Organization Based Control – Childcare Case Ft Riley Principles of Cost Analysis and Management © Dale R Geiger 2011 What Makes a Good AAR Brief? • • • • What does your Senior Leader want to know? How should you present the information? What are your presentation pet peeves? What should you avoid? © Dale R Geiger 2011 Terminal Learning Objective • • Task: Prepare a forecasts, variances and reconciliation briefing • Standard: with at least 80% accuracy Condition: You are a cost advisor technician with access to all regulations/course handouts, and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors • Use scenario information to prepare forecast, variance and reconciliation briefing © Dale R Geiger 2011 Child Development Center Background • Part of Community Activities Directorate (Morale, Welfare, Recreation) that reports to Garrison Commander • Looks at cost in two categories • • • Appropriated funds are supplied from Congress Non appropriated funds are received from user fees that parents pay based on rank The following brief was presented by the center supervisor to the Garrison Commander © Dale R Geiger 2011 DIRECTORATE OF COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER CATEGORY OF DEC 98 JAN 99 FEB 99 EXPENSE LABOR PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE APF Base Pay $46,061 $41,874 $4,187 $52,222 $55,903 Benefits $12,659 $12,150 $509 $12,150 $12,150 Overtime Awards Special Payment $6,659 $0 $6,659 $6,659 NAF Base Pay $43,955 $45,538 ($1,583) $58,689 $46,950 Benefits $8,794 $7,553 $1,241 $11,526 $9,311 Overtime Awards Military Labor OTHER OPERATING EXPENSES APF Travel Supplies $4,213 $3,457 $756 $4,500 $9,925 Equipment Contracts Rents NAF Travel Supplies $1,000 $782 $218 $1,000 $1,000 Equipment Contracts Other $1,553 $1,553 $0 $1,553 $1,553 COGS TOTAL COSTS $124,894 $112,907 $9,505 $135,479 $136,792 INCOME Reimbursable $59,200 Revenue $58,957 $42,800 ($16,157) $60,850 NAF NIBD $3,655 -$12,626 ($8,971) -$11,918 $386 DIRECTORATE OF COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER CATEGORY OF DEC 98 JAN 99 FEB 99 EXPENSE LABOR PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE APF Base Pay $46,061 $41,874 $4,187 $52,222 $55,903 Benefits $12,659 $12,150 $509 $12,150 $12,150 Overtime Awards Special Payment $6,659 $0 $6,659 $6,659 NAF Base Pay $43,955 $45,538 ($1,583) $58,689 $46,950 Benefits $8,794 $7,553 $1,241 $11,526 $9,311 Overtime Awards Military Labor OTHER OPERATING EXPENSES APF Travel Supplies $4,213 $3,457 $756 $4,500 $9,925 Equipment Contracts Rents NAF Travel Note these math Supplies $1,000 $782 $218 $1,000 $1,000 Equipment errors Contracts Other $1,553 $1,553 $0 $1,553 $1,553 COGS TOTAL COSTS $124,894 $112,907 $11,987 $148,299 $136,792 INCOME Reimbursable $59,200 Revenue $58,957 $42,800 ($16,157) $60,850 NAF NIBD $3,655 -$12,626 ($16,281) -$11,918 $386 Group Activity • • Divide into six groups Each group will have an assignment to prepare information from the data on the previous slides • After preparing your information you will brief the CO (class) © Dale R Geiger 2011 Group Activity • Group 1: Prepare a graph with two lines: total cost (both APF and NAF) and revenue Interpret the graph for the CO © Dale R Geiger 2011 Group Activity • Simplify Data • • Fewer Categories, Fewer