Driving Value Using Activity-Based Budgeting

"To create value for a customer requires an organization to translate its vision into a strategy with definable objectives."

"Value-driven planning allows the organization to understand causes of variation so the variation can be controlled."

"Organizations must begin controlling costs when times are good rather than after an earnings slowdown."

"Management must understand the market and then, using the organization's strengths, set achievable targets."

"A rule of thumb is that 80 to 90 percent of a department's costs should be traceable to activities."

"The product or service concept should be defined in terms of price, quality, and functionality required by the customer regardless of the cost."

"The first step in forecasting the total organization workload is to forecast cost object demand and then to determine the workload for product or service-direct activities."

"The key to profitability is to match capacity to future needs."

"Feature costing is a technique that seeks to understand the process variation caused by unique features of individual products or services."

"Attributing cost and value, based on how product/service characteristics impact a process is the most proficient tool available for accurately assigning cost."

"How a business process is structured determines how value is created. The key is to structure business processes in alignment with strategic objectives and the marketplace."

"Any gaps between budgeted performance and strategic targets should result in modifications to the budgeted activities and their resulting resources."

"Once the problem areas in an organization's business processes or activities have been identified, possible solutions must be outlined and "plugged" into the business processes to see if they fit."

"Determining the current level of work being performed through activity analysis is the basis from which one can begin to analyze and plan better ways of achieving an organization's goals."

"Using business process and activity measures and proactive process controls, a process manager and relevant process workers can readily anticipate and plan for expected changes in workload."

"Re-engineering is an intensive, customer-focused, top-down management effort to establish breakthrough in the performance capabilities and value of processes."