APPENDIX D: Revised Cost Accounting Methodology and Prototype

APPENDIX D: Revised Cost Accounting Methodology and

Prototype

Consultancy ProjectFinal Report

14 May, 2004

Contents

• Overview of cost-accounting methodology

• Recommendations:– 2.1/2.2. Define Outputs

– 2.3. Introduce time tracking

– 2.4. Introduce Service Delivery Reporting (SDR) based on Service Level Agreements (SLAs)

– 2.5. ‘’Loaded Costs”

– 2.6 IT solutions to support the revised cost accounting

• Cost-accounting prototype

For definition of terminology see Appendix A

Contents Appendix page ref.

2

11

13

20

32

36

42

1

2

Overview of cost-accounting methodology

The revised financial management systems strengthens the linkages between planning, budgeting, accounting and reporting

Revised Financial Management System

Service Level Agreements

Strategy/Operational

Planning

Financial and cost accounting*

Service Delivery Reporting

Results-Based Budgeting

Financial, results-based and other

reporting

* Includes time tracking, loaded cost etc.3

The key challenge is to make the linkage between resources and results more direct, transparent and accurate

Three basic options for planning and cost

accountingGeneral

Secretariat ITU-R ITU-T ITU-D Outputs

4

1. No direct linkage: based on rough estimation

(current costing methodology)

2 . Project-based organisation: direct

organisational linkage between resources and

outputs

3. Time tracking and reporting: virtual linkage between resources and

outputs

With option 3 ITU will achieve a strong linkage between resources and outputs without a complete re-

organisation to a less attractive model

With option 3 ITU will achieve a strong linkage between resources and outputs without a complete re-

organisation to a less attractive model

The revised cost accounting methodology creates a more direct, transparent and accurate link between costs and Outputs

5

Allocation method

TranslationTyping

Sales & Mktg, Publication, Conference Service

Legal, CEC & SPU

SGOConference Mgt

Rest of Common Services Personnel

Information ServicesFinance

Structure

Gen

eral

Sec

reta

riat

Bur

eaux

LogisticsLibrary & Archiving

Personnel & Social ProtectionFinance

SGO (including Legal)CEC & SPU

Conference Services (including translation & typing)

Information ServicesCommon Services

(sales/mktg, pub., print/dispatch)

Outputs

Intersectoral

BDT

BR

TSB

12 Outputs 7 new outputs

added

Improved cost accounting to outputs

16 Outputs 3 new outputs added for SNF

12 Outputs

18 Outputs 1 new Output

Current Revised

‘Direct’

Forecast Annual Survey

Service Delivery Reporting

Driver –revenue & budget based

Weekly Time SurveyDriver –Post Count ‘Loaded’ Cost: Driver –

Post Count

BR

BDT

TSB

BR

BDT

TSB

Driver – Post Count

• Staff: Weekly Time Survey

• Mgt: Prorated on staff time

• Staff: Annual forecast Survey

• Mgt: Prorated on staff time

Allocation methodStructure

Summary assessment of revised costing methodology against goals

Increase of up 50%

Impact of revised costing methodology Steps leading to improvement

• ‘Delivery reporting’ on more GS services• More sector services tracked to outputs

Criteria

Direct Share of cost base

Low

Medium

High

6

• More frequent time recording• Greater consistency in tools and business

practices• Loading of costs

Accuracy

• Shared terminology• Time recording to activities• Processes and tools shared across ITU• Actual costs will be known for more activities

• Complexity increases as greater share is allocated on use of service

• But enhanced logic and consistency

Complexity

• All staff members will do timesheets• Business processes and tools will limit

added workload• Should be traded off against discontent

with current practices

Workload

Transparency

Clear improvement

Clear improvement

Increased complexity

Increased workload

Proposed steps will improve accuracy and transparency of costing

Proposed Steps

• In General Secretariat:– Increased use of internal invoicing (i.e. Conference Department, activities in

Information Services and Common Services)– Carving out activities directly related to outputs (i.e. Training, Finance working for

Satellite Network Filing, etc.) • In Sectors:

– Staff to record time to activities and determine when to cost activities to outputs

Recommendation

• Making a greater share of cost base direct

• Improved methodology for ‘internal invoicing’

• Application of improved and consistent methodology for service level agreements and service delivery reporting to Outputs

• Greater accuracy in forecasting & recording time

• Increased frequency and depth of time tracking • Introduction of improved business processes and tools

• Loading costs • Allocating Logistics costs and Personnel costs across the organization, prior to allocation of GS costs

• Increasing amount of General Secretariat costs not allocated

• Assess GS activities and determine which should not be allocated across the organization

7

Some additional GS items should be classified as Intersectoral Outputs and should not be allocated to the sectors

