Costing Benchmarking Framework TBS

1. Costing Centre of Expertise
Costing Benchmarking Framework
Planning & Performance Exchange Learning Event
Operational Costing & Capacity Management: Their Links
to Planning, Performance, and Efficiency
January 26, 2016
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2. 2
Purpose
• Background
• High level findings
• Cost Factors Manual

3. 3
CCE Major Activities
The CCE proactively supports:
• Deputy Head and CFO accountabilities
• Program Sectors as the primary performers of the TBS challenge
function
• The current roles and responsibilities of EMS
Key activities of the CCE include:
• Supporting an enhanced diligence function within TBS for
consideration of funding requests
• Supporting “deep dives” and “horizontal reviews”
• Developing strategies for provision of training on cost containment
and cost estimation for TBS program sector analysts
• Developing policy and guidance on cost estimation, cost containment,
and the management of user fees
• Rolling out guidance on CFO attestation and provision of support to
departments
Developing a cost factors manual to inform and
support resourcing decisions

4. 4
Cost Factors Manual
• Is it possible to estimate incremental resource
requirements for new initiatives?
• Can the Treasury Board assess the reasonableness
of funding requests?
• Can we determine which metrics (cost factors)
fairly represent efficiency in Internal Services?

5. 5
Work to Date
Approach:
• Attempt to establish standard cost factors for
comparable organizations
CCE went to work:
• What are other jurisdictions doing with their
“internal services”?
• What are appropriate cost drivers for the
different functions in internal services?

6. 6
Open Data
Hypothesis being tested:
• Without adding to the reporting burden of
organizations, what can we find out from
publically available data?
Organizations have attested to this data and it has
been tabled in Parliament:
• RPP, Public Accounts and DPR

7. 7
Proof of Concept
Key Assumptions and Limitations:
• Expenditure was used as proxy for cost and capacity
• The IS Program was analyzed in the aggregate, not by
sub-category of internal services
• IS Program effectiveness was not considered
Scope:
• Analysed the data for the following fiscal years:
• 2010-11
• 2011-12
• 2012-13
• 2013-14
Ongoing evolution of approach

8. 8
Clustering of Organizations
Preliminary Analysis:
• Size on its own may not be sufficient to explain
fluctuations in IS expenditures; other factors must be
considered to measure the complexity
• Type of activities performed (i.e. G&C and Capital) and the
amount of resources dedicated to specific types of
activities impact IS expenditures, as does the geographic
reach (number of regions with employees)
o However Capital expenditures have limited publically
available data
Organizational context is key to understanding the whole story!

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Hypothetical Clustering of Organizations

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What to measure?
• Analyze the behaviour of expenditures in groups of “like”
organizations (or internally between programs) based on
Cost Estimating Relationships
• One measure does not “tell the whole story”, multiple
measures are needed to give a better understanding of an
organization
• Based on preliminary analysis of publicly available data, 3
cost factors are being tested to see how they “tell the
story”:
1) IS Program FTEs/All Other Programs FTEs
2) IS Program Gross Voted Operating Expenditures/ All
Other Programs Gross Voted Operating Expenditures
3) IS Program Gross Voted Operating Expenditures/
Total Organizational FTEs

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Conceptual model
• Using cost factors and
a proxy measure for
capacity, is it possible
to estimate additional
resources required?
• Analytical grids allow
decision makers to
gauge the
reasonableness of
funding requests by
allowing the
comparison of “like”
organizations

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Common Data and Clusters
• Our work to group organizations into appropriate clusters will enable:
o Reasonableness testing for Internal Services by providing a range of
existing expenditures for similar organizations
o EMS can leverage these same cost factors and clustering methodology to
measure performance
Common
Data Points
Clustering
(size and
complexity)
Performance Measures
(Efficiency and Effectiveness):
• Internal Services
• Transfer Payment Programs
• External Services
Reasonableness Measures for
expenditures and FTEs:
• Internal Services Program
• IS by function
• Type of G&C or Program
Collect data
and analyse
Standardize
Treatment
and Context
Review
Results
Continuous
Improvement

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Similar but different
• EMS could leverage and evaluate the work by the CCE to
consider the clustering and cost factors to look at
efficiency metrics
• CCE is leveraging the EMS work on efficiency metrics and
program tagging.
Thus far, common data can be leveraged by both and will not
cause undue reporting burden to organizations.

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Contact Information
Greg Steele
A/Director Costing Policy
Office of the Controller General, Treasury Board of Canada Secretariat
Government of Canada
greg.steele@tbs-sct.gc.ca
Tel: 613-697-0863 / TTY: 613-957-9090
Directeur par intérim sur l’établissement des coûts,
Bureau du contrôleur général, Secrétariat du Conseil du Trésor du Canada
Gouvernement du Canada
greg.steele@tbs-sct.gc.ca
Tél. : 613-697-0863 / ATS : 613-957-9090