Category: Activity-Based Cost Model

The Annual Higher Ed Budgeting Process is Broken!

TLDR The annual budgeting process is broken but can be fixed using centuries old techniques. Using demand for products/services to create budgets, not last year’s budget as a baseline. The critical component is to properly calculate fully-burdened Unit Costs. The budgeting process can be changed in stages, starting with Academic Program financial forecasts. It’s important […]

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Top 5 Higher Ed Financial Reports

I was thrilled to be invited to present at the 2022 Australian University Senior Finance Officers Group (AUSFOG) conference last week alongside Thomas King from Microsoft.  I was asked to present the reports that finance departments are actually using, so we took a look at 12 months of Power BI usage data to see which […]

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Managing in a Period of Stagflation

Stagflation: An economic situation in which prices keep rising but economic activity does not increase (Cambridge Dictionary) TLDR High Inflation hasn’t been around since the 70’s and 80’s. During periods of high inflation focus on defending margins and cashflow. This requires sophisticated and detailed Activity-Based Cost models (which were prolific in the 80’s and 90’s). […]

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Higher Ed Rapid Insights – The start of your Advanced Financial Analytics Journey

We are proud to announce the launch of our new modelling solution, Rapid Insights. We developed Rapid Insights as a low risk, low cost entry into advanced financial analytics for Higher Education. The objective is to build a model of the entire institution in only days, rather than months or years. The exact number of […]

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Steam Engines, Tea Sets & Railroads – A brief history of Activity-Based Costing

TLDR! Activity-Based Costing (ABC) concepts have been around for yonks! (Australian/British slang for a long time) Ever since the 1770’s. ABC concepts have been largely ignored for yonks! ABC was formalized in the 1980’s. ABC is needed more than even now given the increasing complexity of modern business models and the growth of overhead to […]

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Transparency in Higher Education Expenditure

With Covid-19 striking the university sector hard (and suddenly) last year, the Commonwealth Government postponed the need for the university sector to provide their 2019 ‘Transparency in Higher Education Expenditure’ submission.  However, despite the ongoing impact to the sector in 2021, the decision was made to not only ask for the 2019 data, but also […]

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Don’t only use Student Credit Hours to allocate Cost!

Financial analysts use a wide range of cost allocation methods, including cost per student credit hour, in universities to calculate the cost of delivering courses and programs.  I will show you why this is fraught with danger and could cause more harm than good! In recent posts I have used data from our Australian demonstration […]

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Costing is NOT Financial Accounting!

Quick Thoughts Costing is Management Accounting. Costing requires Operations and/or Engineering expertise. Cost is modelled. e.g. Activity-Based Costing. Cost comes in many forms – Financial Cost, Environmental Cost, Social Cost. It’s important to understand what CAUSES cost so you can manage it appropriately. Cost is calculated by identifying where resources are used to undertake work […]

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Higher Ed Course Break-Even Analysis

In times of financial crisis, low enrolment courses are usually targets for removal. But removing the wrong courses could lead to a worse financial position! Due to the financial impacts of the current pandemic, institutions are taking a serious look at all of their programs and courses to determine their financial performance. The typical targets […]

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What can we do that you can’t?

Last week we were invited to present our regular solution to a university technical team. Lots of analytical and IT skills in the group and one of the attendees asked a very important question “What can you do that we can’t?”. What a great question and one that we should be answering all the time […]

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