Unallocated General Secretariat Costs

Some GS activities are deemed as Intersectoral Outputs are not currently reallocated:

• Plenipotentiary Conference• World Telecom. Policy Forum• World Summit on Information Society• Council & Working Groups• GMPCS-MoU

The following have been identified as new Intersectoral Outputs, and so would not be reallocated to the sectors include:

• New Initiatives Programme• ITU News• Governance (CoCo)• TELECOM (already extra budgetary, but separating it out will ensure all

costs for work preformed will be allocated to TELECOM)

Some activities within the GS department solely focus on these intersectoralitems and should not be reallocated – once the departments have detailed

their top 5-15 tasks it will be easier to determine if all/some of their activities relate to intersectoral outputs and should not be allocated across the bureaux

8

In the proposed revision we have taken a number of steps to balance workload and complexity

Pro

• Easier to implement and maintain

• Less time consuming, requires less data compilation

• Allows to go into detail only when advantageous to do so

• Less time consuming

• Easy

• Less time consuming

• More precise

Possible Steps

• Limit the number of outputs and activities

• Limit the number of staff doing time surveys

• Target to product/department –differentiate when appropriate

• Measure on less than a daily basis

• Use a proxy driver to track costs to outputs

• Do not track costs to individual/ customer level

• Break out targeted special initiatives/projects

Con

• Less transparent

• Provides less precise tracking of time

• More complex; not uniform across ITU

• Less precise

• Less precise

• Do not know the cost of individual end product

• More effort required

9

10

Recommendations

11

Recommendation 2.1/2.2 Define Outputs

Summary of ITU Outputs – will require detailed revision by all Bureaux if our Recommendations are adopted by Council

ITU-R

1. Coordinate Member States and Sector Members in their decision making

2. Publish and distribute info material and results of studies and MS/SM deliberations

3. Perform projects and processes necessary to achieving the Sector mission

4. Promote the Sector & coordinate liaison with other bureaux

• World Radio Conf.• Regional Radio Confs• Radio Regs Bd meetgs• RAG meetings• Study Group meetings• Seminars

• ITU-R recommendations and manuals

• ITU-R regulatory publications

• Other ITU-R publications

• SNF Notifications• SNF Coordination• SNF Advance

Publication• Other space services• Notices for terrestrial

services• Other terrestrial

services

• General assistance, external co-operation and internal liaison

ITU-T ITU-D Inter-sectoral

• WTSA• Regional consultation

sessions• TSAG• Study Group meetings• Seminars

• ITU-T recommendations

• ITU-T operational bulletin

• Other ITU-T publications

• Databases accessible to the public

• UIFN registration• UIPRN/UIS CN

registration


Sector objectives

• WTDC• Preparatory meeting

for WTDC• TDAG• Study Group meetings

• ITU-D publications

• Plenipotentiary• WTPF• WSIS• Council &

Working Groups• GMPCS-MoU

• GS publications• ITU News

• Governance through CoCo

• New initiatives program

• Retirees• Telecom


• Regulatory reform• Technologies and

Telecom network dev’t• E-strategies & e-services• Economics & finance• Human capacity-building• Special program for LDCs• Statistics & info on ICT• Special Initiatives (x4)• Regional initiatives


-12

13

Recommendation 2.3 Introduce Time Tracking

Increasing the frequency/depth of time tracking will increase accuracy and transparency

New Standards for Time Tracking

Frequency

Electronic

Consistency

Training

Comprehensive

• Weekly if recording time to outputs• Quarterly if tracking time to activity that are not costed directly to an output• Ongoing tracking where Service Delivery Reporting is applied to track

actual resource use to sectors and outputs

• The time tracking needs to be electronic – this will help ensure that increasing the frequency and depth of tracking will not be more cumbersome

• Business processes should be consistent, simple and practical

• Staff should understand why they are filling out the time surveys, what they used for and the impact of discrepancies in their estimates

• Policies should be in place to ensure that data is collected from all staff members and to deal with any missing data

14

Who will do Time Tracking - General Secretariat

Tracking Time to Outputs Frequency Tracking Time to Activities1Group Frequency

SGO Yes YesWeekly ? Quarterly

CEC & SPU Yes QuarterlyWeekly ?Yes

Personnel Yes QuarterlyN/ANo

Finance Yes QuarterlyN/ANo (occasional)

Common Services

Logistics Services

Library & Archiving

15

Yes QuarterlyN/ANo

Yes QuarterlyN/ANo

Staff working directly on outputs under cost recovery will track

their time to activities on a weekly basis



Conference Services, Information Services and part of Common Services (Production of Publication, Sales & Marketing, and Printing & Dispatch) will use Service Level Agreements and Service Delivery Reporting

