Activities Oversight Team Meeting

1
Activities Oversight Team Meeting FY06 Topic
Discussion Costing Performance Measures 9
February 2006
2
Budget, Cost and Performance Initiative
Engaging the Effort
Grant Thornton is engaged with the Deportment to
assess bureau alignment, formulate A/M
integration methodology, and assess data
validation and verification in support of BPI
Overall Vision Link budget, cost and
performance information that enables DOI and its
Bureaus to practice sound program management
Short-Term Project Goals

• Alignment assess current Bureau alignment to
  DOI strategic plan end outcomes and measures
• Integration Develop methodology to integrate ABC
  and performance measurement and identify
  gaps/overlaps and/or dependencies
• Verification assess Bureau data validation and
  verification processes

3
Budget, Cost and Performance Initiative
Engaging the Effort
Current State DOI ABC/M activities are linked
to End Outcome Goals only no mapping exists to
End Outcome Measures

• 321 total ABC Work activities in the FY06 DOI
  ABC Dictionary
• 283 total ABC Outputs aligned to ABC Work
  activity in the FY06 DOI ABC Dictionary
• DOI ABC work activities are linked to End
  Outcome Goals only

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Budget, Cost and Performance Initiative
Engaging the Effort
Budget and Performance Integration Requirements

• On January 16, 2002, Deputy Secretary Steven J.
  Griles issued a memorandum outlining the
  direction
• for department-wide Activity Based Costing
  (ABC) implementation. One of the eight
  principles outlined
• for ABC is to "Tie the Deportment's strategic
  plan outcomes to performance measures and budget
  tool."

• Compliance with federal initiatives and/or
  requirements
• The Presidents Management agenda (Pomp)
  mandates this initiative and describes the
  long-term expectation of the BPI initiative is
  agencies will ... identify high quality
  outcome, accurately the performance of programs,
  and begin this presentation with associated.
  Using this information, high performing programs
  will be reinforced and non-performing activities
  reformed or terminated.
• OMB Circular o-11 and function specific
  Circulars (e.g., Financial Management o-123 and
  o-127, IT o-130)
• OMB Management memo rondo
• Go High-Risk Series, Special Publications and
  Regular publications
• OMB PART Instructions
• GPRA
• FASAB 4

• "Getting to Green" in budget performance
  integration (BPI)
• Annual budget and performance documents
  incorporate measures identified in PART
• Report the full cost of achieving performance
  goals accurately in budget and performance
  documents and can accurately estimate the
  marginal cost (/- 10) of changing performance
  goals
• PART ratings and performance information are used
  cansistently to justify funding requests,
  management actions, and legislative proposals

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Budget, Cost and Performance Initiative
Engaging the Effort
Future state Enable budget and performance
integration by linking ABC/M activities and
outputs to DOI End Outcome Measures enabling
marginal costing and "what if" budget scenario
planning.

• Proposed method for linking ABC/M data to
  performance
• Develop high-level "key" products/services that
  can be linked to DOI strategic plan measures
• Exist independently of Strategic Plan structure
• Can be mapped to DOI Strategic Plan for FY07 to
  FY12 when finalized products and service will be
  aligned to Intermediate Measures and End Outcome
  Measures
• Why this approach?
• Develop common language and measurement of key
  products/services within DOI
• Provides flexibility in linking to strategic
  plans in the future
• Allows for meaningful, high-level unit and
  marginal costing information

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Budget, Cost and Performance Initiative
Engaging the Effort
Proposed methodology to link ABC/M costs/outputs
to DOI EOMs
EOG Level
DOI End Outcome Goals and Measures
EOM 1
EOM 2
EOM 3
"Key" Products/ Services (cost and measure)
KP/S 1
KP/S 2
KP/S 3
KP/S 4
KP/S 5
KP/S 6
o1
o2
o3
b1
b2
b3
c1
c2
c3
d1
d2
d3
e1
e2
e3
ABC Output/Workload Measures
o4
o5
b4
b5
c4
c5
d4
d5
e4
e5
a
a
a
a
a
a
a
a
a
a
a
a
a
ABC activities and Costs
a
a
a
a
a
a
a
a
a
a
a
a
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Budget, Cost and Performance Initiative
Engaging the Effort
An example of Product and Services aligned to End
Outcome Goal
DOI End Outcome Goals and Measures
"Key" Products/ Services (cost and measure)
ABC Output/Workload Measures
ABC activities and Costs
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Budget, Cost and Performance Initiative
Engaging the Effort
Question How should the DOI ABC activities link
to performance measures in the Strategic Plan?

• Are any bureau costing performance measures now?
  Yes, relating output measures in the strategic
  plan (e.g. acres restored)
• How are the costs for these measures determined?
• Is there a relationship between these measures in
  the strategic plan and the workload output
  measures in ABC?
• Is there a relationship between the output and
  outcome measures in the strategic plan?
• If output and outcome measures are "related," can
  the outcome measure be costed through the related
  output measures?

9
Budget, Cost and Performance Initiative
Engaging the Effort

• Facilitated Discussion

10
Budget, Cost and Performance Initiative
Engaging the Effort
Bureau "homework" for linking ABC/M to DOI
strategic plan measures

• Identify bureau issues with the product and
  service development methodology
• Provide suggestions and comments on the proposed
  "key" DOI products and services
• Identify implementation issues for your bureau
  concerning the proposed "key" products and
  services methodology
• Identify potential impacts on existing BPI
  efforts underway within your bureau.