1. Perform Cost Planning Show Slide #1: Perform Cost Planning
Title: Perform Cost Planning
References:
DFAS-IN Regulation 37-1, Finance and Accounting Policy Implementation
DFAS-IN MANUAL FY, The Army Management Structure
GFEBS Performance Support Website (PSW)
Section I. Administrative Data
Academic Hours/Methods
01 hrs. / 00 min. DSL (small or large group discussion)
02 hrs. / 20 min. PE (Practical Exercise)
00 hrs. / 00 min. Test
00 hrs. / 00 min. Test Review
03 hrs. / 20 min. Total Hours
Section II. Introduction:
Method of Instruction: DSL - Discussion (large or small group)
Facilitator's to Learner Ratio: 1:25
Time of Instruction: 00 hrs. / 05 min.
Media: PowerPoint Presentation
Facilitator Material: Each primary facilitator should possess a lesson plan, evaluation sheet, scenario event list for exercises, and summary sheet containing the above noted references.
Learners Material: Learners should possess course handouts, access to all systems for exercises, summary sheet containing the above noted references portable laptop, and standard classroom supplies.
Note: "All required references and technical manuals will be provided by the local Command“
Motivator (Concrete Experience): Motivator: Cost Accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization’s goals. The Controlling Module is the area within GFEBS that enables Cost Management. Cost planning, analysis, measurement, and reporting to be done in the CO module.

2. Terminal Learning Objective
Action: Perform Cost Planning
Conditions: You are a Budget Analyst with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors.
Standards: With at least 80% Accuracy learners must demonstrate proficiency with:
Define and Communicate the Cost Planning Process
Analyze Cost Management and GFEBS
Show Slide #2: Terminal Learning Objective
Facilitator’s Note: Read/State the TLO
Action: Perform Cost Planning
Conditions: You are a GFEBS data processor with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors
Standards: With a minimum of 80% accuracy, learners must demonstrate proficiency with:
Define and Communicate the Cost Planning Process
Analyze Cost Management and GFEBS
Safety Requirement: In a training environment, leaders must perform a risk assessment in accordance with DA PAM , Risk Management. Leaders will complete a DD Form 2977 RISK MANAGEMENT WORKSHEET during the planning and completion of each task and sub-task by assessing mission, enemy, terrain and weather, troops and support available-time available and civil considerations, (METT-TC). Local policies and procedures must be followed during times of increased heat category in order to avoid heat related injury. Consider the work/rest cycles and water replacement guidelines IAW TRADOC Regulation
Risk Assessment Level: Low.
Environmental Considerations: Environmental protection is not just the law but the right thing to do. It is a continual process and starts with deliberate planning. Always be alert to ways to protect our environment during training and missions. In doing so, you will contribute to the sustainment of our training resources while protecting people and the environment from harmful effects. Refer to FM Environmental Considerations and GTA ENVIRONMENTAL-RELATED RISK ASSESSMENT.
Evaluation: Learners will take the Test 1 Fund the Force examination during the Fund the Force module. Learners must score 80% or higher to obtain a passing score.
Instructional Lead-in. (Publish and Process): Cost Planning is a system whereby Financial Managers plan for cost , analyzing cost, measures cost, and reporting that cost within the controlling cost model of GFEBS. The main focus of cost planning is on the efficient and effective use of all resources used by each organization. The course consist of the following topics:
Cost Planning
The Cost Planning Process in GFEBS
What is Direct and Indirect Cost
What is Full Cost