Note: 1) Time will be tracked quarterly to top 5-15 activities

Who will do Time Tracking - Sectors (org. units are illustrative)

Tracking Time to Outputs FrequencyWho Tracking Time to Activities1 FrequencyBR:

Space NoticesTerrestrialSoftware DevelopmentStudy Groups

QuarterlyQuarterlyQuarterlyQuarterly

YesYesYesYes

WeeklyWeeklyWeeklyWeekly

YesYesYesYes

TSB:

PromotionEDHSoftware DevelopmentProject Management

16

YesYesYesYes

QuarterlyQuarterlyQuarterlyQuarterly

YesYesYesYes

WeeklyWeeklyWeeklyWeekly

BDT:

Regulatory ReformE-strategiesHuman capacity buildingSpecial Initiatives

WeeklyWeeklyWeekly

Weekly

QuarterlyQuarterlyQuarterly

Quarterly

YesYesYes

Yes

YesYesYes

Yes





Note: 1) Time will be tracked quarterly to top 5-15 activities

Proposed roles and frequency in time tracking across sectors and GS

Tracking Time to…

Outputs (where applicable) ActivitiesFrequencyRole Frequency

Professional staff

…

General Service staff

• Time surveys • Track time to top 5-15 activities

• Weekly

• Quarterly• Track time to top 5-15 activities

• Quarterly

• Weekly• Time surveys

• In select cases for administrative assistants, option to prorate based on professional colleague time

Elected Officials

• No

• Time allocated to ‘Governance through CoCo’

• N/A

Senior Management(Heads of GS Departments and Sector Deputies)

• Prorated based on Department staff time surveys

• Track time to top 5-15 activities

• N/A • Quarterly

• No • N/A

17

Discussion: some of the challenges in implementing revised cost accounting procedures in ITU

Key challenges

• Choosing the most appropriate method for measuring staff time (proportional or cumulative time)

• Reporting on indirect activities such as training and administrative time (‘cleaning up’, expense reporting, time tracking, miscellaneous)

• Limiting ‘residuals’, ie. time reported to administrative/misc. category rather than directly to specific output or activity

• Designating appropriate roles

• Guarding confidentiality

• Limiting workload

Recommendation

• Allocate as percentage of time (standard 8 hours)• Find simple, straightforward way to account for part-time

• Make available categories for Administrative time (expense report, time tracking, miscellaneous)

• Cap targets set for administrative/misc.• Use exception reporting to highlight problems

• Guidelines and supervisor monitoring, but no approvals• Finance Dept. and sector controllers will manage system

• Staff to own; supervisor to own staff; all to dept. aggregates

• Time-sheets user-friendly ‘3-5 minute’ design18

19

Recommendation 2.4Introduce Service Delivery Reporting based on Service Level Agreements

Service Level Agreement (SLA) and Service Delivery Reporting (SDR) Process

SLA and SDR Process

SLASLA Results-Based BudgetResults-Based Budget

SDRSDR

Quarterly and annual

reporting

Quarterly and annual

reporting

Goals of the SLA / SDR process

• Improved forecasting and planning of shared services

• More accurate and transparent allocation of costs to outputs

• Increased accountability on the part of services providers

• Increased sensitivity to costs and enhanced sense of ownership on part of users

20

Some basic facts about the proposed use of SLAs and SDRs

21

… but they will not

• Change the structure of budget allocations between sectors and the General Secretariat

• Involve actual transfers of funds between departments

• Change the current framework of budget controls

• Require organisational changes

SLAs do

• Place greater emphasis on forecasting and prioritizing of the use of services

• Enable end-users to be more involved in the up-front decision-making process

• Create an agreement between the service department and it’s users

• Track fluctuation in demand/consumption of services across Outputs

• Use standard rates, which enables:• Better planning of utilisation of

services• Variance analysis between standard &

actual rate• Invoicing department to benchmark

itself to own performance over time as well as to external providers

The SLA process: step-by-step

SLA/SDR process

Service Department creates a ‘service

catalogue’ and sets standard prices1

Service dep’t & units create SLA (prior to

setting biennial budget)

Service dep’t records use of

services to Outputs

as consumed

On-demand access to SDR

& monthly reporting to units

Variance analysis

Revise as needed

On demand access and monthly reporting will allow continual monitoring of costsOn demand access and monthly reporting will allow continual monitoring of costs

Note: 1) Costs are ‘fully loaded’; ie. they include costs of salaries for staff directly working on activity, planned expenditure, portion of dept. management time, as well as portion of the logistics, library and archiving and personnel costs attributed to the unit

