1. Cost Awareness of Financial Operations in Theater
Army Day 2010
June 2, 2010
Steve Bagby - MG Phil McGhee – COL Sawyers

2. Agenda Operationalizing Cost Management Cost Education and Training
Cost Management - Policy / Guidance / GFEBS Support
Resource Informed Requirement Processes
USARCENT Financial Management Operations
Financial Management School
GFBES Sustainment Training Products
Cost Management and Cost Accounting Courses

3. Cost Culture - Cost Management
Single Use
Estimated
Future Cost
Cost Informed
Decision Making
Cost-Benefit
Analysis
Persistent Use
Expected & Actual Cost
Continuous Improvement
Cost Managed Enterprise
Universal Use
Planned & Actual Cost
Role Based, Org Based, Output Based Control
Cost Culture
Cost War Cost War High Cost War Full Spectrum
Insurgency Intensity Conflict Operations
Starting here TARGET
(some work is being done)

4. Cost Management Full Cost Measurement
Accurate, timely and relevant data
Connecting operational output/performance data to financial data
Allocate Overhead, Unfunded Costs, Indirect Support
Cost Planning
Operational managers set cost targets and efficiency goals
Plan cost based on outputs produced
Cost
Planning
Controlling
Analysis
Accounting
Management
Process
Cost Analysis
Variances
Trends and forecasting
Product, service or activity cost by expense (labor, material, contracts, etc…)
Understanding full costs of organizations, operations, products and services
Comparison Analysis & Benchmarking
Resource Informed
Decisions
Take action based on analysis and external demands
Change targets
Change resources
Change quantity / quality

5. Cost Management Enablers
Policy & Guidance
Training (Operational & Resource Mgrs)
Cost Management 101
- Cost Management Overview
Cost Object (ERP) Definitions
Cost Flow Methods
Cost Analysis and Reporting
GFEBS – Cost Management Training
These courses are either computer-based or instructor-led training classes to learn how to operate within the GFEBS cost module.
Cost Management Certificate Course
The program of instruction (POI) is designed to teach the fundamentals of cost management with a view to developing a cadre of Army personnel who are professionally knowledgeable, analytically competent, and personally motivated to serve as proactive change agents within their respective Enterprise line and staff organizations.
Self Study-Cost Management Community of Practice
Cost Management Courses in all Professional Development Programs
Tools

6. Cost Informed Decisions
Cost Benefit Analysis
The Value of Cost Benefit Analysis:
Supplements professional experience and judgment with sound analytical techniques
Ability to make better resourced-informed decisions
Results in a strong “value proposition”
Costs
Benefits
Thinking Domains
Decision
Forums/ Approval
Generate
Capability
Gaps / Require-ments
Top Down Initiatives
Various
Formal
Force Design Update FD
QDR/TAA/Portfolio – Business Area Reviews
SA/CSA
Army Campaign Plan Process
VCSA
Concept Plan (TDA Updates)
JCIDS /AROC
AROC /JROC
Basis of Issue Plan
ORDAB
AoA Studies
SAG/Other
Acquisition Process
Milestones
Installation/MILCON/Sustain
MILCON IPT
Unit/Institutional Training
Train’g Plan
AMC/G4 Depot /Sustainment/Ammo
AMC
ONS/JUONS/Rapid Transition
AR2B/AROC
Doctrine
Organization
Training
Materiel
Leadership
Personnel
Facilities
POM / BES
Manning
Equipping
BCA is not a budget, business plan, acquisition strategy, balance sheet.
Training
Sustaining
Organizing
Installation

7. USARCENT Financial Management Operations
Specified Tasks
Manage Title 10 funds
Resource OEF/OIF
Theater Army Financial Management Report
Imperatives
Visibility
Accountability
Transparency
Oversight
Controls
DoD Resources
Materiel Enterprise
Strategic Partners
FM/Contract Systems
Lean Six Sigma Team
Cost Analyst Team
Banking Team
Mgmt/System Accts
Exceptional Stewardship
Performance metrics
Resource informed
Cost savings
Cost avoidance
Process efficiencies
Near cashless Theater
Link end-to-end processes
Effect major cost drivers
Model and analysis
Lean out inefficiencies
Maximize e-commerce
Theater FM Initiatives
FM/Contracting systems
Cost culture
Cost of war
FM doctrine
FY10
Monthly Disbursements
$396M
$714M Cost Avoidance
$434M Cost Savings
$1,148M
91% EFT Payments
9% Cash Payments
1 % Goal
Credibility
Confidence
Trust
v2 as of 18 APR10

