Activity based costing

Activity based costing, also known as unit costing or cost architecture, can be used to carry out very detailed costing of service delivery processes.

• What does it cost to run your service? 
• How efficient and effective are the service delivery processes? 
• How much does it cost to deliver the service via the phone, face-to-face, email or web? 

The results can answer these questions and give you an insight into the services employee costs; cost to deliver by each channel; and cost to serve per transaction.  Savings can then be made by removing wasteful practices highlighted during the review or by changing the way you deliver a service to a more cost effective channel.  For services who charge, income can also be offset against service delivery costs to see how efficiently the service is performing.  A national standard is used to define the work activities, which means that like for like costs can be benchmarked across the Resource or the Council to enable sharing of best practice.  Activity based costing needs to be combined with process improvement mapping and is aligned with lean thinking reviews to support business cases for savings.