22

Proposed use of SLA/SDR from the beginning: the largest GS service groups

Services (to be refined)Department

23

• Conference Services

• Translation Services

• Trans/Typing – Arabic, Chinese, Russian

• Document Composition

• Quickpub

Conference Department

Information Services Department

Common Services Department

• Production of Publications

• Sales & Marketing

• Printing & Dispatch

• Network services

• User Services

• Database & Application Services

• Administrative & Managerial (ERP) Application Services

• Project Management

Detailed design issues

• Use of drivers other than staff time• Level of granularity in reporting to specific outputs• Other service groups in GS / sectors that would benefit from SLA/SDR• Lessons learned from IS Dept. service management work and previous internal invoicing experience at ITU

Example template: Service Level AgreementSERVICE LEVEL AGREEMENT FOR THE ‘ABC’ SERVICE FOR ‘DEF’ PERIOD This agreement is made between……………………………………….. and…………………………………………………. The agreement covers the provision and support of the ABC services which….. (brief service description). This agreement remains valid until superseded by a revised agreement mutually endorsed by the signatoriesbelow. The agreement will be reviewed annually. Minor changes may be recorded on the form at the end of the agreement, providing they are mutually endorsed by the two parties. Signatories: Name…………………………………. Position………………………. Date …………… Name…………………………………. Position………………………. Date …………… Details of previous amendments: Service Description: The ABC Service consists of …. (fuller description to include key business functions, deliverables and allrelevant information to describe the service and its scale, impact and priority for the business) Service Hours/Availability: Reliability: Service Performance: Charging (if applicable): Service Reviews: Glossary: Amendment Sheet:

• SLA will initially be prepared in a Word template

• Will also include forecast schedule of allocation of services to individual outputs (volumes and CHF)

• Axios, ITU’s off-the-self service management tool, will be assessed to see whether it can support SLAs

24

The SDR process: step-by-step

Service Delivery Reporting process

• Service Delivery department tracks time and effort to Outputs asservices are consumed

• End-users of services have on-demand access to reports detailing consumption of services, and the resulting allocation of costs

• Monthly reports will also be sent to end-users, including variance analysis

• Regular joint reviews will be held to revise forecast targets

25

One benefit of the new system is to contain the “element of surprise” when variances are passed on to sector and intersectoral outputs at end of period

Current Situation – Translation Unit

Planning Period ExampleTSB Study Group5,000 pages translated in French in 2004/05

Estimate # of translated pages, across all Outputs for biennium

GS

BR

TSB

BDT

Translation Unit

26

Actual

Based on estimated demand & capacity, rates are set for the various services

Rates used to estimate costs in the budget

At year-end finance allocates the actual cost of the unit by actual services rendered (i.e. actual translation costs across the number of pages translated)

2

Cost perpage

Forecast # of Pages

Cost of French Translators

Discrepancy –CHF 110,000

50,000 CHF 100CHF 5M

1

3TSB Budget is charged CHF 500,000(5,000 pages * CHF100) Implications

• Limited accountability for variance

• Limited incentive for gain efficiencies

4

GS

BR

TSB

BDT

Translation Unit

Cost perpage

Actual # of Pages

Cost of French Translators

41,000 CHF 122CHF 5M

TSB Budget is charged CHF 610,000(5,000 pages * CHF122)

The revised methodology will also simplify handling of variable and fixed costs (translation/typing)

Today

Service ConsumptionPlanning

Department/Bureaux

• Determine internal capacity and need for external service providers to cover excess

• ‘Invoice’ Unit/bureaux for variable cost based on the standard rate

• Perform quarterly reconciliation between standard rate charged & actual

• Estimate translation/ typing volume needed

Conference Services

Finance Department • Sets standard rates for Fixed & Variable costs

• Use Fixed capacity first• Hires external service providers to cover

excess demand as needed

Department/Bureaux

• Variable costs (cost of external service providers) comes from Bureaux budget

• No changes to the decentralization of budget • SLAs is a tool to plan volume of services• SDR is a method to track consumption of services• Actual cost recorded – no reconciliation required• On demand access and monthly reporting to detail Fixed and Variable costs

Under the Revised Methodology

27

Discussion: some of the challenges in implementing SLA / SDR procedures in ITU

Key challenges

• Same issues as for time tracking discussed under cost accounting

• Need to reach agreement on SLAs and revision of targets during reporting period

• Access / confidentiality

• Handling of variance to limit end-of-period surprises

• Handling capital expenditure

Recommendation

• Similar approaches to time tracking

• Maintain realistic links to operational plans and budget• Shared commitment to reach reasonable service levels• No veto-power for users on planning and revision of targets• Finance department and sector controllers as final arbiters