3. Associated Key Terms Automated Planning Manual Planning Direct Cost
Indirect Cost
Full Cost
Funded Cost
Unfunded Cost
Variance
Outcome
Activity Dependent Planning
Activity Independent Planning
Show Slide #3: Key Terms Associated with Cost Planning
Section III. Presentation
Learning Step / Activity 1. Define and Communicate the Cost Planning Process
Method of Instruction: DSL (large or small group discussion)
Facilitator's to Learner Ratio: 1:25
Time of Instruction: 01 hrs. / 05 min.
Media: PowerPoint Presentation, Handout
Facilitator’s Note: Learners should refer to any summary sheets and/or notes during this lesson.
Facilitator's Note: Before facilitating this lesson, ask the learners which of the 21st Century Soldier Competency do they think pertain to this lesson. Facilitate a discussion on the answers given and at the end of the lesson revisit it and see if the learners still believe their choice are the same.
Note: For this lesson, these competencies should be talked about.
#1. Character and Accountability
#6. Communication and Engagement
#7. Critical Thinking and Problem Solving
#9. Tactical and Technical Competence
Facilitator’s Note: Key Terms Associated with Cost Planning:
a. To follow are some Key Terms associated with Cost Planning:
(1) Automated Planning: In Automated Planning, the system calculates the distribution of secondary costs based on the sender’s anticipated costs.
  (2) Manual Planning: In Manual Planning, the product/service receiver estimates the secondary cost rather than relying on the sending activity’s cost estimates.
(3) Direct Cost: The cost of resources (labor and materiel) directly consumed by an activity. Direct costs are assigned to activities by direct tracing of units of resources consumed by individual activities. Is a cost that is specifically identified with a single cost object.
  (4) Indirect Cost: Is a cost that cannot be identified specifically with or traced to a given cost object in an economically feasible way. The cost of resources that are jointly or commonly used to produce two or more types of outputs but are not specifically identifiable with any of the outputs, e.g., general administrative services, general research and technical support, security, rent, employer health and recreation facilities, and operating and maintenance cost for buildings, equipment, and utilities. Such cost can be assigned to the output on a cause and effect basis or allocated on a reasonable and consistent basis.
  (5) Full Cost: The sum of all costs associated with an organization, product, or service to include activities performed by other entities regardless of funding sources. 
  (7) Unfunded Costs: Cost assigned to an organization that is not responsible for funding, or reimbursing the incurred expense. These costs do not result in any obligation of funds by the organization; examples include military labor and military rations.
  (6) Funded Costs: Cost assigned to an organization that is responsible for funding, or reimbursing the incurred expense. These costs are funded in the Annual Operating Budget of the organization.
(8) Variance: Is the amount, rate, extent, or degree of change, or the divergence from a desired characteristic or state.
(9) Outcome: The results of a program activity compared to its intended purposes. Program results may be evaluated in terms of service or product quantity and quality, customer satisfaction, and effectiveness.
(10) Activity Dependent Planning: Secondary cost planning is input planning for costs incurred because of the consumption of another internal organization’s goods and services (e.g., IT services, facilities, electricity, etc.)
(11) Activity Independent Planning: Input planning for cost centers and internal orders for costs your organization directly will incur.

4. The Cost Management Process
Show Slide #4: The Cost Management Process
Facilitator’s Note: In this Lesson our focus will be on the Cost Planning Functions of the Cost Management Process. The chart above shows the entire process as a whole. Each area will be covered throughout both Learning Step Activities.
In this Lesson our focus will be on the Cost Planning Functions of the Cost Management Process

5. Associated Roles Show Slide #5: The Cost Management Roles
Facilitator’s Note: Throughout all four areas of the Cost Management Process, there are 29 Roles associated with this process.

6. Cost Management Roles Cost Plan Maintainer
Performs activities and tasks related to evaluating planning options, planning primary costs on cost centers and internal orders, and planning prices of activity types and business processes.
This role will be performed throughout the Army.
Every operational area may have this role to establish a Cost Plan (similar to a Spend Plan in legacy process).
Most organizations will not create a full-blown cost plan until they have a year’s worth of actual costs data to base the Cost Plan upon (Establishing a Baseline).
The Actual Cost from the previous year become your Cost Plan for the upcoming year after adjusting for new mission, new personnel (Activity Types) and mission requirement that are no longer conducted.
Spend Plan Distributor
Generates, analyzes and exports the Spend Plan v/s Actuals report for the appropriate fund centers as needed.
Show Slide #6: Cost Planning Roles
Facilitator’s Note:
Cost Plan Maintainer: Performs activities and tasks related to evaluating planning options, planning primary costs on cost centers and internal orders, and planning prices of activity types and business processes. This role will be performed throughout the Army. Every operational area may have this role to establish a Cost Plan. Most organizations will not create a full-blown cost plan until they have a year’s worth of actual costs to base the plan upon.

