1. Intermediate Cost Analysis and Management
Prepare Forecasts, Variances and a Reconciliation Briefing --Childcare Case Ft. Riley--
Intermediate Cost Analysis
and Management
Show Slide #1: Prepare Forecasts, Variances and a Reconciliation Briefing --Childcare Case Ft. Riley--
9.3

2. What Makes a Good AAR Brief?
What does your Senior Leader want to know?
How should you present the information?
What are your presentation pet peeves?
What should you avoid?
Show Slide #2: What Makes a Good AAR Brief?
Facilitator’s Note: What Makes a Good AAR Brief?
What does your Senior Leader want to know?
How should you present the information?
What are your presentation pet peeves?
What should you avoid?

3. Terminal Learning Objective
Action: Prepare Forecasts, Variances and a Reconciliation Briefing
Condition: You are training to become an ACE with access to ICAM course handouts, readings, spreadsheet tools, and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy:
Use scenario information to prepare forecast, variance and reconciliation briefing.
Show Slide #3: Terminal Learning Objective
Facilitator’s Note: State the TLO
Action: Prepare a forecasts, variances and reconciliation briefing.
Condition: You are a cost advisor technician with access to all regulations/course handouts, and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors.
Standard: with at least 80% accuracy on the exam:
Use scenario information to prepare forecast, variance and reconciliation briefing.

4. Child Care Centers
Part of The Family and Morale, Welfare and Recreation Command (FMWRC or simply MWR)
Show Slide #4: Child Care Centers
Facilitator’s Note: Activity Step 1 Case Study: Child Care Centers
Let’s see how the AAR pertains to a Child Care Center case study. The Child Care Center is part of the Family and Morale, Welfare and Recreation Command (FMWRC or simply MWR)

5. MWR’s Mission
FMWRC, The Family and Morale, Welfare and Recreation Command serves the needs, interests and responsibilities of each individual in the Army community: -for as long as they are associated with the Army - no matter where they are -provides the Army Family with the same quality of life afforded the society they protect.
Show Slide #5: MWR’s Mission
Facilitator’s Note: Activity Step 1 Case Study
Here’s some background on the MWR’s mission, which will give us some insight into how the Child Care Center operates.
The mission is to serve the needs, interests and responsibilities of each individual in the Army
For as long as they are associated with the Army
No matter where they are
Providing the same quality of life afforded the society they protect.
Clearly this is an important mission, and providing quality childcare is a small but important part of it.

6. MWR & Leadership
MWR is a comprehensive network of support and leisure services designed to enhance the lives of soldiers (active, Reserve, and Guard), their families, civilian employees, military retirees and other eligible participants
Over 37,000 MWR employees worldwide
A 2-star general leads the FMWRC
Show Slide #6: MWR & Leadership
Facilitator’s Note: Activity Step 1 Case Study
Facilitator’s Note: MWR is a comprehensive network of support and leisure services designed to enhance the lives of soldiers, their families, civilian employees, military retirees and other eligible participants
There are over 37,000 MWR employees worldwide
A 2-star general leads the FMWRC

7. MWR Program Categories
Categories A - Mission Sustaining Activities (Appropriated Funds APF) B - Basic Community Support Activities (Combination - APF/NAF) C - Business Activities (User paid - Non Appropriated Funds)
Examples Sports, Libraries Child Care centers, youth programs Golf courses, clubs, bowling, travel
Show Slide #7: MWR Program Categories
Facilitator’s Note: Activity Step 1 Case Study
There are three major categories of programs in MWR.
Category A consists of Mission-Sustaining activities. Examples are sports programs and libraries. These are funded through appropriations.
Category B involves Basic Community Support activities. Examples are child care centers and youth programs. These are funded through a combination of appropriated and non-appropriated funds. This is analogous to subsidized activities in the civilian community, where fees are charged for services but the fees do not necessarily cover the cost of the service, or the service is enhanced by the government or donor-provided funds. In the case of the Ft. Riley child care center, fees for service were determined by a sliding scale based on rank.
Category C is comprised of Business Activities. These activities receive no appropriated funding, and the fees charged must cover the cost of the service. Examples are golf courses, clubs, bowling, and travel packages.