• Restricted access to individual staff reporting• Open access to aggregate reporting to outputs• On-line access followed up by monthly reports

• Standard rates calculated with regular intervals (eg. quarterly)• Open process of ’workload smoothening’ over periods with fluctuations to

avoid adverse effects on staffing levels

• Do not depreciate capital expenditure to ensure that the financial and results-based budget reconcile

28

29

Recommendation 2.5‘Loaded Costs’

Loading costs to all GS departments will more accurately reflect costs

Issue with Current “Direct Method”

• Many GS services are only allocated to Inter-sectoral“Activities” and to the Bureaux

• Does not take into account services rendered to other GS departments

• If use of GS services proportionally differs from the distribution based on post count, there will be inaccuracies

• This is likely the case in several instances (such as documentation, conference services, legal, SPU, etc.)

“Step-down Allocation” Will Address This Problem

• Costs of service departments are allocated across GS departments (before being allocated), Inter-sectoral outputs and to the Bureaux

• Selected GS services costs are allocated across ITU – then the fully loaded GS costs are allocated to outputs on the basis of their consumption of services

It is Proposed to use this Method for Several Cost Categories

• Logistics Costs allocated across all GS departments, bureaux, and outputs

• Personnel Costs allocated across all GS departments, bureaux, and outputs

• Information Services Costs across all remaining GS departments, the bureaux, and all outputs

30

Example of what loaded costs will look like

Cost Allocation

Unallocated (Intersectoral)

Internally Invoiced

General Secretariat Costs

Plen.ConferenceWorld Tel. Policy Form WSISCouncil & Work GroupGMPCS-MoUGS PublicationITU News

Finance

Conference Services

Common ServicesDocument/Translat

Bureaux

Logistics

Personnel

Library & Apartment

Step Allocation (Loaded Costs)

Output - SNFBR

Bureau ‘overhead’(director, controller, GS finance, General IS, etc.)

Output- Seminars

Output –Publications

BDT Output –Reg. Reform

Output –Study GroupsTSB Output - UIFN

TELECOM

Planned ExpenseDocumentationDirect Salary Costs






Direct Costs

1

2



Information Services

Reallocated

General Assistance

GovernanceNew Initiatives ProgramRetireesTELECOM

3

SGOCEC & SPU

31

Example of what loaded costs will look like(L) = Logistics Services(P) = Personnel (L/A) = Library & ArchivingGeneral Secretariat Departments (CHF 000)

Logistics (“L”) 22,155

Step

Allo

catio

n (L

oade

d C

osts

)Step 1 TELECOM 642 (L) + 355 (P) + 57 (L/A) = 1,054 ’Loaded Costs’Allocate to all units across ITU, including TELECOM

Personnel (“P”) 11,078 + 765 (L) = 11,843Step 2

32

Bureau

To be allocated to units within the Bureaux

Common Services 31,427 + 2,868 (L) + 1,587 (P) +255 (L/A) = 36,137

Conference Services 37,981 + 3,032 (L) + 1,678 (P) + 270 (L/A) = 42,961

Finance 8,503 + 762 (L) + 421 (P) + 67 (L/A) = 9,753

IS 26,644 + 1,491 (L) + 826 (P) + 133 (L/A) = 29,094

SGO 7,165 + 511 (L) + 282 (P) + 45 (L/A) = 8,003

CEC & SPU 10,399 + 838 (L) + 464 (P) + 74 (L/A) = 11,775

Allocate to all units across ITU, including TELECOM (except Logistics Services)

Step 3

Invoice ‘fully loaded’ costs based on consumption to Finance, SGO, CEC/SPU, TELECOM, Bureau mgt & all outputs (GS & Bureau)

Serv

ice

Del

iver

y R

epor

ting

Allo

cate

d

BR 5,564 (L) + 3,081(P) + 495 (L/A) = 9,140 ’Loaded Costs’

Library & Archiving (“L/A”) 1,629 + 167 (L) + 93 (P) = 1,889Step 2

Allocate to all units across ITU, including TELECOM (except Logistics Services and Personnel) TSB 2,087 (L) + 1,155 (P) + 186 (L/A) = 3,428 ’Loaded Costs’


BDT 3,431 (L) + 1,900 (P) + 305 (L/A) = 5,636 ’Loaded Costs’


All unit costs willbe tracked or allocated to

Outputs

Step 4

Allocate ‘fully loaded’ costs (based on cost driver) to TELECOM, Bureau mgt & all outputs (GS & Bureau)