7. Perform Cost Planning Define Cost Planning
Topic Objectives
Define Cost Planning
Define and the differences between Cost and Budget Planning
Describe the purpose and benefits of Cost Planning
Describe Cost Planning as it relates to GFEBS
Define Output Planning
Define Input Planning
GFEBS Spend Plan vs Actuals
Explain Plan Output Reports
Show Slide #7: Perform Cost Planning
Facilitator’s Note: Cost Planning: Plan Outputs. Instructor will cover each area in the objectives.
– Define and explain cost planning.
– Define and explain the differences between cost and budget planning.
– Describe the purpose and benefits of cost planning.
– Describe cost planning as it relates to GFEBS.
– Explain how to set a planner profile.
– Explain output planning.
– Explain plan output reports.

8. Why Do We Plan? The purpose of planning is to anticipate:
What you are going to do? (What are your goals, missions and/or objective).
How you are going to do it? (What are the risks and/or opportunities for each alternative) .
And how well you did it? (Be proactive about time and efficiencies).
An additional value of planning is to:
-Provide a baseline against which one can measure changes that occur in the course of operations.
-For example, an organization can be directed to provide disaster relief assistance to civil authorities.
Show Slide #8: Why Do We Plan?
Facilitator’s Note: The purpose of planning is to anticipate what you are going to do, how you are going to do it, and how to assess what you did. An additional value of planning is to provide a baseline against which one can measure changes that occur in the course of operations. For example, an organization can be directed to provide disaster relief assistance to civil authorities.
Facilitator’s Note: The definition of a Plan is typically any diagram or list of steps with timing and resources, used to achieve an objective. We put together a plan on a daily basis. What time do I plan to
get up, What time will I shower and get ready, What time do I have to be at work, How long/How much time do I need to get there, When I get to work, what is my plan to achieve my daily work goals,
What time am I going to lunch, What time do I have to return (depending on where I’m going – how much time to I need to achieve this, What time do I plan on leaving work, When I get home (My wife
plan takes precedence over my plan, so then I have no plan and follow her plan). Planning is part of our daily lives. So it is with Cost Planning.

9. Cost Planning
Cost Planning focuses on the efficient and effective use of all resources used by each organization.
When Cost Planning, managers need to consider the following:
What do I have to deliver, (what are the requirements)?
Who are my customers?
What work has to be done, (what work is prioritized)?
What are the resources necessary and support available to perform this work?
Show Slide #9: Cost Planning
Facilitator’s Note: Cost planning focuses on the efficient and effective use of all resources used by each organization. When Cost Planning, managers need to consider the following:
(1) What do I have to deliver?
(2) Who are my customers?
(3) What work has to be done?
(4) What are the resources necessary and support available to perform this work?

10. Budget Planning
The primary objective of a budget plan is to synchronize obligations with funding.
When building a budget plan, the following considerations apply:
What are the regulatory guidance to justify the spending.
On what am I going to spend my money?
When am I going to execute the mission?
Where/by whom will this work be performed (e.g., onsite/off-site, Army labor/contractor labor)?
What are the constraints to consider in executing this mission (e.g., CRA, supplemental)?
Show Slide #10: Budget Planning
Facilitator’s Note: The primary objective of a budget plan is to synchronize obligations with funding. Budget planning focuses on inputs. When building a budget plan, the following considerations need to be made: On what will the money be spent? When will this mission be executed? Where/by whom will this work be performed (e.g., on-site/off-site, Army, or contractor labor)? Finally, What are the constraints to consider when executing this mission (e.g., Continuing Resolution Authority (CRA), supplemental)?

