Rough-cut Activity Based Costing (R-c ABC) is a variant of ABC developed by our experienced ABC consultants specifically for local authorities in the UK.  It was first developed in response to the Gershon agenda requirement for demonstrating efficiency gains within a service delivered by an authority.

Rough-cut ABC differs from conventional ABC in a number of respects: 

It avoids obscure terminology such as “cost objects” and “micro-activities” and uses simple language;

It is not necessary to deploy it at the enterprise level, and is easily used at process or service delivery level;

Its approach is quicker and simpler to implement and uses easily learnt methods of data collection and analysis;

It is complementary to SPRINT and other BPR methodologies

It can be used to build a business case for proposed process improvements.

This simplification is possible because the local authority market has very specific needs that differ markedly from the commercial sector where small percentages of differences in efficiency within service delivery may dramatically change the cost and competitiveness of a product in the market place.  The changes happening within local government and especially with regard to e-Government have typically double digit percentage efficiency improvements so the need for high accuracy is not as important as the basic demonstration of the order of magnitude of improvement.

“Activity based costing, a common approach in criminal justice, is based on coding tasks, for example by whether they are frontline or support work. An overview is contained in the OGC Guidance and more information is available on the Home Office website. However it will be onerous if not used already for financial reporting. Also, it may not always be appropriate in local government to separate frontline and support tasks.”

Source: I&DeA website “Measuring productive time”

We provide their software free of charge on an “as is” basis to local authorities with whom we work, thereby reducing both acquisition costs and obviating the need to determine numbers of licences and users as would be necessary with purchase software.   Furthermore, at little extra cost, we provide web-based data collection for those authorities spread over a number of sites or buildings where conventional interview based collection would be time consuming and costly.

There does not appear to be any other ABC software or consultancy that specifically addresses the English local authority market.

“Activity Based Costing software is crucial in the implementation of Activity Based Costing and Activity Based Management.  It is the tool that calculates the results and produces the data.  While ABC is not about implementing a new software product, but about implementing an improved management decision making tool, the software must be implemented and used.” 

Source: Feature article by Jim Gurowka in Focus Magazine, entitled “Is There a Future for ABC Software?”

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