33

Recommendation 2.6 IT solutions to support revised cost-accounting

Time Tracking - Tools

ITU Internal Web

34

My ITU

Click here

TIM ESHEET (Exam ple BR) Nam e: _______________________ Departm ent: __________________ Grade: _______________ Output: % of tim e 1 W orld Radiocom m unication Conference 2 Regional Radiocom m unication Conference 3 Radio Regu lation Board 4 Radiocom m unication Advisory G roup 5 S tudy Group M eeting 6 Sem inars 7 ITU-R recom m endations and m anuals 8 ITU-R-regulatory publications 9 ITU-R O ther publications Cost Recovery O utputs % of tim e 10 SNF - Advance Publication

i) Activity 1 ii) Activity 2 iii) Activity 3 iv) Activity 4 v) Activity 5

11 SNF - Coordination

i) Activity 1 ii) Activity 2 iii) Activity 3 vi) Activity 4 vii) Activity 5

12 SNF - Notifications 13 O ther space services 14 Notices for Terrestrial services 15 O ther terrestria l services 16 L ia ison w ith & support to developm ent activities 17 G eneral Support – m anagem ent Total (100% ): _________ E-signature of staff m em ber: _______________________ Date: ________________________ E-signature of supervisor: _______________________ Date: ________________________

Timesheet

My ITU

Latest news at ITU

ApplicationsTimesheetExpensesTraining

Timesheet

Goals is user-friendly SDR tool for recording use of services (illustrative)

Time Sheet Personnel ID: D41 RP5 811

Week 20 - 2004

Activity Sub activity Output Monday Tuesday Wednesday Thursday Friday Saturday Sunday

• Delivery of Services recorded by Output

• Account codes can distinguish between Fixed and Variable Costs

35

Overview of IT solution for Service Delivery Reporting

Web Timesheet

SAP R/3

HR Access

Other sources

DPS, other

Reporting (Service Delivery)

Initial SDR with SAP and / or Excel

SAP Business Warehouse

Business Explorer Analyzer

Eventually SDR

reporting with BW

Capturing Processing

36

How it all fits together (short-term solution)Application

Interface

Possible interface

37


ITU staff

SAP R/3

Laptop

HR Access

Other applications

User Self Service

timesheet

1

1

2 2

2

3

3

The timesheet should be user friendly and web based (in either SAP or HR access, tbd)

SAP / HR access are the core administrative applications

SAP Business Warehouse is used as central storage of information

Note: SAP Business Warehouse and Cognos are not currently available to ITU, but they are examples of software tools that could be obtained through normal tendering processes

How it all fits together (with full SAP implementation)

Enterprise Portal


ITU staff

SAP R/3

Laptop

HR Access

• time sheets, Travel req.

Other applications

ITU members

Application

Interface

Possible interface1

2 SAP Business Warehouse publishes updated reports (service delivery) in user specific portal or with workflow

The Employee Self Service Portal is used to do time sheet but also to do travel requests and training etc.

1

2

Note: SAP Business Warehouse and Cognos are not currently available to ITU, but they are examples of software tools that could be obtained through normal tendering processes

38

39

Cost-accounting prototype

Objectives of cost-accounting prototype

• Display the new cost-accounting methodology through a shell model in Excel

• Consolidate cost information into one Excel template, rather than having all of the data compiled in numerous files as is done today

• Reduce manual re-entry of data by linking cost-accounting data to SAP and HR Access

• Consolidate costs based on Output leading to increased transparency and accuracy of costs

• Increase the direct cost base through linking costs directly to Outputs

• Cost accounting prototype is contained in unpublished Excel model

• The prototype will be available to Council members during the 2004 Council and Dalberg will be available to demonstrate and answer questions about the prototype

40

Cost-accounting prototype inputs – Creating the Results-based Budget

To Create the Costing Information for the Results-based Budget

41

Required Inputs

• Post count

• Planned Expenditure

• Forecasted Timesheets (based on prior year time tracking adjusted for known differences)

• Outputs from Service Level Agreements

Purpose

• To calculate “loaded costs” of Logistics, Personnel and Library & Archiving

• To determine planned costs across each Output and/or department (GS & Bureaux)

• To link staff costs to Outputs across SGO, CEC & SPU, and the Bureaux; and to identify special projects to Outputs in Finance and Personnel

• To forecast consumption of services to Outputs for the following dep’ts: Conference Services, Information Services, and parts of Common Services (Production of Publication, Sales/Marketing, & Printing/Dispatch)

Source

• HR Access/SAP

• Electronic form stored filled out by GS and Bureaux; captured in SAP

• HR Access/SAP

• Electronic document stored in SAP

Cost-accounting prototype inputs – Maintaining the Results-based Budget

Ongoing Maintenance of the Costing information for the Result-based Budget

42

Required Inputs

• Actual Expenditure (related to Planned Expenditure)