11. Cost Planning
Cost Planning estimates what it should cost to provide the products and services required to support the Army.
Focusing on the efficient and effective use of resources to deliver these products and services.
– Calculates the “cost per output or service.”
– Provides a baseline of expected costs.
– Compares actual and plan costs.
– Provides management with data.
– Predicts full cost and expected outcomes of resources.
Show Slide #11: Cost Planning
Facilitator’s Note:
1. Cost planning focuses on the efficient and effective use of resources to deliver products and services that support the Army. By addressing the criteria of what you are going to do, how, where, and when you are going to do it, and how well you did it, you will be able to determine what it should cost to deliver products and services. You also should be able to anticipate the outcomes from those costs to calculate the “cost per output or service.” During the year, actual costs and activity outputs can be compared to the plan. Outputs are any product or service generated from the consumption of resources. It can include information or paper work generated by the completion of the tasks of an activity. Some examples of products and services in the Army are courses, service support programs, tests, research projects, and training events. Managers can identify the causes of significant variances, take action to institutionalize positive performance, and correct unacceptable or negative performance.

12. Knowing your obligations is not the same as knowing your costs!
Cost Planning vs. Budget Planning
Costs
Obligations
Show Slide #12: Cost Planning vs. Budget Planning
Facilitator’s Note: Knowing your Obligations is not the same as knowing your costs. Costing and budgeting are both essential for a firm to control its finances and helps a firm to reduce its risk of making unrecoverable losses. Costing and budgeting perform entirely different roles. Costing estimates the future costs to be incurred for one unit of output and budgeting makes sure that expenses incurred are pre planned. Budgeting is concerned with planning for the future, costing involves evaluating past information. Both costing and budgeting must be carried out hand in hand, so that, a firm can estimate its future costs and allocate funds for the right purposes
Knowing your obligations is not the same as knowing your costs!

13. Cost Planning vs. Budget Planning (Cont.)
The Focus
Budget Planning
Cost Planning
Full Cost
Focus: Manager’s available
Funds
Focus: Full cost (direct and indirect). Primary costs (budget) plus secondary costs (outside of your cost center)
Timing
Focus: When obligation is
Made. (Records full value for 12 month contract at obligation)
Focus: When benefit of obligation is received. (Records 1/12 of value
of 12-month contract – monthly).
Detail
Tends to be high-level by
Organization and object class.
More management detail. Adds another level of detail – plans against projects, products, services (via internal orders, business processes, and WBS elements).
Show Slide #13: Cost Planning vs. Budget Planning (Cont.)
Facilitator’s Note: In defining the 1st column as it pertains to Budget Planning and Cost Planning:
1. Full Cost: Budget planning focuses on a manager’s available obligation authority. Those funds may only partially cover the expenses associated with the performance of that manager’s mission. For example, some costs such as military pay, equipment purchases, certain supplies, printing, or overhead support, may be funded centrally in another manager’s budget. As such, individual budget plans (from the center up) often do not reflect the full costs of performing the organization’s mission. Cost planning considers the full costs, which are all quantifiable costs associated with the production of a good or delivery of a service regardless of the source of its input. This includes the cost of resources consumed by the segment that directly or indirectly contributes to the output and the cost of identifiable supporting services.
2. Timing: Budget plans focus on when an obligation is made. Cost plans focus on when you receive the benefit of an obligation. For example, a budget plan would record the full value of the obligation for a 12-month custodial contract in the month of the obligation. The cost plan would record 1/12 of the value of the contract each month.
3. Level of Detail: Budget plans tend to be high level plans by organization and EOR (or object class). Cost plans add an additional level of detail by planning against the specific functions, projects, products, or services that comprise the organization’s mission (using internal orders, business processes, and work breakdown structure [WBS] elements).

14. Cost Planning in GFEBS In GFEBS cost planning, managers must consider:
What good or service are to be delivered?
Who are the customers?
What work has to be done?
What money are necessary?
What support is available to perform this work?
Initially, Managers may plan primary costs on cost centers, internal orders, and WBS elements.
Managers may create an initial cost plan before the beginning of the year and make adjustments to the plan, as needed, during the operating year.
Show Slide #14: Cost Planning in GFEBS
Facilitator’s Note: In GFEBS cost planning, managers consider:
a. What to deliver?
b. Who are the customers?
c. What work has to be done?
d. What resources are necessary and what support is available to perform this work?
Facilitator’s Note: Initially, managers may plan primary costs (e.g., payroll, travel and supplies) on cost centers, internal orders, and WBS elements. Additionally, managers may create an initial cost plan before the beginning of the year and make adjustments to the plan, as needed, during the operating year.

