Operational Costing and Capacity Management

CBSA’s Cost Factor Manual

PERFORMANCE AND PLANNING EXCHANGE (PPX)

January 26, 2016

Outline• Context

• CBSA Cost Factor Manual

• The Step-variable approach applied

• Sample data extracts

• "Demo"

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GoC Context• TB President has been directed to

ensure more oversight on costing and to ground decisions on “best available information”

• TBS moving forward on

– Step-variable approach

– Benchmarking of internal services costing / comparative data

– Internal Service efficiency and performance indicators being introduced

• CBSA proactively moving forward with costing centre of expertise to strengthen costing and implement / apply step-variable approach

CBSA Context• Like other departments, CBSA

facing a tight fiscal environment, with significant pressure to justify resourcing needswith evidence

• In 2014, at the direction of the Deputy, the Agency initiated a “Tooth-to-Tail” (TTT) analysis of Agency front-line versus internal services resources

• The TTT architecture and data set was then transformed and expanded to incorporate core front-line operational activities and associated volumetrics to lay the foundation for the Agency’sCost Factor Manual (CFM)

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A A1-1 Front-line Program-Service Delivery Risk Assessment 1 Intelligence in the regionsA A1-2 Front-line Program-Service Delivery Risk Assessment 2 Security ScreeningA A1-3 Front-line Program-Service Delivery Risk Assessment 3 TargetingA A2-1 Front-line Program-Service Delivery Secure and Trusted Partnership 1 Trusted traveller … in the regionsA A2-2 Front-line Program-Service Delivery Secure and Trusted Partnership 2 Trusted trader … in the regions A A3-1 Front-line Program-Service Delivery Admissibility determination 1 Front-line Ops - Traveller

CBSA CFM Objectives• Improve accuracy, reliability and quality of Agency financial data

• Link data to core program volumetrics to enable stepped variable costing in accordance with TBS / OCG costing directions

• Comply with TBS / OCG Internal Services costing guidance

• Create foundational data set to determine unit cost standards across all common functions

• Strengthen rigour and quality of financial advice into budget allocation decision making

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The CFM – What Precisely Is it?• The CFM is a strategic resource management, costing, and management accounting

tool designed to support program analysis and resourcing decision-making

• It is essentially an off-line, enterprise data warehouse that links– Financial expenditure data, to– Program volumetric data,– At the PoE level of analysis (in the regions), and– At the Directorate level of analysis (at HQ).

• The scope of the database includes:– Expenditure data, based on CAS, manually adjusted and validated by business owners

through multiple iterations since 2013– Linkages to all financial data in the coding block, including Cost Centre data, Program Activity

data, Activity Type data, GL, Fund Code, etc– Linkages to program volume data from core systems / data cubes, including ACROSS,

CRMS,G11, FOSS, ICES, etc..)

• As it contains manually adjusted financial data, it is not and should not be used for system of record financial accounting requirements.

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• The CFM architecture captures expenditures on multiple analytical levels,

through a series of data tags, including:– “Tooth-to-Tail”, which captures

• Front-line Program Delivery, distinct from • Direct Support to Front-line Program Delivery, distinct from • Internal Services (in accordance with TBS guidance on coding for internal services)

– CBSA program architecture, specifically wrt • The Agency’s current PAA, approved by TB Ministers in 2010, as distinct from• The Agency’s new PAA, as approved by EC October 22, 2015

• The CFM is comprised of three main costing components:– Regional Data – Headquarters Data – Costing by application

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The CFM – What Precisely Is it?

Key Principles / Methodology• CFM Key principles

– Account for 100% of expenditures– No double counting– Balance to public accounts / system of record

• To build / update the database, the data is pulled from source systems and adjusted based on the attribution formulas that have been validated over the past 2 years

– Mapped by POE/division to enable the alignment of resources and volumes– Resources and volumes are attributed by function based on the CFM

architecture – The data is then compared by “cluster” to further validate the allocation /

attributions by function at the most granular level (to identify anomolies / variances and challenge the attributions and enable further refinement of the quality of the data)

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Using the CFMThe Agency is looking to use the CFM as a core analytical tool for costing and resource allocation. Uses include:•Costing for TB submissions•Stepped-variable approach for budget allocations / resource management decision-making•Tool for targeted reviews (e.g. OT)•Identification and assessment of variances in unit costs within a program and between PoE •Development of efficiency indicators for the new Agency Performance Measurement framework•X-walk for implementation of a new PAA•Mapping of data pathways for the Agency Enterprise Data Warehouse•Engaging the financial and program analyst user community to proto-type business requirements and functionality for future reporting tools

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• However, unlike true variable costs that vary directly with the level of activity; the stepped-variable approach incurs increases at certain discrete points that involve changes in the number of FTEs required at the POE.

• Once we get to large POEs, the costs become truly variable depending on volumes.

Step-Variable Approach

Large

Tota

l Cos

t ($)

Small POEs

Small/MediumMedium

Number of POEs :107Travellers : 4,463,023Commercial Releases: 319,065

Number of POEs: 28Travellers: 18,276,980Commercial Releases: 1,632,462

Number of POEs: 37Travellers : 5,647,045Commercial Releases: 2,009,161

Number of POEs: 20Travellers: 68,250,348Commercial Releases: 10,721,106

CFM Visualization ToolPrograms Branch – 2014-15

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(under development)

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Costing Centre of Expertise: MandateVision: •CBSA recognized as one of the best in costing in government

Mandate: •Build and implement a fully integrated costing capability that strengthens the Agency’s ability to deliver value-for-money across programs

Role / Position within Comptrollership: •Centralized unit providing specialised cost estimation services•Services to include:

– A core costing capability– Capacity building, guidance and training to FMAs (targeting FI-02s and FI-03s) – Costing tools for FMAs, to support their work– Enterprise costing (I.e. CBSA costing template, IS costing model, SAF etc…)

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Demo

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Next Steps• Confirm scope and limitations on use of CFM data

• Use CFM as an input factor in budget allocation decision-making

• Deploy visualization tool and directions and scope and limitations to financial and program analyst community

• Use tool to support engagement and proto-typing of functionality desired from user community in support of Enterprise Data Warehouse

• Continue to build a more accurate historical dataset by incorporating periodic updates (until enterprise data warehouse is complete)

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Questions?

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