Numbers Group 2: Prepare one page that shows Jan Plan, Feb Plan, and the change between them What questions should the CO ask when looking at this analysis? © Dale R Geiger 2011 Group Activity • Simplify Data • • Fewer Categories, Fewer Numbers Group 3: Prepare one page that shows Dec Actual, Jan Plan, Feb Plan, and the change between them What questions should the CO ask when comparing future plans to Dec’s results? © Dale R Geiger 2011 10 Groups 5&6 Activity • Simplify Data • • Fewer Categories, Fewer Numbers Groups 5&6: Prepare one page that shows all the relevant information of the original brief plus the variances of the Jan Plan to Dec Actual and Feb Plan to Jan Plan Highlight issues raised © Dale R Geiger 2011 12 Instructor Materials © Dale R Geiger 2011 13 Group Graph 160.0 140.0 Total Cost 120.0 100.0 80.0 60.0 Revenue 40.0 20.0 0.0 DEC JAN FEB ACT PLAN PLAN © Dale R Geiger 2011 14 Group Analysis Jan Plan Feb Plan Var Jan Pay and Benefits 64.4 68.1 (3.7) Special Payment 6.7 0.0 6.7 Supplies 4.5 9.9 (5.4) 75.5 78.0 (2.5) 60.9 59.2 (1.7) 70.2 56.3 13.9 Supplies 1.0 1.0 0.0 Other 1.6 1.6 0.0 72.8 58.9 13.9 -11.9 0.4 12.3 Appropriated Funds Total APF Cost Non Appropriated Funds Revenue Pay and Benefits Total NAF Cost Net Income © Dale R Geiger 2011 15 Group Analysis Dec Actual Jan Plan Var Dec Feb Plan Var Dec Pay and Benefits 54.1 64.4 (10.3) 68.1 (14.0) Special Payment 6.7 (6.7) 0.0 0.0 3.5 4.5 (1.0) 9.9 (6.4) 57.6 75.5 (17.9) 78.0 (20.4) 42.8 60.9 18.1 59.2 16.4 53.1 70.2 (17.1) 56.3 (3.2) Supplies 0.8 1.0 (0.2) 1.0 (0.2) Other 1.6 1.6 0.0 1.6 0.0 55.4 72.8 (17.4) 58.9 (3.5) -12.6 -11.9 0.7 0.4 13.0 Appropriated Funds Supplies Total APF Cost Non Appropriated Funds Revenue Pay and Benefits Total NAF Cost Net Income © Dale R Geiger 2011 16 Group Analysis Dec Plan Dec Actual Delta Plan Pay and Benefits 58.8 54.1 4.7 Special Payment 6.7 6.7 Supplies 4.2 3.5 0.8 69.6 57.6 12.1 59.0 42.8 (16.2) 52.8 53.1 (0.3) Supplies 1.0 0.8 0.2 Other 1.6 1.6 0.0 55.4 55.4 0.0 3.7 -12.6 (16.3) Appropriated Funds Total APF Cost Non Appropriated Funds Revenue Pay and Benefits Total NAF Cost Net Income © Dale R Geiger 2011 17 DIRECTORATE OF COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER DEC PLAN ACT JAN VAR APF Base Pay Benefits Special Payment Supplies TOTAL APF COST 46.1 12.7 6.7 4.2 69.6 41.9 12.2 0.0 3.5 57.5 NAF Revenue Base Pay Benefits Supplies Other NIBD 59.0 44.0 8.8 1.0 1.6 3.7 42.8 (16.2) 45.5 (1.6) 7.6 1.2 0.8 0.2 1.6 0.0 -12.6 (16.3) 4.2 0.5 6.7 0.8 12.1 FEB PLAN VAR DEC 52.2 (10.3) 12.2 0.0 6.7 (6.7) 4.5 (1.0) 75.5 (18.1) 60.9 58.7 11.5 1.0 1.6 -11.9 PLAN VAR JAN 55.9 (3.7) 12.2 0.0 6.7 9.9 (5.4) 78.0 (2.4) 18.1 (13.2) (4.0) (0.2) 0.0 0.7 59.2 47.0 9.3 1.0 1.6 0.4 18 © Dale R Geiger 2011 (1.7) 11.7 2.2 0.0 0.0 12.3 What’s the Story? • • • Why is APF so favorable in December? Can we annualize and reprogram? Story: • • • $6.7K special payment delayed until Jan $5.0K new hire delayed until Jan Conclusion: cannot annualize and reprogram 19 © Dale R Geiger 2011 DIRECTORATE OF COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER DEC PLAN ACT JAN VAR APF Base Pay Benefits Special Payment Supplies TOTAL APF COST 46.1 12.7 6.7 4.2 69.6 41.9 12.2 0.0 3.5 57.5 NAF Revenue Base Pay Benefits Supplies Other NIBD 59.0 44.0 