Activities Oversight Team Meeting FY06 Topic Discussion Costing Performance Measures

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

4. Compliance with federal initiatives and/or requirements: The President’s 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 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." "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

5. 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

6. 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

7. 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

8. 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. Facilitated Discussion Budget, Cost and Performance Initiative – Engaging the Effort

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