8. GFEBS Sustainment Training Products
The US Army Financial Management School will implement GFEBS financial management training products no later than 1 OCT 2011 in order to sustain FM Community knowledge and skills
Instructor Led Training
Distributed Learning (dL)
Cost Management (80 hrs)
GFEBS Essentials (20 hrs)
Reimbursables (20 hrs)
Financials (80 hrs)
Funds Management (24 hrs)
Non FM Roles
Spending Chain (50.5 hrs)
Training Support Packages
GFEBS PM
Training
(53 Courses)
Project Systems (8 hrs)
dL Products
Technical Training
Our Soldier Support Mission with respect to GFEBS is to develop and implement sustainment training products after fielding is complete….currently scheduled for 2nd Quarter FY12. We are shooting for 1st Quarter FY12
to have products available.
Our strategy is simple. We plan to take the Program Managers training products that he’s currently using for fielding – and transform them into our sustainment training products.
Using our resources and expertise here, we plan to add more Army terminology and scenarios to ultimately develop a superior product for long term sustainment training.
The courses listed above in the light blue field are GFEBS technical training courses….to show students how to operate within the GFEBS system.
- We plan to offer 5 distributed learning courses you see listed here on the right. Students will be able to take these courses sitting at a computer using the Army Learning Management System. The GFEBS Essentials course is simply a foundational course that provides the big picture view of GFEBS, what an ERP is, and the benefits of integrating multiple processes and systems into this single system. The other 4 dL courses focus in on those particular business areas.
- Additionally, we plan to offer two – 2 week functional courses here at the FMS – Cost Management and Financials. While these courses will delve into the Financials and Cost Management business processes, they will also cover a broad range of GFEBS topics that will be of interest to several of the various GFEBS User Roles.
- For the roles other than Financial Management – We are coordinating with IMCOM and the Logisticians to develop training for their specific needs. Generally speaking – this training is for the property, plant, and equipment personnel on the installations.
The courses below in the gray field are the Education training courses.
- Legacy: Updating our existing legacy courseware is a top priority. We have 82 hours of new GFEBS training that will be integrated into our Professional Military Education courses such as AIT, NCO, and Officer courses; and our functional courses.
- The other two courses are new initiatives to address the need for a Cost Culture within the Army. - the Principles of Cost Accounting and Managemnt – and Intermediate Cost Accounting and Management. With the fielding of GFEBS, the capabilities will eventually be available to leverage cost data unlike ever before. This will allow resource managers across the Army to get better cost data so our leaders can make good sound resource informed decisions. These courses will provide the knowledge and skills to use these cost tools effectively.
Education
Principles Cost Act/Mgmt (120 hrs)
Intermediate Cost Act/Mgmt (120 hrs)
GFEBS Material
w/in Legacy Courseware
(AIT, NCOES, OES, Functional Courses) 14

9. Cost Management (CM) within Professional Military Education
Course:
FM BOLC
FMCCC
Purpose:
Provide CM foundation.
Introduce cost concepts and
terms.
Describe the Army’s cost culture.
Relate CM to GFEBS capabilities.
Introduce advanced Cost Accounting and CM concepts.
Cost Benefit Analysis (CBA) case study.
Develop communications skills to influence leaders decisions.
Audience:
2nd Lieutenants
Captains
Length:
8 Hours
16 Hours
Content:
Cost Management (CM)
Cost Culture within the Army
Cost Terms and Concepts
Cost Benefit Analysis (CBA)
Practical Exercise
Cost Management (CM)
Cost Accounting (CA)
Cost Decision Briefings
Intensive Group CBA Exercise
In addition to the PCAM and ICAM functional courses – We are adding cost management material to the Professional Military Education courses
….specifically The BOLC course which is the initial Financial Management Course for new Finance officers…typically 2nd Lieutenants.
…and the FM Captains Career Course for officers who have completed about 3-5 years of service.
The BOLC students will get a total of 8 hours. 4 hours of lecture and classroom discussion…and another 4 hours of Cost Management practical exercises.
The Captains will get a total of 12 hours. They’ll receive cost management material that is slightly more advanced…with a focus on performing cost benefit analysis. Additionally, they will get an intense Cost Benefit analysis group exercise where they will brief their analysis to a senior leader and justify their recommended course of action.
The FMCCC students are doing this now – In fact, they will brief the CMDT next week.

