Activity Based Budgeting in the Public Sector Training Course

Participants can define cost objects that support useful public-service budget decisions.

• Cost objects defined as services, cases, inspections, applications or transactions
• Service catalogue developed from statutory mandates and delivery commitments
• Programme structures tested against operational services and beneficiary groups
• Cost-object hierarchy separates unit, batch, service-sustaining and facility costs
• Materiality thresholds identify services requiring separate cost measurement
• Decision purpose determines appropriate granularity for cost-object definitions

Participants can map service processes and identify the activities consuming resources.

• SIPOC mapping identifies suppliers, inputs, processes, outputs and customers
• Swimlane diagrams assign activities to units, roles and control points
• Value-stream mapping distinguishes value-adding work from delays and rework
• Activity dictionary records task descriptions, frequency, ownership and evidence
• Process boundaries set from demand entry through service completion
• Exception routes captured for appeals, referrals, investigations and escalations

Participants can classify and prepare resource costs for activity-based allocation.

• Chart-of-accounts extracts reconciled to approved budget and financial statements
• Direct costs traced to services using invoices, payroll and contract records
• Indirect costs grouped into support, management, facility and technology pools
• Fixed, variable and step costs classified for planning purposes
• Committed expenditure separated from discretionary expenditure during budget preparation
• Non-cash costs considered including depreciation, pensions and donated assets

Participants can create cost pools and allocate resources to activities transparently.

• Resource cost pools formed around similar consumption patterns
• Payroll costs assigned using timesheets, job profiles and workload evidence
• Facilities costs allocated through floor area, occupancy and operating hours
• Information technology costs assigned using users, licences and transactions
• Shared-service costs separated from agency-specific operational resource costs
• Allocation assumptions documented in a cost-assignment register

Participants can select cost drivers that represent causal resource consumption.

• Cause-and-effect tests assess proposed drivers against actual resource consumption
• Transaction counts used for applications, payments, permits and case files
• Time drivers estimate effort for variable-complexity service transactions
• Capacity drivers distinguish practical capacity from expected service demand
• Driver data assessed for reliability, timeliness, ownership and audit trail
• Sensitivity analysis tests unit costs against alternative driver assumptions

Participants can calculate activity rates and unit costs using ABC methods.

• Two-stage allocation traces resource costs through activities to cost objects
• Activity rates calculated from cost-pool values and driver volumes
• Unit costs derived for standard services, cases and transactions
• Reciprocal service relationships handled using step-down allocation methods
• Unallocated costs investigated before finalising reported unit-cost figures
• Costing model reconciled to general ledger totals and approved budgets

Participants can apply time-driven costing where activities vary in complexity.

• Time-Driven ABC estimates capacity cost rates for staff resources
• Practical capacity calculated after leave, training, meetings and downtime
• Time equations model complexity from service attributes and exceptions
• Standard processing times validated through observation and operational records
• Unused capacity reported separately from productive service-delivery costs
• Time-driven models compared with conventional activity-based costing results

Participants can forecast service demand and workload for budget development.

• Demand forecasts built from historical volumes, policy changes and demographics
• Trend analysis separates seasonal patterns from underlying demand movements
• Scenario planning models baseline, pressure and savings demand assumptions
• Workload standards translate cases and transactions into staff-hour requirements
• Queue and backlog data identify deferred workload entering budget periods
• Forecast assumptions recorded with sources, owners and review dates

Participants can align resource capacity with service standards and expected workload.

• Capacity plans match available labour hours to forecast activity volumes
• Service standards specify response times, coverage levels and quality requirements
• Full-time equivalent calculations account for productive and nonproductive hours
• Bottleneck analysis identifies activities constraining end-to-end service delivery
• Make-or-buy analysis compares internal capacity with contracted service options
• Contingency capacity assessed for emergencies, peaks and policy changes

Participants can build an annual budget model from activity, demand and cost assumptions.

• Budget model links demand forecasts, activity volumes and resource requirements
• Driver volumes converted into staffing, procurement and operating cost budgets
• Monthly phasing reflects seasonality, recruitment timing and contract schedules
• Assumption sheets separate policy decisions from technical calculation inputs
• Model controls identify missing data, duplicate costs and invalid formulas
• Version control records revisions, approvals and budget-submission changes

Participants can budget shared services and overheads using defensible allocation bases.

