization. |
| American Red Cross - Supply chain model that models the complex manufacturing process of the primary Agency that runs over 52% of the nation's blood supply. Each blood component and type (A+, O, B) is modeled uniquely, and corresponding indirect and direct costs are accurately associated with the blood manufacturing processes (marketing, donation, distribution, transportation, storage, and sales). |
Guiding the rollout of the American Red Cross 36 regional models that will be used to manage blood manufacturing and servicing costs and non-financial performance metrics. These regional models will be used to manage the manufacturing process and for performance improvement (consolidation, technology, etc), and two choose financial and non-financial metrics (i.e., losses in supply chain). |
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