MESSAGE FROM THE CEO

When organisations invest in projects and programmes intended to improve performance, change behaviours and ultimately benefit their organisation's impact outcomes, the investment is usually agreed in a business case and money allocated to the project or programme. However, our experience has been that in assessing costs, few organisations identify FULL costs either when forecasting or when reporting results. In our workshops and coaching, we assist clients to build up the full cost picture, using activity based cost approach. 

In the September 2011 Harvard Business Review, an article by none other that Michael Porter and Robert Kaplan titled 'How to Solve the Cost Crisis in Health Care' describes work they have carried out in the USA and Germany and includes their recommended 'time driven activity based costing approach'. This is what we have been advocating for years as the many hundreds of participants in our Awards workshops will know! It's nice to see that such eminent experts such as Porter and Kaplan support this approach!

Our reasons for emphasising the importance of this approach is that everyone involved in a project or programme needs to be aware of the full cost to the organisation even where the costs do not appear in their budgets.

In a recent evaluation in the healthcare sector with multiple organisations working collaboratively on a shared learning and development programme here in the UK, the direct costs to each organisation appeared very low as the course fees were externally funded. However using the data provided by each organisation in our activity based costing template, we were able to show that the full cost to each organisation was on average double that of the direct costs.

Nothing is free; there are costs to every organisation over and above the amount captured on someone's budget. It is essential that all involved have full knowledge of the costs as they balance these against the improvements and organisational benefits they are supposed to be achieving. The message on full costs needs most of all to be shared with senior as well as line managers. Forecasting the full costs from the start and reporting full costs at the end of every project enables better decision making and ensures greater attention to engaging everyone's commitment to achieving the results.