15. Plan Anticipated Primary Costs
Anticipated Primary Costs are Planned on the following objects:
Cost centers (CC)
Internal orders (IO)
Work Breakdown Structure element (WBS)
When there is an unanticipated mission requirement for more than the initial plan, then the additional or incremental cost is planned.
For example, for natural disaster relief, the Army might create an internal order to plan additional costs for relief supplies.
Show Slide #15: Plan Anticipated Primary Costs
Facilitator’s Note: Anticipated Primary Costs are Planned on Cost centers, Internal orders, and WBS elements. When there is an unanticipated mission requirement for more than the initial plan, then the additional or incremental cost is planned. For example, for natural disaster relief, the Army might create an internal order to plan additional costs for relief supplies.

16. Plan Secondary Cost
For a full cost plan, managers plan for secondary costs.
– Secondary costs are used to track the internal movement of costs, such as allocations or settlements that provide a more accurate view of costs within the organization.
– Secondary cost elements do not have corresponding expense accounts in the General Ledger (GL).
– Examples of secondary cost elements include:
• Assessment cost elements
• Cost elements for internal activity allocation
• Cost elements for order settlement
Show Slide #16: Plan Secondary Cost
Facilitator’s Note: For a full cost plan, managers plan for secondary costs. Secondary costs are used to track the internal movement of costs, such as allocations or settlements that provide a more accurate view of costs within the organization. These cost elements do not have corresponding expense accounts in the general ledger (GL). Examples of secondary cost elements include Assessment cost elements, Cost elements for internal activity allocation, and finally, Cost elements for order settlement.

17. Plan Outputs – Cost Center / Activity Types
The purpose of output planning for cost centers/activity types is to determine how much your organization is going to produce for a given period of time.
A cost center is a responsibility center that incurs costs and has a manager who is accountable for those costs.
An activity type is a type of cost master data that represents a group of resources within a cost center.
During this step, planned activities for cost center activity types are entered into GFEBS.
– Additionally, planned capacities can be entered as well to provide additional information that might be useful for managerial decision-making purposes.
Show Slide #17: Plan Outputs - Cost Center/Activity Types
Facilitator’s Note: The purpose of output planning for cost centers/activity types is to determine how much your organization is going to produce for a given period of time. During this step, planned activities for cost center activity types and business processes are entered into GFEBS. Additionally, planned capacities can be entered as well to provide additional information that might be useful for managerial decision-making purposes. An activity type is a type of cost master data that represents a group of resources within a cost center. These resource groups have planned activity outputs (e.g., labor hours that you intend to supply), capacity (e.g., total available labor hours) and a unit of measure (e.g., labor hours, machine hours, square footage, etc.). Activity types are consumed and utilized to produce the products and services of an organization. Activity types can be used to plan, allocate, and control costs.
Facilitator’s Note: A cost center is a responsibility center that incurs costs and has a manager who is accountable for those costs. Cost centers have a manager, occupy space, and have personnel assigned to them. Each cost center manager may plan which of the organization’s activity types (e.g., labor, equipment, facilities) will be consumed by the products and services the organization produces, based on a specified unit of measure of output (e.g., labor hours, machine hours, square footage). Activity types categorize a production or service output provided from one cost center to another or to another object (such as an internal order or WBS element) for use in internal activity allocations. Activities are assigned prices to be used during activity allocation. The activity price is essential for cost assignment. The activity price will be established and revised by the Cost Rate Maintainer. The Cost Plan Maintainer will use these prices in cost planning. Because activity types break down the output of a cost center, the activity prices are cost center-specific. Therefore, an activity price may vary across cost centers.

