MKIP Mid Kent Improvement Partnership

1. MKIP (Mid Kent Improvement Partnership) Approach to Activity Based Costing Denise Johnson – Review Manager

2. MKIP Approach to Activity Based Costing:- As part of MKIP - We review services with more than one authority. The activity based costing gives us a base to compare the cost of the process in each authority. It highlights which steps of the process are cheaper in each authority so gives further opportunities to learn from best practice from each authority. Gives managers the opportunity to compare their service with other authorities taking part in the review.

3. What is Activity Based Costing? Used to produce an assessment of the costs per transaction and the overall process. MKIP use a simplified approach to activity based costing which provides information to a sufficiently accurate degree to be assistance in decision making. Highlight clues where potential savings can be made.

4. What information is needed? Define the headline steps within the review and get them agreed. Identify which items are included in each step if this is open to interpretation. Identify staff involved within the process, their standard hours per week & mid point salary. Obtain a copy of the core budget where staff in the process are costed.

5. What information is needed? Collect allocation of time against the headline steps from all staff involved in the process to include all managers. This can be done individually or as a group. If information is collated on behalf of a group, suggest this is done by someone in the group other than the manager. Include allocation of time for all staff in the costing matrix.

6. How is this calculated?

7. Worked Example – Contract Monitoring – 3 Way Review

8. Contract Monitoring – Authority 1 – Cost of Refuse & Recycling

9. Cost of Refuse & Recycling Cost Comparison

10. Cost of Refuse & Recycling Comparison

11. Potential savings identified – Refuse & Recycling: Migration to electronic customer interactions Adjust levels of monitoring Staff structures & working arrangements

12. Activity based costing – other key points: It is not the same as the cost of the budgeted service. Always liaise with finance teams for up to date finance/ budget information. Lets managers of the service see how they compare with others. It raises awareness that there is always room to improve the service and make efficiencies.

13. Key points to achieve success: Ensure lead officers verify the cost of the process before it is used to make comparisons and calculate savings. Remember the time allocation should reflect what staff actually do and not what managers think they do. Keep all workings simple; colour code information. Ensure information cross checks between sheets.

14. Activity Based Costing A worked procedure is available in excel format on request. Contact details: Email: denisejohnson@maidstone.gov.uk Telephone: 01622 602794

15. Activity Based Costing Thank you Any questions? Just remember, it’s as easy as…