Fort Huachuca Case Study Cost Command and Control © 2000-11 Dr Dale R Geiger CMA CGFM drgeiger@manage.gov.org Terminal Learning Objective Task: Identify the Characteristics of a Cost Managed Organization from the Case Study Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors Standard: with minimum 80% accuracy Describe the transformation process that occurred Discuss lessons learned Ft Huachuca Story Garrison Commander 94-96 Col Elliot Staff Freauff Planted Seeds Jim Freauff: “As budgets get cut year after year, it seems to me that there has to be a better way to use increasingly limited resources There must be a systematic management process of continuous improvement that would be far better than mindlessly cutting x% of our capability every time there’s an x% budget cut.” Cost Management in the 90s Activity Based Costing Major efforts were made to provide cost information to leaders Models broke organizations into activities Extensive allocations assigned cost to activities ABC Models Had many, many activities Were populated annually Not Were very complex Affordabl e Not First Attempt: 1996 ABC data, by itself, did not generate results “No sense of ownership” “Managers didn’t accept that the numbers were theirs” Managers thought effort Was unneeded waste of time Would be used against them Would go away if they waited out the commander and his initiative DA: Managerial Costing Steering Committee Met quarterly to provide advisory input Chaired by Deputy Cost and Economics and Deputy Asst Chief of Staff Installations Comprised primarily of Major Command Resource Managers Included Dr Geiger as Academic Advisor Teamed with LTG (Ret) Carney to “Armyize” ideas on cost management Initiated pilots in garrisons at Ft Huachuca, Ft Leonard-Wood, Ft Detrick, Ft Riley Check on Learning Who were the key players? How did the operating environment contribute to the process? Ft Huachuca Story Garrison Commander 94-96 Col Elliot 96-99 Col Chopin Staff Freauff Freauff Planted Seeds Began Pilot Colonel Chopin: “When I took command it was clear that I had no real way of impacting much All the budget was distributed to my subordinates and there was nothing left to play with I needed a process that would free up resources for me to command if I was going to make a contribution personally.” (emphasis added) The Cost Command & Control Process What was Expected? What Happened? Why? Subordinates Running Their Operations plan Subordinates Using Strategic Guidance de 9, 13 February 2008 execute Superiors Reviewing Subordinates measure Actual Results From Managerial Costing review AAR Learning: An Engine of Innovation learning better execution plan improved planning de 10, 13 February 2008 execute measure refined info needs review Ft Huachuca Story Garrison Staff Commander 92-96 Col Elliot Freauff 96-99 Col Chopin Freauff 99-02 Col Boardman Freauff 02-04 Col Portouw Freauff Planted Seeds Began Pilot Improved AARs Garrison Mgmt System GARRISON MANAGEMENT SYSTEM U.S FY03 C Paul A Rossi Number of Initiatives Cumulative New 350 300 250 200 150 100 50 322 163 85 30 4Q02 30 78 55 1Q03 2Q03 232 90 69 3Q03 4Q03 GARRISON MANAGEMENT SYSTEM U.S FY03 C Paul A Rossi $ Value of Initiatives Cumulative $ Millions New $32 $28 $24 $20 $16 $12 $8 $4 $0 $23.2 $11.6 $1.50 4Q02 $14.0 $23.7 $9.25 $2.37 $1.10 1Q03 $24.4 2Q03 3Q03 $0.65 4Q03 GARRISON MANAGEMENT SYSTEM QUARTER REVIEW U.S AGENDA C Paul A Rossi 10 Minutes OPENING REMARKS 20 Minutes Each Directorate Presentations COL PORTOUW Status of FY 2% Target Cost and Performance Initiatives Recognize Directorate Cost Warriors Status of Processes Reviewed During 1st Q 04 Directors Processess to Review During 2nd Q 04 UFR's Funded with Cost Savings Review Directorate Productivity in GMS Review Directorate Overhead Minutes Next Quarterly Schedule Jim Freauff 10 Minutes WRAP UP COL PORTOUW Ft Huachuca Story Garrison Commander Staff 92-96 Col Elliot Freauff Planted Seeds 96-99 Col Chopin Freauff Began Pilot 99-02 Col Boardman Freauff Improved AARs 02-04 Col Portouw Freauff Built Display System 04-07 Col Hunter Freauff/Kent Handled 30% Budget Cut Air Force Visitor: “I’ve dreamt about seeing a meeting like this Everyone sitting around the table was using cost information logically and constructively to manage the operation.” Huachuca Garrison Dept Manager: “It is now a way of life and I don’t know how we operated without it.” As a member of the Air Force Managerial Cost Accounting Council, I found the Fort Huachuca Garrison Cost Management After Action Review on 29 June 2006 both exciting and insightful I had not seen such attention to both cost and quality in DoD since I was associated with the Navy Submarine Force Nuclear Power program The enthusiasm of the Garrison Staff, the leadership of the Garrison Commander, and the results of Garrison efforts were truly impressive Capt Seth Baldwin, USN (retired) CGFM Partner, Kearney & Company Integrity - Service - Excellence Requirements Inventory - Leadership None of these garrison commanders had prior experience in cost management Col Chopin was an aviator Col Boardman was special forces Col Portouw was military intelligence Col Hunter was infantry Yet they instinctively knew how to lead effective cost management and control when well supported by ACE Requirements Inventory – continued ACE Staff: enabled leadership, ran the process, developed the measurements Process: after action review was key Measurement: less important than originally thought Biggest transformation barrier: middle management aversion to change Check on Learning What was Col Chopin’s motivation for expanding the cost management process begun by his predecessor Col Elliot? Discussion Was this effort worthwhile? What were the key factors? Do you think this is repeatable at other garrisons? Ft Huachuca – The Unhappy Ending Garrison Commander Staff 92-96 Col Elliot Freauff Planted Seeds 96-99 Col Chopin Freauff Began Pilot 99-02 Col Boardman Freauff Improved AARs 02-04 Col Portouw Freauff Built Display System 04-07 Col Hunter Freauff/Kent Handled 30% Budget Cut 07Col Sturgeon Kent Citing Budget Limitations Col Sturgeon Ceased the Garrison AAR Made AARs “Optional” for Departments NONE HAS OCCURRED SINCE Group Activity - 35 Minutes Why did process fail? What are the lessons learned? Suggestions for improvement? ... now a way of life and I don’t know how we operated without it.” As a member of the Air Force Managerial Cost Accounting Council, I found the Fort Huachuca Garrison Cost Management After Action...Terminal Learning Objective Task: Identify the Characteristics of a Cost Managed Organization from the Case Study Condition: You are training to become an ACE with access to ICAM course handouts,... Freauff Began Pilot 99-02 Col Boardman Freauff Improved AARs Colonel Boardman Cost management is like a sailboat tacking into the wind As long as the hand is firmly on the rudder and the sail