Cost & Activity Management Programme

In any financial institution, a significant proportion of the resources is used to support the infrastructure of the organisation, eg regulatory compliance, risk management, technology, finance and human resource management. These areas are often called the overheads and are areas where value can be enhanced or diluted easily.

The traditional methods of managing these costs are based on allocating them to operating cost centres to provide a means for focusing management attention on the large proportion of costs that are overheads and effectively outside the control of the individual line manager. Over the past few years, it has become common practice to allocate all overhead costs back to operating functions on a variety of sophisticated bases. This practice has a tendency to focus attention on the allocation process, not on the management of the underlying costs.

Activity Based Management, however, concentrates on managing by the analysis of activities and using direct cost management within each function to look at the use of resources in each function and how it adds value to the organisation without the need to allocate costs.

Our cost and activity management programmes look at how to measure the costs of activities and how to use this data to build up costs by business process, channel, product and/or customers.

Topics which could be included in a programme are:

  • Calculating activity costs
  • Understanding business processes 
  • Using activity-based information 
  • Including funding costs 
  • Avoiding cost allocation 
  • Managing overhead costs 
  • Analysing channel costs 
  • Measuring product costs 
  • Calculating costs by customer segment 
  • Building budgets and targets 
  • Using data for performance measurement

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