• Actual Timesheets

• Service Delivery Reporting

Purpose

• To capture costs related to Outputs/departments on an ongoing basis as they occur

• To capture staff costs to Outputs on an ongoing basis

• To capture costs of services consumed at the Output and department level by service departments

Source

• SAP

• HR Access/SAP

• Detail in SAP, and eventually in SAP Business Warehouse

There are six main steps in the cost-accounting prototype

• Enter information on staff costs and planned expenditure on a per unit basis

• Load Logistic Services, Personnel and Library & Archiving costs across all of the units in the GS and bureaux (driver – post count)

• Allocate ‘loaded cost’ of general mgmt to the respective units they manage for Conference Services, Information Services & remainder of Common Services (all ‘service units to do SDR)

• Cost of these units are then allocated to specific Outputs and departments/bureaux based on the relevant Service Level Agreements and Service Delivery Reporting

• Allocate Finance costs of special projects to specific Outputs (based on projected time spent), with remaining costs being allocated to remaining General Secretariat departments and the Bureaux (driver – post count)

• Allocate costs of SGO and CEC & SPU to specific Outputs as relevant based on time tracking and the remaining costs to bureaux based on post count

• Allocate costs of the bureaux general mgmt to the units in the bureaux based on staff time tracking – costs of these units are then allocated to specific Outputs based on staff time tracking

Step One:

Step Two:

Step Three:

Step Four:

Step Five:

Step Six:

43

Steps: Cost-accounting prototype (1/6)

Enter information on staff costs (post count and grade level) and planned expenditure on a per unit basis

Step One:

Post count data is required across all units in ITUPlanned Expenditure is required across all units in ITU

Department: _________________

Unit: _____________________

Category of Expenditure

Staff costsOther staff costsTravel on dutyContractual servicesRental & maintenance of

premises & equip’tMaterial & suppliesAcquisition of premises,

furniture & equip’tPublic & internal service utilitiesAudit & inter-agency fees & Misc.

Total

CHF (000)

2 0 0 4 /2 0 0 5 D a ys M o n th s

G e n e ra l S e c re ta r ia t T e m p o ra ry P e rm a n e n tS G OO ff ic e o f th e S G & D S GL e g a l A ffa irs U n itIn te rn a l A u d ito rC ,E R ,C ,S P UC o o rd in a tio nE x te rn a l R e la t io n sC o m m u n ic a t io nS tra te g y & P o lic y U n itsC o n fe re n c e D e p tC o n fe re n c e M a n a g e m e n tC o n fe re n c e S e rv ic e sP la n n in g & C o n tro l S e rv ic e sT ra n s la t io n S e rv ic e sT ra n s /T yp - A ra b ic /C h in e s e /R u s s ia nD o c u m e n t C o m p o s it io n S e rv ic eQ u ic k p u b S e rv ic eC o m m o n S e rv ic e sC o m m o n S e rv ic e s M a n a g e m e n tP ro d u c t io n s o f P u b lic a t io n sS a le s & M a rk e t in gP rin t in g & D is p a tc hP la n n in g & C o m p u te r iz a t io n S e rv ic eL ib ra ry & A rc h iv e sL o g is tic s S e rv ic e sP e rs o n n e lP e rs o n n e l M a n a g e m e n tP e rs o n n e l A d m in is tra t io n D iv is io nH u m a n R e s o u rc e s D e v e lo p m e n tS o c ia l S e rv ic e sS ta ff C o u n c il S e c re ta r ia tIT U C e n tra lize d E xp e n d itu reF in a n c eF in a n c e M a n a g e m e n tB u d g e t-C o n tro l-C o s t A n a ly s isP a y ro ll S e rv ic eV o lu n ta ry F u n d s S e rv ic eA c c o u n ts D iv is io n (e xc e p t P a y ro ll)In fo rm a tio n S e rv ic e sIS M a n a g e m e n tN e tw o rk S e rv ic e sU s e r S e rv ic e sD a ta b a s e & A p p lic a tio n S e rv ic e sA d m in . & M g t (E R P ) A p p lic a tio n S e rv ic e sP ro je c t M a n a g e m e n tT o ta l G e n e ra l S e c re ta r ia t P o s t C o u n t

2 004 /2 00 5 D a ys M o n th sT e m p o rary P erm a n e n t

R ad io co m m u n ic a tio n B u re auN E E D T O D E F IN E U N IT SC on fe ren c esR ad io R e gs .R ad io A dv is ?S tud y G rou p - Inc ld? 40 55 C om m is s io n S tud y?

