Course Introduction © Dale R. Geiger 20111. Even Super Powers Can Lose a Cost War Kamchatka...
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Transcript of Course Introduction © Dale R. Geiger 20111. Even Super Powers Can Lose a Cost War Kamchatka...
Even Super Powers Can Lose a Cost WarEven Super Powers Can Lose a Cost War
Kamchatka Peninsula , Russia
Aral Sea, Kazakhstan
Soviet military installationPaldiski, Estonia
© Dale R. Geiger 2011 2
Terminal Learning ObjectiveTerminal Learning Objective
• Task: Introduce Principles of Cost Analysis and Management
• Condition: You are cost advisor technician with access PCAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors
• Standard: With at least 80% accuracy:• Discuss purpose for increasing cost effectiveness; terminology,
and best practices response to threat • Understand the Purpose of this Course• Understand the asymmetrical threat of lack of resources.
© Dale R. Geiger 2011 3
Cost Maturation ProcessCost Maturation Process
Single Use
EstimatedFuture Cost
Cost BenefitAnalysis
Cost InformedDecisions
Persistent Use
Expected and Actual Cost
Continuous Improvement
Cost-Managed Organizations
Universal Use
Planned & Actual Cost
Role Based, Org Based, Output Based Control
Cost-Managed Enterprise
Cost War Cost War High Cost War Full Insurgency Intensity Conflict Spectrum Operations
Starting here (Some work is being done now) TARGET© Dale R. Geiger 2011 5
Check on LearningCheck on Learning
• What are the three stages of the Cost Maturation Process?
• Where is the Army now in the process?
© Dale R. Geiger 2011 6
Transforming the Army:Transforming the Army:Four Requirements for SuccessFour Requirements for Success
Need Status Action
Leadership Team with ACE* to create “informed” leaders
Exploit existing strong leadership capabilities
ACE Build strong staff, strong organization
Select, develop ACEs (*Asst to Comdr – Enterprise)
Design and deliver advanced training
Process Modify “winning the cost war” template as needed
Cost Info Use new tools as they come online
© Dale R. Geiger 2011 7
• Principles of Cost Accounting and Management• Targeted at entry level CP11 Personnel, Sergeants, Lieutenants,
Junior Captains• Course Length: Three Weeks• Pre-requisites: On Line Math Refresher
• Intermediate Cost Accounting and Management• Targeted at mid career CP11 Personnel, Staff Sergeants and above,
Senior Captains, Majors and above• Course Length: Three Weeks• Pre-requisites: On Line Math Refresher
ACE Development: PCAM & ICAMACE Development: PCAM & ICAM
© Dale R. Geiger 2011 8
All CEs will require basic, advanced, and master skills with a concentration in:Readiness – Capacity management and force cost analysisMateriel – Logistics and working capital funds cost analysisHuman Capital – Manpower cost analysisServices & Infrastructure – Services and capital asset costingFAs and CPs that are common to all CEs should train to become a master in any CE
Stackable CredentialsStackable Credentials
* NOTE: Stackable credentials are based on Financial Management (BC36/CP11) career field demands for cost management, which is the Army maximum; other career fields will use a subset of these requirements.
Based on the Financial Management Career Field
© Dale R. Geiger 20119
PCAM PCAM
• Develop basic cost management skills• First step in becoming an ACE
© Dale R. Geiger 2011 10
Purpose of CoursePurpose of Course
• Develop Skills in Cost Accounting• Includes Conference, Demonstration and Practical
Exercises• Emphasizes hands-on experience• Introduces Excel templates to facilitate learning
• Introduce and Apply Skills in Cost Management• Case studies give students the opportunity to
apply their skills to a real-world scenario
© Dale R. Geiger 2011 11
Overview of CourseOverview of Course
• Week 1: • Basic Accounting Principles: External Reporting
Accounting Basic Training
Military Fund Accounting
Financial Accounting
Cost Accounting: External Reporting
Test Days 1-4Managerial Cost Intro
Basic Financial Statements, Cash-based Accounting
Budgetary Accounting, Obligations & Expenditures
Accrual Accounting Basics – Revolving Funds
Accounting for Manufacturing, Job Order Costing
Cost Terminology, Relevant Cost Decisions© Dale R. Geiger 2011 12
Key Issues for Week 1Key Issues for Week 1
• Internal vs. External Reporting • Different ways of measuring costs for external
reporting• Measuring and reporting the cost of a job• Defense contractor costing• How to use and interpret different types of
information prepared for external users
© Dale R. Geiger 2011 13
ExpectationsExpectations
• There are lots of different methods to account for costs
• The goal of this course is to create awareness of the different methods
• Students are not expected to become experts but should understand where each method is used and why
© Dale R. Geiger 2011 14
Overview of CourseOverview of Course
• Week 2:• Cost Relationships and Cost Tradeoffs
Cost Relationships I
Cost Relationships II
Activity Based Costing
Cost Tradeoffs I
Test Days 5-9Cost Tradeoffs II
Fixed, Variable, Linear and Non-linear relationships
Net Present Value and Expected Value
Allocation Mechanics, Cost Driver Selection, Pitfalls
Breakeven Analysis, Sensitivity, Indifference Points I
Batch Quantity Tradeoffs, Indifference Points II © Dale R. Geiger 2011 15
Key Issues for Week 2Key Issues for Week 2
• Identify and express cost relationships• Evaluate investment courses of action using
net present value and expected value• Identify behavioral issues with cost
measurement• Explain the concept of cost tradeoff and
identify points of indifference
© Dale R. Geiger 2011 16
Overview of CourseOverview of Course
• Week 3:• Cost Planning & Explanation, CBA
Cost Planning and Estimation
Cost Benefit Analysis
Cost Explanation
Winning the Cost WarAfter Action Review
Final Exam
Flexible Forecasting, Trend Projection, Learning Curve
Eight Steps to Cost Benefit Analysis
Variance Analysis and Reconciliation
Prepare After Action Review Briefing from Case Study
Comprehensive Final Exam, Closing Activities© Dale R. Geiger 2011 17
Key Issues for Week 3Key Issues for Week 3
• Tools for cost planning and projection• Cost Benefit Analysis• Cost explanation and After Action Review
© Dale R. Geiger 2011 18
Remember Valley ForgeRemember Valley Forge
• Read the article by Ms. Matiella
© Dale R. Geiger 2011 20
Check on LearningCheck on Learning
• Why does the Army need to become more cost effective?
• What is the difference between Cost Benefit Analysis and a Cost-Managed Organization?
• How do fiscal constraints pose an “asymmetric threat”?
• How should we respond?
© Dale R. Geiger 2011 21