8.8 1.0 1.6 3.7 42.8 (16.2) 45.5 (1.6) 7.6 1.2 0.8 0.2 1.6 0.0 -12.6 (16.3) 4.2 0.5 6.7 0.8 12.1 FEB PLAN VAR DEC 52.2 (10.3) 12.2 0.0 6.7 (6.7) 4.5 (1.0) 75.5 (18.1) 60.9 58.7 11.5 1.0 1.6 -11.9 PLAN VAR JAN 55.9 (3.7) 12.2 0.0 6.7 9.9 (5.4) 78.0 (2.4) 18.1 (13.2) (4.0) (0.2) 0.0 0.7 59.2 47.0 9.3 1.0 1.6 0.4 20 © Dale R Geiger 2011 (1.7) 11.7 2.2 0.0 0.0 12.3 What’s the Story? • • Why was revenue/profit down $16K? Story: • ($10K) December slow month for day care • • • Why was this a surprise? Why didn’t we anticipate and reduce staffing? ($6k) Increased proportion of low rates • Will this annualize and create a major problem for the year? 21 © Dale R Geiger 2011 DIRECTORATE OF COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER DEC PLAN ACT JAN VAR APF Base Pay Benefits Special Payment Supplies TOTAL APF COST 46.1 12.7 6.7 4.2 69.6 41.9 12.2 0.0 3.5 57.5 NAF Revenue Base Pay Benefits Supplies Other NIBD 59.0 44.0 8.8 1.0 1.6 3.7 42.8 (16.2) 45.5 (1.6) 7.6 1.2 0.8 0.2 1.6 0.0 -12.6 (16.3) 4.2 0.5 6.7 0.8 12.1 FEB PLAN VAR DEC 52.2 (10.3) 12.2 0.0 6.7 (6.7) 4.5 (1.0) 75.5 (18.1) 60.9 58.7 11.5 1.0 1.6 -11.9 PLAN VAR JAN 55.9 (3.7) 12.2 0.0 6.7 9.9 (5.4) 78.0 (2.4) 18.1 (13.2) (4.0) (0.2) 0.0 0.7 59.2 47.0 9.3 1.0 1.6 0.4 22 © Dale R Geiger 2011 (1.7) 11.7 2.2 0.0 0.0 12.3 What’s the Story? • • Why are we adding so much payroll? Is this an opportunity? • • • Can we avoid or defer? Can we shift people from other areas where their job is no longer needed? Story • Unknown • Action item for follow up 23 © Dale R Geiger 2011 DIRECTORATE OF COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER DEC PLAN ACT JAN VAR APF Base Pay Benefits Special Payment Supplies TOTAL APF COST 46.1 12.7 6.7 4.2 69.6 41.9 12.2 0.0 3.5 57.5 NAF Revenue Base Pay Benefits Supplies Other NIBD 59.0 44.0 8.8 1.0 1.6 3.7 42.8 (16.2) 45.5 (1.6) 7.6 1.2 0.8 0.2 1.6 0.0 -12.6 (16.3) 4.2 0.5 6.7 0.8 12.1 FEB PLAN VAR DEC 52.2 (10.3) 12.2 0.0 6.7 (6.7) 4.5 (1.0) 75.5 (18.1) 60.9 58.7 11.5 1.0 1.6 -11.9 PLAN VAR JAN 55.9 (3.7) 12.2 0.0 6.7 9.9 (5.4) 78.0 (2.4) 18.1 (13.2) (4.0) (0.2) 0.0 0.7 59.2 47.0 9.3 1.0 1.6 0.4 24 © Dale R Geiger 2011 (1.7) 11.7 2.2 0.0 0.0 12.3 What’s the Story? • • • • What’s the risk of cost happening and revenue not happening? Does revenue rate problem go away? Why are we adding payroll? Story • • Unknown Action items taken to review rates and consider increase 25 © Dale R Geiger 2011 Reconciliation December Revenue Actual Cost 42.8 112.9 Plan 59.0 124.9 Variance (16.2) 12.0 (10.0) (6.2) Explanation Low Attendance Low Rates Delayed Hire 5.0 Delayed Special Payment 6.9 All Other © Dale R Geiger 2011 26 ... Terminal Learning Objective • • Task: Prepare a forecasts, variances and reconciliation briefing • Standard: with at least 80% accuracy Condition: You are a cost advisor technician with access... COMMUNITY ACTIVITIES Cost Based Management Review Organizational Element: CHILD DEVELOPMENT CENTER CATEGORY OF DEC 98 JAN 99 FEB 99 EXPENSE LABOR PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE PLAN ACTUAL... Organizational Element: CHILD DEVELOPMENT CENTER CATEGORY OF DEC 98 JAN 99 FEB 99 EXPENSE LABOR PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE PLAN ACTUAL VARIANCE APF Base Pay $46,061 $41,874 $4,187 $52,222 $55,903