8. Child Development Center at Ft. Riley
Part of Community Activities Directorate (Morale, Welfare, Recreation) that reports to Garrison Commander
Looks at cost in two categories
Appropriated funds are supplied from Congress
Non appropriated funds are received from user fees that parents pay based on rank
The following brief was presented by the center supervisor to the Garrison Commander
Show Slide #8: Child Development Center at Ft. Riley
Facilitator’s Note: Activity Step 1 Case Study
Part of Community Activities Directorate (Morale, Welfare, Recreation) that reports to Garrison Commander
Looks at cost in two categories
Appropriated funds are supplied from Congress – this subsidy covers costs not covered by user fees.
Non appropriated funds are received from user fees that parents pay based on rank.
The following brief was presented by the center supervisor to the Garrison Commander

9. Directorate of Community Activities
Show Slide #9: Directorate of Community Activities
Facilitator’s Note: Activity Step 1 Case Study
What’s wrong with this picture?
(Let the students critique the slide.) Some points that they should be able to identify:
The slide is way too detailed.
It would be better to start with an overview that showed total cost plan, actual and variance.
Since there is so much detail on the slide, the font is too small.
Some of the line items don’t even have any data and could be eliminated altogether.
There is not a clear delineation between the periods.
Dec 98 is the just-completed period.
Jan 99 and Feb 99 have not happened yet….there is no need for columns for actual and variance.
(Extra point for anyone who notices the math errors before you show the next slide.)

10. Directorate of Community Activities
Show Slide #10: Directorate of Community Activities
Facilitator’s Note: Activity Step 1 Case Study
Did anyone notice that there were even math errors in the original slide? They are corrected here.
Note these math errors

11. Group Activity Divide into six groups
Each group will have an assignment to prepare information from the data on the previous slides
After preparing your information you will brief the CO (class)
Show Slide #11: Group Activity
Facilitator’s Note: Activity Step 1 Case Study
Instructor Note: Read the students instructions below:
Divide into 6 groups.
Each group will have an assignment to prepare information from the data on the previous slides.
After preparing your information you will brief the CO (class).

12. Group 1 Activity
Group 1: Prepare a graph with two lines: total cost (both APF and NAF) and revenue. Interpret the graph for the CO.
Show Slide #12: Group 1 Activity
Facilitator’s Note: Group 1
1. Prepare a graph with two lines: total cost (both APF and NAF) and revenue.
2. Interpret the graph for the CO.
APF
NAF

13. Group 2 Activity Simplify Data
Fewer Categories, Fewer Numbers
Group 2: Prepare one page that shows Jan Plan, Feb Plan, and the change between them. What questions should the CO ask when looking at this analysis?
Show Slide #13: Group 2 Activity
Facilitator’s Note: Simplify Data- Fewer Categories, Fewer Numbers
Group 2:
Prepare one page that shows Jan Plan, Feb Plan, and the change between them.
What questions should the CO ask when looking at this analysis?

14. Group 3 Activity Simplify Data
Fewer Categories, Fewer Numbers
Group 3: Prepare one page that shows Dec Actual, Jan Plan, Feb Plan, and the change between them. What questions should the CO ask when comparing future plans to Dec’s results?
Show Slide #14: Group 3 Activity
Facilitator’s Note: Simplify Data: Fewer Categories, Fewer Numbers
Group 3:
Prepare one page that shows Dec Actual, Jan Plan, Feb Plan, and the change between them.
What questions should the CO ask when comparing future plans to Dec’s results?

15. Group 4 Activity Simplify Data
Fewer Categories, Fewer Numbers
Group 4: Prepare one page that shows Dec Plan, Dec Actual, and the change between them. What Questions should the CO ask when comparing performance to plan?
Show Slide #15: Group 4 Activity
Facilitator’s Note: Simplify Data: Fewer Categories, Fewer Numbers
Group 4:
Prepare one page that shows Dec Plan, Dec Actual, and the change between them.
What Questions should the CO ask when comparing performance to plan?

