1. Full Cost Accounting at UCLA Judith Freed Administrative Information Systems University of California Los Angeles

2. UCLA Administrative Information Systems Full Cost Accounting at UCLA  FCA History and UCLA statistics  Goals and Benefits of Full Cost Accounting  Methodology for calculating rates and allocating expenses  Estimating new projects and ongoing maintenance  How FCA fits into our bigger picture

3. UCLA Administrative Information Systems UCLA and AIS by the numbers UCLA  27,000 FTE (employees)  37,000+ Students AIS AIS  350 MIPs CPU  4 terabytes of data storage  115 servers  50+ campus wide applications  6500 admin users  128 budgeted FTE  $20M budget

4. UCLA Administrative Information Systems History of Full Cost Accounting  AIS experienced chronic deficits for many years  1996-97: Deloitte & Touche engaged to develop initial “Full Cost Model”  1998-99: AIS developed systems and refined formulas for full costing  1999-Current: Resource usage captured by “Service Line” and Full Cost Statements provided to customers

5. UCLA Administrative Information Systems Goals of FCA  Provide better information to executive management of IT  Determine monthly and annual cost for each application/service and major project  Develop budget and funding for each system and project  Provide a basis for expense management – not a source of recharge funding  Eliminate bad business deals

6. UCLA Administrative Information Systems Benefits of FCA  Broadens and elevates the decision-making process for prioritization and use of resources  Facilitates open, objective dialogue on service quality, timeliness, costs and funding  Improves estimating and management of new development projects  Provides effective project monitoring and control system (avoids deficits, cost overruns and delays)  Makes AIS more accountable to executives, system owners and the campus community

7. UCLA Administrative Information Systems Prerequisites to FCA  Naming conventions and standards for production and test environments  Mechanism for tracking personnel time to projects or tasks  Clear definition of what constitutes a “service line”  Budget and actual costs available on a monthly basis

8. UCLA Administrative Information Systems FCA Methodology Major Drivers or Components of Cost:  Applications Programming: Task Tracking  CPU (mainframe): Job Name  Storage (DASD and Tape): File Name  Printing (images): Job Name  Distributed Platform Support: Server ID  Direct Expense (i.e., direct benefit to a specific application or project)

9. UCLA Administrative Information Systems Calculations: Establishing Rates  Primary cost is salaries/benefits  Compute fully burdened average salary  Salary divided by available hours = billable hourly rate  71.7% of 2088 Work Hours per programmer “available” for billing

10. UCLA Administrative Information Systems Calculations: Establishing Rates  Primary cost is mainframe hardware and software  Salaries/benefits of personnel associated with mainframe  CPU Rate = Total costs divided by CPU minutes consumed

11. UCLA Administrative Information Systems Calculations: Establishing Rates  Primary cost is salaries/benefits of associated personnel  Supplies and expense includes tape acquisition and off-site storage  Storage Rate = Total costs divided by total MB/Day Used

12. UCLA Administrative Information Systems Calculations: Establishing Rates  Primary cost is printing equipment, supplies and distribution charges  Print Rate = Total costs divided by number of images  No rate variation on type of print

13. UCLA Administrative Information Systems Calculations: Establishing Rates  Primary cost is salaries and benefits of associated personnel  Server hardware and software are considered direct costs  Power units established by type of server  Rate = total costs divided by total power units

14. UCLA Administrative Information Systems Calculations: Establishing Rates Direct Costs  Key entry  Microfiche  Hardware/Software used exclusively by a service line

15. UCLA Administrative Information Systems Sample Full Cost Statement

16. UCLA Administrative Information Systems Estimating New Projects  Use same basic cost components  Establish one-time costs associated with project start-up and development  Use standard methods to calculate annual ongoing maintenance costs  Application maintenance = 15-20% of development costs  Server maintenance calculated by power units and a standard 3 year replacement cycle

17. UCLA Administrative Information Systems Project Estimate (in thousands ) Project Components FY04FY05FY06FY07 4 year Total Application Programming $ 250 $ 100 $ 700 Consulting Services $ 150 Software Package $ 200 $ 36 $ 308 Server HW/SW $ 50 $ 50 $ 50 $ 150 Application Maintenance $ 128 $ 143 $ 271 Server Maintenance $35 $35 $ 70 $ 175 Total by year Total by year $ 650 $ 371 $ 334 $ 399 $1754

18. UCLA Administrative Information Systems Tracking Estimate to Actual  Establish a new “service line” or a project within an existing service line  Track actual costs in all applicable categories  Periodic review of actual spend to estimate  Review spend patterns and adjust methodology when necessary

19. UCLA Administrative Information Systems Full Cost Accounting - Part II  Proportioning Costs for shared service lines (UC Merced, Office of the President)  Costing out service requests – and directly charging for them  Determining financial “break-even point” for replacement of applications  Getting at the true cost of “integrated applications”

20. UCLA Administrative Information Systems The Bigger Picture at UCLA  Full Cost Accounting  Service Level Agreements  Balanced Scorecard  Project Control Documents

21. UCLA Administrative Information Systems What’s next at UCLA?  Refinement of some calculations and methodologies  Power units for distributed platform technologies  Prepare project estimates using same methodology across all organizations at UCLA  Incentives for reducing ongoing costs, i.e., reduction in printing

22. UCLA Administrative Information Systems Full Cost Accounting at UCLA Questions