• Shared-service catalogue defines finance, human resources, technology and procurement outputs
• Service-level agreements specify volumes, standards, responsibilities and charging arrangements
• Direct charging applied where consuming units can be identified
• Allocation bases selected for corporate costs without direct consumption evidence
• Cross-subsidy risks identified through comparative service-consumption analysis
• Overhead recovery policies aligned with legal, treasury and reporting requirements

Participants can link ABB budgets to meaningful service and performance measures.

• Logic models connect resources, activities, outputs, outcomes and assumptions
• Performance indicators balanced across volume, quality, timeliness and cost
• Unit-cost indicators paired with service standards to prevent cost-only decisions
• Targets set using baselines, benchmarks, policy commitments and capacity limits
• Performance information integrated into budget submissions and management reports
• Indicator definitions document formulas, data sources, owners and frequency

Participants can analyse ABB variances and recommend informed corrective actions.

• Flexible budgets restate planned costs for actual activity volumes
• Volume variances distinguish demand changes from spending-control failures
• Rate variances identify changes in pay, prices and resource consumption
• Efficiency variances compare actual driver usage with planned activity standards
• Mix variances expose shifts toward more complex cases or services
• Variance narratives assign causes, owners, actions and decision deadlines

Participants can use ABB evidence to challenge budgets and compare resource options.

• Budget challenge questions test demand, standards, drivers and unit-cost assumptions
• Zero-based review identifies activities requiring renewed funding justification
• Options appraisal compares service levels, delivery models and fiscal effects
• Marginal cost analysis estimates consequences of expanding or reducing services
• Priority ranking matrices assess statutory duties, risk, impact and affordability
• Decision papers present recommendations, trade-offs, evidence and implementation implications

Participants can establish data controls and assurance arrangements for ABB models.

• Data dictionary defines each field, formula, source and accountable owner
• Reconciliation controls compare model data with payroll, ledger and operational systems
• Audit trails retain source extracts, assumptions, calculations and approvals
• Segregation of duties protects model changes and budget-input integrity
• Quality checks test completeness, reasonableness, consistency and timeliness
• Model review calendar schedules updates for data, drivers and assumptions

Participants can prepare a practical ABB implementation plan for their institution.

• Readiness assessment examines leadership, data, systems, skills and governance
• Pilot selection targets material services with measurable activities and demand
• Implementation roadmap sequences design, testing, rollout and improvement activities
• Stakeholder analysis identifies finance, operational, union and oversight interests
• Change communications explain purpose, methods, decisions and staff responsibilities
• Training plan assigns model-building, review and reporting capabilities

Participants can apply ABB judgement to public-service equity, risk and accountability issues.

• Municipal waste collection compares route costs, volumes and service frequencies
• Health clinic model examines appointments, triage, treatment and referral costs
• Social protection administration analyses caseload complexity and processing times
• Regulatory inspection budgeting links risk categories to inspection effort
• Equity analysis tests cost decisions against access and inclusion obligations
• Ethical review identifies perverse incentives created by narrow cost targets

Participants can communicate ABB evidence through clear budget submissions and management reports.

• Budget narrative explains service demand, cost drivers and requested resources
• Executive dashboards present volumes, unit costs, capacity and material variances
• Waterfall charts show changes from current baseline to proposed budget
• Management reports distinguish controllable costs from externally driven pressures
• Briefing notes anticipate challenge questions from ministers, boards and treasury officials
• Reporting calendar aligns operational data, finance close and decision meetings

Participants can build, review and present a complete activity-based budget and implementation plan for a public service.

• Service scope defines cost objects, beneficiaries, standards and planning horizon
• Process map identifies activities, handoffs, controls and resource-consuming tasks
• Cost model assigns resources, pools, drivers and unit-cost calculations
• Demand scenario translates workload assumptions into capacity and budget requirements
• Variance and risk analysis identifies sensitivities, constraints and management responses
• Implementation plan specifies governance, data actions, milestones and ownership