Parallel working group session WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra European University Association Country Workshop in Poland Universities Implementing Full Costing University of Warsaw 13 May 2011

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra CONTENT 1 | Context 2 | Developing FC at UC 3 | Leadership and support for full costing implementation project at UC 4 | Recent institutional development – SSC 5 | Final remarks

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra

1 | Context Exponential Growth of the Portuguese Higher Education System (80s and 90s) Recent decrease in the number of “traditional” undergraduate students Pressures on state funding Research's competitive context 2000: Change in the Education Accounting System 2007: Change in the Legal Framework - RJIES Portuguese Higher Education System Portuguese Higher Education System

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra 1 | Context Portuguese Higher Education System Portuguese Higher Education System

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra 1 | Context Portuguese Higher Education System Portuguese Higher Education System Charter of Accounts for the Education Sector. CA-Education since 2000 (Order no. 794/2000, 20 September). Cost Accounting became compulsory. BUDGET PATRIMONY CA Budgetary statements Indicators for the use of financial resources Costs for services, activities and products Deviations Income statement [IS] per function Control of transactions with third party Fixed assets (CIBE) IS total Balance sheet Registers transactions of budgetary management and control of expenditure and revenue Establishes costs per function Establishes costs and income in the overall In 2007, only two Universities used this system, being the University of Coimbra one of them.

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra 1 | Context Institutional context: UC Institutional context: UC The University of Coimbra (UC) is the oldest university in Portugal – it was founded in has a comprehensive mission where research, T&L and cultural/social dimensions are pursued.  8 Faculties  41 Research & Development Units  students (with 2955 international students – 39 countries)  Academic staff: 1500  Administrative staff:

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra

In 2000, there was a set of factors which contributed towards this purpose: Strategic – the UC felt the need to have a tool for strategic management Managerial – due to the increased complexity of activities, the UC felt the need to develop a coherent model to manage the activities □ Vertical structure organized per organic units with relevant autonomy, which allows the control of costs, income and results by independent units. 2 | Developing FC at UC Conceptual Model for UC’s Cost Accounting Central Structure HumanitiesLawPharmacyEconomics Psycology Sports Reclassification Cost Centres Activities Other Programmes

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra Struture  Activities Research Service Provision T&L  Graduate, Master’s, Doctorate,  etc.  Individual Research Projects; R&D Units;  Current Research  Services provided to the internal and external community  Reclassification/allocation of other costs Management Bodies Departments General Services Other  Cost Centres 2 | Developing FC at UC

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra Timeline □ 1st phase – Academic year 2002/2003 – Test  test at the Faculty of Economics as pilot-project □ 2nd phase – Academic year 2003/2004 – Implementation  development at the Faculties of Humanities, Law, Psychology and Sports since October 2003 (first report with integrated information for the academic year 2003/2004) □ 3rd phase – Academic Year 2004/2005 – Post-Implementation Monitoring  Faculties readjusted some of the allocation keys, based on the experience of the previous year □ 4th phase – Academic year 2005/2006 – Extended Implementation  Implementation in all the Faculties □ 5th phase – Academic year 2010/2011 – Structural Revision  Implementation of the shared services centre and administrative reform impacted on the Faculties. 2 | Developing FC at UC

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra □ Cost accounting reflects the functioning of the institution and therefore it requires permanent updating, thus needing ongoing and constant improvement; □ criteria definition for cost allocation as regards academic staff per activity is one of the most important and most complex analysis in the process; time accounting framing rules casual allocation Faculty Directors are responsible for the criteria definition □ the implementation of cost accounting requires the continuous collaborative work of the units and the processing and analysis team. Practical Issues 2 | Developing FC at UC

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra Financial □ the development of this project has costs which, in Portugal, have to be fully assumed by Institutions (there is no government support to this kind of projects); □ at UC there was an important institutional effort and the project only progressed because there were basic internal competencies and a strong commitment Technical □ assessment of a full costing system □ risk assessment □ legal barriers (ex: ownership of buildings; depreciation; insurance; real cost of historic buildings) Accounting □ new requirements (coding, reporting, etc.) □ cost accounting conciliation with the financial statement Cultural □ time measuring and recording by HR (timesheet) □ to face “sensitive” questions within the institutions □ resistance to change Barriers 2 | Developing FC at UC