16. Groups 5 & 6 Activity Simplify Data
Fewer Categories, Fewer Numbers
Groups 5&6: Prepare one page that shows all the relevant information of the original brief plus the variances of the Jan Plan to Dec Actual and Feb Plan to Jan Plan. Highlight issues raised.
Show Slide #16: Groups 5 & 6 Activity
Facilitator’s Note: Simplify Data: Fewer Categories, Fewer Numbers
Groups 5 & 6:
1. Prepare one page that shows all the relevant information of the original brief plus the variances of the Jan Plan to Dec Actual and Feb Plan to Jan Plan.
2. Highlight issues raised.

17. Instructor Materials Show Slide #17: Instructor Materials
Facilitator’s Note: Instructor Materials:
The following slides are examples of the type of information the groups should prepare and present.

18. Group 1 Graph 160.0 140.0 Total Cost 120.0 100.0 80.0 60.0 Revenue
Show Slide #18: Group 1 Graph
Facilitator’s Note: Group 1’s graph should look something like this. The assignment was to prepare a graph with two lines: total cost (both APF and NAF) and revenue. Interpret the graph for the CO.
The graph shows an increasing trend in both revenue and cost, with cost exceeding revenue (normal for appropriated funded operations.)
20.0
0.0
DEC
ACT
JAN
PLAN
FEB
PLAN

19. Group 2 Analysis Jan Plan Feb Plan Var Jan Appropriated Funds
Pay and Benefits
64.4
68.1
(3.7)
Special Payment
6.7
0.0
Supplies
4.5
9.9
(5.4)
Total APF Cost
75.5
78.0
(2.5)
Non Appropriated Funds
Revenue
60.9
59.2
(1.7)
70.2
56.3
13.9
1.0
Other
1.6
Total NAF Cost
72.8
58.9
Net Income
-11.9
0.4
12.3
Show Slide #19: Group 2 Analysis
Facilitator’s Note: Group 2: Prepare one page that shows Jan Plan, Feb Plan, and the change between them. What questions should the CO ask when looking at this analysis?
Where are the large variances? Why? What caused them?
Can we learn from favorable variances and repeat the savings in the future?
Can we learn from unfavorable variances and avoid them?

20. Group 3 Analysis Dec Actual Jan Plan Var Dec Feb Plan
Appropriated Funds
Pay and Benefits
54.1
64.4
(10.3)
68.1
(14.0)
Special Payment
6.7
(6.7)
0.0
Supplies
3.5
4.5
(1.0)
9.9
(6.4)
Total APF Cost
57.6
75.5
(17.9)
78.0
(20.4)
Non Appropriated Funds
Revenue
42.8
60.9
18.1
59.2
16.4
53.1
70.2
(17.1)
56.3
(3.2)
0.8
1.0
(0.2)
Other
1.6
Total NAF Cost
55.4
72.8
(17.4)
58.9
(3.5)
Net Income
-12.6
-11.9
0.7
0.4
13.0
Show Slide #20: Group 3 Analysis
Facilitator’s Note: Group 3: Prepare one page that shows Dec Actual, Jan Plan, Feb Plan, and the change between them. What questions should the CO ask when comparing future plans to Dec’s results?
Every cost is increasing compared to December. Why? What is changing?
Revenue is expected to increase significantly. Why?

21. Group 3 Analysis Dec Plan Dec Actual Delta Plan Appropriated Funds
Pay and Benefits
58.8
54.1
4.7
Special Payment
6.7
Supplies
4.2
3.5
0.8
Total APF Cost
69.6
57.6
12.1
Non Appropriated Funds
Revenue
59.0
42.8
(16.2)
52.8
53.1
(0.3)
1.0
0.2
Other
1.6
0.0
Total NAF Cost
55.4
Net Income
3.7
-12.6
(16.3)
Show Slide #21: Group 3 Analysis
Facilitator’s Note: Group 4: Prepare one page that shows Dec Plan, Dec Actual, and the change between them. What Questions should the CO ask when comparing performance to plan?
Almost every cost was less than planned. Why? Can we learn from this and repeat it in the future?

22. Directorate of Community Activities
Show Slide #22: Directorate of Community Activities
Facilitator’s Note: Groups 5 & 6: Prepare one page that shows all the relevant information of the original brief plus the variances of the Jan Plan to Dec Actual and Feb Plan to Jan Plan. Highlight issues raised.
First item to highlight: The 12.1 favorable variance in Appropriated Funding cost.

