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Operational Overhead Cost Identification and Containment

Operational Overhead Cost Identification and Containment. Edith Cowan University Experience. ECU Profile. 17,500+ EFTSL 1,750+ staff FTE 2009 Revenue $315m 2009 Operating Result $25.9m 2009 Assets $955m 2009 Research Revenue $20.5m. ECU Profile. 2 metro campuses and 1 regional

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Operational Overhead Cost Identification and Containment

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  1. Operational Overhead Cost Identification and Containment Edith Cowan University Experience

  2. ECU Profile • 17,500+ EFTSL • 1,750+ staff FTE • 2009 Revenue $315m • 2009 Operating Result $25.9m • 2009 Assets $955m • 2009 Research Revenue $20.5m

  3. ECU Profile • 2 metro campuses and 1 regional • 3 large and 1 small Faculties • Computing, Health and Science • Education and Arts • Business and Law • Regional Professional Studies

  4. Why Worry?

  5. ECU Financial Management • Moderately devolved budgets • Income allocated as earned to Faculties • “One line” expenditure budgets • University Services and Sustainability Charge • Accountability rests with line managers • Acceptance of change is reasonable (though fatigued!)

  6. What are our costs? Cost profile based on 2009 op exp

  7. Managing Staff Costs • Academic workloads • Academic delivery – low enrolment units etc. • Operational Excellence Program – remove/reduce duplication • Realigned structures • Funds reinvested in T,L & R • Common to all universities is lack of agility to change staffing costs – change management process

  8. Managing Non-Salary Costs • Strategic Procurement • Preferred supplier contracts in place for major expenses • Desktop IT • Travel • Stationery • Printing • Banking • Courier Services • Contract management • Electronic Invoicing (B2B) where possible – TNT, Abacus, Ricoh, Key2Design, Corporate Express

  9. Managing Non-Salary Costs (cont’d) • Credit card system (iCMS) • Spend analysis • Spend alerts • Procurement dashboard • Spend analysis • Compliance

  10. ECU Procurement Dashboard

  11. ECU Procurement Dashboard Compliance v Non-Compliance to Purchasing Policies • By Account $ and volume • By Supplier $ and volume • By Faculty/Centre

  12. Current Initiative – Activity Based Costing • Why bother? • Academic managers want it • Understanding of costs (not just a big central charge) • Focus on academic delivery • Course/unit break evens • Units running at a loss • Effort allocated to teaching v research • Important to ECU to know (given our profile) • Indirect costs of research (SRE +)

  13. Other Initiatives • Travel system • Identifies travel more transparently • OE – structural realignment + process improvement • On line forms • eRecruitment • Executive Information Management – better access to data • Process Improvement Analyst role • TEFMA – benchmarking of facilities costs

  14. Further Work • Projects – facilities and IT • Asset utilisation • Academic workloads

  15. Growth – Cost Impacts • Growth in student numbers • Profit centres v cost centres • Fixed costs v variable costs • Rate of increase: costs v revenue

  16. Competing Forces? • Quality costs (?) • Teaching delivery – move to online but cost of development and maintenance • Student/Staff ratio - cost impact of improving? • Student satisfaction – facilities, campus “life” etc • My Uni website indicators

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