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra

CLEAR CENTRAL VISION the importance of the project was strongly assumed by the University Top Government (Rector) national and international benchmarking was performed a single information system was chosen KEY ROLE OF FACULTIES participation of Faculties – ensuring Faculties’ individuality Directors of the Faculties assume the responsibility for the important decisions (criteria, time distribution, …) commitment to the project 3 | Leadership and support for full costing implementation at UC

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra THE IMPORTANCE OF A PILOT TEST SELECTION OF A PILOT FACULTY SELECTION OF A PILOT FACULTY medium size diversified structures board committed to the project non-resistant culture (ex. UC - Faculty of Economics) COMMUNICATION AND INFORMATION explanation of benefits to all intervenients and relational model establishment of communication flows and clear routines team meetings 3 | Leadership and support for full costing implementation at UC

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra 3 | Leadership and support for full costing implementation at UC PROJECT DEVELOPMENT TEAM specialised competencies centralised structure pro-activity and dynamism small structure

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra The implementation of Cost Accounting: □ has transversal impact on the Institution; □ enables the opportunity to clarify within the activities and at institutional level: assessment and certification; □ is a support for Change: technical, of management and cultural.  Management and organization structures and processes  Resource Allocation Model  New criteria: in the development of the activity and in the activities' sustainability  People: involvement and commitment  Organizational Culture change 3 | Leadership and support for full costing implementation at UC The Cost Accounting Project at the University of Coimbra began in 2000 □ the main driver was the internal wish to have the support for an adequate managerial and strategic system □ the project was developed without any external funding or incentive from the Government, there being a strong internal effort.

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra

September 2008 – new statutes of the UC Implementation of a Shared Services Centre 4 | Recent institutional development Viability studyDesign Design and implementation Migration, stabilisation and optimization /2011 The UC Shared Services Centre will include six macro-services

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra Defines strategic policies and guidelines Informs and controls corporative goals Ensures value to the different participants Management report Provides services according to the Units needs Transactions processing Information processing Operational report ORGANIC UNITS UNIVERSITYS´GOVERNING BODIES Focus on consolidated resources management Focus on core activities SHARED SERVICES CENTRE Focus on non-core activites Defines policies and strategic guidelines with functional impact on the SSC Decision and approval Reports consolidated information Defines the services needs Establishes SLAs Analyses information and starts processes RELATIONAL MODEL 4 | Recent institutional development

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra SECTORAL BENEFITS OF THE SCS Benefits for the Faculties and other units Takes away from the Faculties management the weight of support activities so that they can focus on strategy and management properly Best support to decision making Reduces tensions between management and support staff Faculties are responsible for their own cost management Benefits for the Administration Creates and develops specialised skills Increments financial and operational control Improves the support areas towards meeting different parties’ needs Motivates staff Allows for the provision of new services and a more efficient procurement process GLOBAL BENEFITS OF THE SCS More efficiency with the same resources Services based on best practices Standardisation of policies and processes Increment in productivity Enhanced skills due to specialisation Implementation of multiple small wins Minimisation of the number of systems 4 | Recent institutional development

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra 4 | Recent institutional development FACULTIES LOSSES FACULTIES GAINS BEST SUPPORT TO DECISION MAKING RELEASING FINANCIAL AND HUMAN RESOURCES FOCUS ON ESSENTIAL ACTIVITIES FLEXIBILITY TO COSTUMISETHE SERVICES FOR SPECIFIC NEEDS DIRECT CONTROL OF THE SUPPORT PROCESSES

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra How to ensure that GAINS>LOSSES? - Active participation in the initial requirements definition phase - Faculties commitment governance structures - Service Level Agreements (SLAs) - Regulation Body (macro structure) 4 | Recent institutional development

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra

5 | Final remarks The importance of leadership in UC was supported by: the Rector’s involvement and commitment the focus on the mission and on the implementation of the project participation and commitment of the Direction of Faculties: in respect to the specificity of each Faculty taking advantage of the synergies arising from the common gains (efficiency) transparency of communication and information regarding the project competence and commitment of the technical team

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra Discussion