B R - D irec to rS tud y G rou pS S D (S pa c e S e rv ic es )S S D - A d va nc e P ub licS S D - C oo rd ina tionS S D - N o tif ic a tionT S D - T e rres te ria lO th e rT o ta l R ad io co m . B u rea u P o s t C o u n t

T e lec o m . S tan d a riz a tio n B u rea uN E E D T O D E F IN E U N IT SC on fe ren c esW o ld T e le c om A s s em b lyR eg io na l S e s s io nsG rou p C on s u lta if N o rm a lis aS tud y G rou ps ?

T S B - D irec to rA S E PS tud y G rou pU IF NT S O N , U IF N , U IP R N /U IS C NT o ta l T e lec o m . S tan d ard s P o s t C o u n t

T e lec o m . D e ve lo p m en t B u rea u N E E D T O D E F IN E U N IT SC on fe ren c eG rou p C on s u lta if D e ve lS tud y G rou p

B D T - D ire c to rA d m in - F in an c eO th e rP S FF O PIO ST o ta l T e lec o m . D e ve lo p m e n t P o s t C o u n t

T E L E C O M

ITU T O T AL P O S T C O U N T

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Load Logistics, Personnel and Library & Archiving across all of the units in the GS and bureaux (driver – post count)

Steps Two:

‘Loaded’ Cost

Allocate

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Conference Services- Unit A- Unit B

Common Services- Unit A- Unit B

SGO & DSG- Unit A- Unit BLogistic Services

22,155,000

Allocate to all units across ITU, including TELECOM

First General Secretariat

Information Services - Unit A- Unit B

CEC & SPU- Unit A- Unit B

Finance- Unit A- Unit B

Personnel & Social Protection 1

11,078,000

Allocate to all units across ITU, including TELECOM (except Logistics Services)

Second

Bureau Management Unit A Unit BBR

Library & Archiving

1,629,000

Third Allocate to all units across ITU, including TELECOM (except Logistics Services

Bureau Management

BDT Unit A Unit B

Bureau ManagementTSB Unit A Unit B

TELECOM

1) Excludes costs related to ITU Retired Employees, which is a new Output; any “special initiatives” related to Outputs should be directly costed to Outputs first prior to being loaded across the Union.


Steps Three: Allocate ‘loaded cost’ of general management to the respective units that they manage, for the following: Conference Services, Information Services (IS) and Common Services (remaining units are all ‘service units’ to do Service Delivery Reporting: Production of Publication, Printing & Dispatch, and Sales & Marketing)

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Conference Mgt

Translation Services

Translation/ Typing -Arabic

-Chinese-Russian

Document Composition

Service

QuickpubService

Conference Services/

Planning & Control Service

Example – Conference Services Department

May want to allocate this cost across the

units as well

The costs of these units are then allocated to specific Outputs and departments/bureaux based on the relevant Service Level Agreements and Service Delivery Reporting

OutputOutputDepartment Output

Notes: 1) Allocate fixed costs of Translation and Typing to Outputs first prior to allocating variable costs (costs for short-term employees) – need to use different codes in SAP to indicate fixed and variable costs2) Some IS services (i.e. E-Mail maintenance) may be spread across the Union based on post count.


Allocate Finance costs of special projects to specific Outputs (based on projected time spent), with remaining costs being allocated to remaining General Secretariat departments and the Bureaux (driver – post count)

Steps Four:

Finance

General SecretariatOutput

TELECOMTSB BDTBR

SGO & DSG- Unit A- Unit B

• Unit A• Unit B


CEC & SPU- Unit A- Unit B


Output

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Allocate costs of Secretary-General Office and Coordination, External Relation, Communication and Strategy & Policy Unit to specific Outputs as relevant based on timesheets and the remaining costs to bureaux based on post count

Steps Five:

Office of the Secretary General & Deputy Secretary General

Coordination, External Relations, Communication and Strategy & Policy Unit

External Relations Communication

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CoordinationSGO Legal Strategy & Policy Unit

InternalAuditor

Output Output TELECOMTSB BDTBR




Output Output


Allocate costs of the Bureaux management to the units in the Bureaux based on staff time tracking

Steps Six:

Example – TSB Bureau (org. units illustrative)

BureauxManagement

Promotion Software Development

Project ManagementEDH

The costs of these units are then allocated to specific Outputs based on staff time tracking

OutputOutput OutputOutput

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Issues/Questions

Issues

• Classifying variable and fixed costs• Need to create list of variable and fixed costs and capture costs in this manner, both within

the prototype and within the SAP system (can code accounts differently to indicate variable versus fixed costs

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We do not have the detail at the level we need to fill in the prototype – but it can serve as a guideline on what the cost-accounting methodology looks like

APPENDIX D: Revised Cost Accounting Methodology and Prototype

Documents

Transcript of APPENDIX D: Revised Cost Accounting Methodology and Prototype