Using activity‐based costing to implement behavioural cost initiatives successfully

Abstract

Continuing budget pressure is forcing facilities groups to re‐think their current service delivery models and develop initiatives that reduce cost and increase efficiency. Making this task more difficult is the fact that many costs incurred by the facilities department are the result of behaviour patterns of non‐facilities employees. To assist in this task one facilities organisation turned to activity‐based costing (ABC) as a solution. ABC has allowed the facilities group to identify internal and external behaviour changes that affect the cost of delivering services. Once identified, plans of actions are developed in conjunction with the various departments to address equipment and facilities usage, service level requirements and operational process improvements. The execution of these plans allows the facilities group specifically to identify cost drivers that can be eliminated, thus avoiding the traditional arbitrary budget reduction process. Readers will be introduced to the application of the ABC model and how behaviour modification initiatives, using ABC, provide supporting data for the development of the annual budget. In addition, readers will learn how the development of behaviour change initiatives can place the responsibility for corrective maintenance cost control on the end user.

Citation

Kaszubski, M.A. and Ebben, S. (2004), "Using activity‐based costing to implement behavioural cost initiatives successfully", Journal of Facilities Management, Vol. 3 No. 2, pp. 184-192. https://doi.org/10.1108/14725960510808473