Case Studies

Military

US Coast Guard – Maintenance and Logistics Command Pacific (MLCPAC)

Pilbara Group has been instrumental in helping MLCPAC rollout an activity based cost methodology within the United States Coast Guard. The rollout phase began with a proof-of-concept, and blossomed into a full West Coast rollout to Coast Guard Sectors, Districts, AREAS, Maintenance and Logistics Command, and Support Units.
One of the major tenants of the rollout is to automate the modeling process to the highest degree possible.  To date, Pilbara Group has developed software tools to cleanse, transform, and load source system data into the existing Activity Based Cost Performance Model (CPM), now incorporated into the Strategic Cost Model, as well as develop a model that is enterprise capable.

US Coast Guard – Headquarters CG-83

The Maintenance and Logistics Command (MLC) Pacific study described above had a shift in ownership as the Headquarters Division CG-832 took program management control.  At this point, Pilbara Group became a key component of the team required to rollout an Enterprise Strategic Cost Management system for the Coast Guard Support Community including all base operations, vessel maintenance, small boat maintenance, information technology support and maintenance, and the Support Command.

The rollout required studying over 2,000 military, civilian, and contracted personnel, as well as over $207 million in labor and non-labor costs.  The model creates four separate perspectives of costs and level of effort: Resource, Activity, Customers, and Assets.  Utilizing each of these perspectives and their relationship to each other, the CG will be able to use the information by transforming it into knowledge to support reorganization studies, outsourcing studies, homeport movements, and budgeting exercises.

U.S. Navy – Commander Atlantic Fleet / Commander Navy Installations

Pilbara Group personnel were required to provide an Enterprise-Wide Strategic Activity Based Cost Model for a number of regions within the Commander Atlantic Fleet (COMLANTFLT) claimancy that were then transitioned to Commander Navy Installations (CNI).  The Base Operating Support (BOS) component of COMLANTFLT was transitioned to CNI in October 2003.  CNI’s mission is to support war fighter readiness through the provision of consistent, effective and efficient shore installation services and support.
The work commenced in September of 2002 with a pilot implementation within Commander Navy Region South East. The scope of the project entailed the development of a methodology and IT architecture that would enable the cost model to be rolled out locally, but more importantly, could be expanded with relative ease to the other regions on the east coast.  The primary objective of the cost model was to capture the costs of providing BOS services to CNI customers.
In August of 2003, the strategic cost model was expanded to include the three other Atlantic Fleet Regions.  These regions encompassed 11 states and 33 individual stations, and included approximately 12,000 military and civilian personnel.  The cost model sourced data from a significant number of Defense legacy systems – including two different financial systems, at least two payroll systems, many different human resource applications and a large number of peripheral reporting systems.
The activity based cost model was centrally hosted but implemented locally within each of the regions.  Once implemented all four individual models were consolidated for reporting purposes, so senior management could obtain one enterprise view of the costs for all Atlantic Fleet regions.

The developed system was completely web based which allowed users from anywhere in the country to update and validate the models as well as view the results from their web browser.  The team also developed the Cost and Performance Analysis Tool (CAPAT) as a proof-of-concept model to demonstrate the ability to link cost and performance for BOS services.  Moreover CAPAT allowed predictive analysis enabling the organization to determine funding requirements based on differing performance levels.  This very important feature is a goal of management to tie performance levels and costs together.  Using the developed tool CNI could develop effective budget estimates and also predict increases in costs based on varying levels of performance.

FINANCIAL SERVICES

Grupo Nacional Provincial (GNP)

Grupo Nacional Provincial (GNP) is a one hundred year old insurance company, headquartered in Mexico City.  GNP offers insurance policies for Property and Casualty, Automobile and Life insurance. GNP used ACE on-Demand to allow an activity based cost effective “proof of concept” model to be developed rapidly.  This concept model was successfully developed and GNP signed on for continual use of ACE on-Demand for their monthly updated enterprise activity based cost model. Pilbara Group easily supports the GNP model from Australia and the United States, with any modeling issues being able to be resolved immediately, without the requirement to be on-site.

HIGHER EDUCATION

Activity Based Costing Case Study, Unit Delivery Costs

Southern Cross University commenced its Activity Based Costing project in 2006. The state and availability of data for use in the Activity Based Costing model was a major issue. The project commenced with 2005 calendar year data. One of the goals of the project was to understand academic unit, or subject, costs in the various locations in which those units were delivered.
 
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