10. Cost Management (CM) Functional Courses
Principles of
Cost Accounting & Management (PCAM)
Intermediate
Cost Accounting & Management
(ICAM)
Purpose:
Offer a basic cost management and cost accounting functional course
Provide underlying cost accounting (CA) and CM principles, theories, and application.
Prepare military and DA civilians to leverage CM tools within GFEBS
Build on the PCAM course and provide more advanced CA and CM concepts.
Provide an increased focus on analysis, reporting, and communication skills.
Provide the knowledge necessary to fully leverage the CM and analytic tools within GFEBS.
Target Audience:
SGT, LT, CPT, entry level CP 11 Personnel
SSG, SFC, CPT, mid level CP 11 Personnel
Course Length:
3 Weeks
Prerequisites:
Math dL Prep Course
Math dL Prep Course, PCAM
Course Content:
Cost Management Principles
Cost Term/Concepts
Cost Accounting
Cost Benefit Analysis
Variance Analysis
Practical Exercises
Cost Management
Cost Management Paper
Cost Management Briefings
Intensive Case Studies/Exercises
Here is a look at PCAM and ICAM. These courses are not intended to show students how to use GFEBS; rather, they are to provide students with the necessary knowledge and fundamental skills so they have a good foundation of cost management. This way, they’ll understand the importance of cost – and will be able to leverage the tools within GFEBS when required. PCAM is an introductory course while ICAM will build on PCAM, but offer more in depth material.
The target Audience for PCAM is SGTS, company grade officers, and entry level CP 11 personnel. ICAM is for more senior NCOs, senior Captains, and mid-level CP 11 personnel.
Both courses are 3 weeks in length
Prerequisites: Both courses will require a dL Math refresher course to better prepare students for the Math requirements of Cost Management. ICAM will require completion of PCAM.
Listed at the bottom, you can see the course content for each.
- PCAM will be about 2 weeks of in class lecture and discussion with about a week of practical application exercises.
- ICAM is intended to be more intensive with about 1 week of lecture and class discussion with 2 weeks of application. Specifically, more case studies, CBAs, Briefings, and possibly a written paper requirement.

11. Cost Management and Cost Accounting
“Achieving Readiness at Best Value”
Soldier Support Institute
Naval Postgraduate School
Principles of
Cost Accounting and Management
PCAM
Cost Terms
Cost Concepts
Fundamentals of Cost
Acct. and Cost Mgmt
Practical Exercises
Intermediate
Cost Accounting and Management
ICAM
Cost Flow Methods
Analysis and Reporting
Practical Exercises
Complex Case Studies
CMCC
Managerial Costing
Operations Management
Cost Control
Organizational Development
Cost Management Certificate Course
Here is a big picture view of how Cost Management will be provided to the FM community through functional courses:
In addition to PCAM and ICAM being offered here at the Soldier Support Institute – The Cost Management Certificate Course is currently offered at the Naval Post-Graduate School. This is a graduate level course intended for the more senior level personnel. I graduated from this course in March.
CMCC is a 4 week course focused on implementing better cost management throughout the Army. The whole idea centers around better overall management, and continuous process improvement regardless of what your activity is. Any savings generated from better, more efficient processes…is to be executed on existing unfinanced requirements. Bottom line – lets get the most bang for our buck.
End State: FM personnel are not just aware of cost management; but they possess the necessary knowledge and skills to put it into practice.
CMCC:
Managerial Costing—instruction in cost concepts and analysis techniques with a strong focus on analytics.
Operations Management—the fundamentals of design, management, and control of operational processes used in cost management.
Cost Control—control theory, practical ex-amples of cost control issues and solutions, and Army case studies.
Organization Development— systems thinking, interpersonal communication, listening, motivation, leadership, message framing, decision-making, persuasion, power and social influence, and negotiation. LT
CPT
MAJ
LTC / COL
SGT
SSG
SFC
MSG / SGM
End State:
FM Community possesses the knowledge and skills necessary
to leverage cost management and cost accounting 17