Costing Centre of ExpertiseCosting Benchmarking Framework

Planning & Performance Exchange Learning EventOperational Costing & Capacity Management: Their Links to Planning, Performance, and Efficiency January 26, 2016

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Purpose

• Background

• High level findings

• Cost Factors Manual

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CCE Major ActivitiesThe CCE proactively supports:

• Deputy Head and CFO accountabilities• Program Sectors as the primary performers of the TBS challenge

function• The current roles and responsibilities of EMS

Key activities of the CCE include:• Supporting an enhanced diligence function within TBS for

consideration of funding requests• Supporting “deep dives” and “horizontal reviews”• Developing strategies for provision of training on cost containment

and cost estimation for TBS program sector analysts• Developing policy and guidance on cost estimation, cost containment,

and the management of user fees• Rolling out guidance on CFO attestation and provision of support to

departments

Developing a cost factors manual to inform and support resourcing decisions

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Cost Factors Manual

• Is it possible to estimate incremental resource requirements for new initiatives?

• Can the Treasury Board assess the reasonableness of funding requests?

• Can we determine which metrics (cost factors) fairly represent efficiency in Internal Services?

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Work to Date

Approach:• Attempt to establish standard cost factors for

comparable organizations

CCE went to work:• What are other jurisdictions doing with their

“internal services”?• What are appropriate cost drivers for the different

functions in internal services?

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Open Data

Hypothesis being tested:• Without adding to the reporting burden of

organizations, what can we find out from publically available data?

Organizations have attested to this data and it has been tabled in Parliament:• RPP, Public Accounts and DPR

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Proof of Concept

Key Assumptions and Limitations:• Expenditure was used as proxy for cost and capacity• The IS Program was analyzed in the aggregate, not by

sub-category of internal services• IS Program effectiveness was not considered

Scope:• Analysed the data for the following fiscal years:

• 2010-11• 2011-12• 2012-13• 2013-14

Ongoing evolution of approach

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Clustering of Organizations

Preliminary Analysis:

• Size on its own may not be sufficient to explain fluctuations in IS expenditures; other factors must be considered to measure the complexity

• Type of activities performed (i.e. G&C and Capital) and the amount of resources dedicated to specific types of activities impact IS expenditures, as does the geographic reach (number of regions with employees)o However Capital expenditures have limited publically

available data

Organizational context is key to understanding the whole story!

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Hypothetical Clustering of Organizations

DRAFT

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What to measure?

• Analyze the behaviour of expenditures in groups of “like” organizations (or internally between programs) based on Cost Estimating Relationships

• One measure does not “tell the whole story”, multiple measures are needed to give a better understanding of an organization

• Based on preliminary analysis of publicly available data, 3 cost factors are being tested to see how they “tell the story”:1) IS Program FTEs/All Other Programs FTEs2) IS Program Gross Voted Operating Expenditures/ All

Other Programs Gross Voted Operating Expenditures3) IS Program Gross Voted Operating Expenditures/

Total Organizational FTEs

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Conceptual model

• Using cost factors and a proxy measure for capacity, is it possible to estimate additional resources required?

• Analytical grids allow decision makers to gauge the reasonableness of funding requests by allowing the comparison of “like” organizations

DRAFT

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Common Data and Clusters

• Our work to group organizations into appropriate clusters will enable:o Reasonableness testing for Internal Services by providing a range of

existing expenditures for similar organizationso EMS can leverage these same cost factors and clustering methodology to

measure performance

Common Data Points

Clustering(size and

complexity)

Performance Measures (Efficiency and Effectiveness):• Internal Services• Transfer Payment

Programs• External Services

Reasonableness Measures for expenditures and FTEs:• Internal Services

Program • IS by function• Type of G&C or Program

Collect data and analyse

Standardize Treatment

and Context

Review Results

Continuous Improveme

nt

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Similar but different

• EMS could leverage and evaluate the work by the CCE to consider the clustering and cost factors to look at efficiency metrics

• CCE is leveraging the EMS work on efficiency metrics and program tagging.

Thus far, common data can be leveraged by both and will not cause undue reporting burden to organizations.

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Contact Information

Greg SteeleA/Director Costing PolicyOffice of the Controller General, Treasury Board of Canada Secretariat Government of Canadagreg.steele@tbs-sct.gc.ca Tel: 613-697-0863 / TTY: 613-957-9090 Directeur par intérim sur l’établissement des coûts, Bureau du contrôleur général, Secrétariat du Conseil du Trésor du Canada Gouvernement du Canadagreg.steele@tbs-sct.gc.ca Tél. : 613-697-0863 / ATS : 613-957-9090