23. What’s the Story? Why is APF so favorable in December?
Can we annualize and reprogram?
Story:
$6.7K special payment delayed until Jan
$5.0K new hire delayed until Jan
Conclusion: cannot annualize and reprogram
Show Slide #23: What’s the Story?
Facilitator’s Note: Why is APF so favorable in December?
Can we annualize and reprogram? Favorable variances are opportunities for learning. What did we do right? Can we repeat that in the future? If so, we can annualize the savings and use it for some other purpose.
Story:
$6.7K special payment delayed until Jan. So the “savings” now will be eliminated by an overage in the next month.
$5.0K new hire delayed until Jan.
Conclusion: cannot annualize and reprogram

24. Directorate of Community Activities
Show Slide #24: Directorate of Community Activities
Facilitator’s Note: Groups 5&6: Prepare one page that shows all the relevant information of the original brief plus the variances of the Jan Plan to Dec Actual and Feb Plan to Jan Plan. Highlight issues raised.
This slide highlights the unfavorable revenue variance in the NAF side.

25. What’s the Story? Why was revenue/profit down $16K? Story:
($10K) December slow month for day care
Why was this a surprise?
Why didn’t we anticipate and reduce staffing?
($6k) Increased proportion of low rates
Will this annualize and create a major problem for the year?
Show Slide #25: What’s the Story?
Facilitator’s Note: Why was revenue/profit down $16K?
Story:
($10K) December slow month for day care
Why was this a surprise?
Why didn’t we anticipate and reduce staffing?
($6k) Increased proportion of low rates (sliding scale based on clients’ income level – more of the clientele was on the lower end of the scale.)
Will this annualize and create a major problem for the year?

26. Directorate of Community Activities
Show Slide #26: Directorate of Community Activities
Facilitator’s Note: This slide highlights the unfavorable variances between current month actual and the future plans.

27. What’s the Story? Why are we adding so much payroll?
Is this an opportunity?
Can we avoid or defer?
Can we shift people from other areas where their job is no longer needed?
Story
Unknown
Action item for follow up
Show Slide #27: What’s the Story?
Facilitator’s Note: Why are we adding so much payroll?
Is this an opportunity?
Can we avoid or defer?
Can we shift people from other areas where their job is no longer needed?
Story
Unknown
Action item for follow up
Key point: AAR doesn’t give all the answers, but it should ask the right questions.

28. Directorate of Community Activities
Show Slide #28: Directorate of Community Activities
Facilitator’s Note: This slide highlights the planned increase in revenue and also planned increase in cost.

29. What’s the Story?
What’s the risk of cost happening and revenue not happening?
Does revenue rate problem go away?
Why are we adding payroll?
Story
Unknown
Action items taken to review rates and consider increase
Show Slide #29: What’s the Story?
Facilitator’s Note: What’s the risk of cost happening and revenue not happening?
Is this plan overly optimistic? What if the revenue doesn’t materialize?
When we hire another employee, we are committed to incurring that cost. What then?
Does revenue rate problem go away? Will our clientele change to high rate payers next month? Is that reasonable?
Why are we adding payroll?
Story
Unknown
Action items taken to review rates and consider increase

30. Reconciliation December Revenue Cost Actual 42.8 112.9 Plan 59.0 124.9
Variance (16.2)
Explanation
Low Attendance (10.0)
Low Rates (6.2)
Delayed Hire
Delayed Special Payment
All Other
Show Slide #30: Reconciliation
Facilitator’s Note: This slide shows the reconciliation/explanation of the total variance.

31. TLO Summary
Action: Prepare Forecasts, Variances and a Reconciliation Briefing
Condition: You are training to become an ACE with access to ICAM course handouts, readings, spreadsheet tools, and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy:
Use scenario information to prepare forecast, variance and reconciliation briefing.
Show Slide #31: TLO Summary
Facilitator’s Note: Restate the TLO
Action: Prepare a forecasts, variances and reconciliation briefing.
Condition: You are a cost advisor technician with access to all regulations/course handouts, and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors.
Standard: with at least 80% accuracy on the exam:
Use scenario information to prepare forecast, variance and reconciliation briefing.
“Or”
Facilitator's at this time, have one learner from each group to explain the most important take away to them from this lesson. Facilitate a discussion on each answer.