18. Conduct Practical Exercises
Show Slide #18: Conduct Practical Exercise
Method of Instruction: PE - Practical Exercise (Hands-On/Written)
Facilitator to Learner Ratio: 1:25
Time of Instruction: 01 hrs. / 00 min.
Media: Printed Reference Material, Practical Exercise, Handout
General Information: (Introduction / Objective) this practical exercise simulates a scenario that measures your ability to properly “Display Activity Type Price Report” - KSBT :
“Change Plan Data for Activity Types” - KP26 : “Display Plan Data for Activity Types” KP27: “Display Activity Type Price Report” KSBT: “Display Cost Centers: Planning Overview Report” KSBL: “Display Plan Cost Line Item for Cost Center Report” KSBP.
Special Instructions: N/A
Facilitator’s Note: Issues the PE and then go over it with the student’s.
Answer Key: N/A

19. Plan Outputs – Cost Center / Activity Types (Cont.)
Output Planning for cost centers includes specifying planned activities (e.g., labor activity types). This is accomplished by using the following transaction codes:
- KSBT - Display Activity Type Price Report
- KP26 – Change Plan Data for Activity Types
- KP27 – Display Plan Data for Activity Types
Show Slide #19: Output Planning for Cost Centers/Activity Types (Cont.)
Facilitator’s Note: Output Planning for cost centers includes specifying planned activities (e.g., labor activity types). This is accomplished by using the following transaction codes:
a. KSBT - Display Activity Type Price Report: Perform this procedure to view the rate or activity price associated for a given cost center(s)/activity type(s).
b. KP26 – Change Plan Data for Activity Types: Use this procedure to create, change or delete planned activity output (e.g., labor hours, machine hours) related to a cost center/activity type.
c .KP27 – Display Plan Data for Activity Types: Use this procedure to view the attributes of an activity type and planned output for a given period. The user is able to view an activity type and planned output by period, cost center, planned activity, unit of measure, by allocation cost element, scheduled activity, and description. Output activities and capacities are not currently being planned. As of October 2010, the Army is using output planning functionality to establish rates and prices only. As the Cost Model matures, specific guidance and direction may be given.

20. Type of Plan - Output Reports
Plan Output Reports are used to view costs related to cost centers and activity prices associated with cost planning.
These reports can be used for both output and input planning, with the exception of the KSBT report, which is the only true output report.
The following are Plan Output Reports:
- KSBT: Display Activity Type Price Report
- KSBL: Display Cost Centers: Planning Overview Report
- KSBP: Display Plan Cost Line Item for Cost Center Report
Show Slide #20: Type of Plan Output Reports
Facilitator’s Note: Plan Output Reports are used to view costs related to cost centers and activity prices associated with cost planning. These reports can be used for both output and input planning, with the exception of the KSBT report, which is the only true output report:
a. KSBT – Display Activity Type Price Report - Perform this procedure to view the rate or activity price associated for a given cost center(s)/activity type(s).
b. KSBL – Display Cost Centers: Planning Overview Report – The report is divided into three sections: input planning, output planning, and SKF planning. The first section, input planning, is relevant for displaying planned costs. The second section, the output section, is relevant for displaying information related to planned activities and capacities. The third section displays SKF information. Perform this procedure when you wish to view a report displaying the Cost Plan of dollars and quantities for a cost center, activity types related to a cost center, as well as planned
SKF values.
c. KSBP – Display Plan Cost Line Items for Cost Centers Report - Perform this procedure to view planned cost line item-level detail related to cost centers.

21. LSA #1 Check on Learning
Q1: _____ _____focuses on the efficient and effective use of all resources used by each organization.
A1: Cost Planning
Q2: Anticipated Primary Costs are Planned on what objects?
A2: 1. Cost Centers 2. Internal Orders 3. WBS Elements
Show Slide #21: LSA #1 Check on Learning
Facilitator's Note: Read and ask the following check on learning question and facilitate discussion on answers given.
Note: Animated slide
Q1: _____ _____focuses on the efficient and effective use of all resources used by each organization.
A1: Cost Planning
Q2: Anticipated Primary Costs are Planned on what 3 objects?
A2: 1. Cost Centers; 2. Internal Orders; 3. WBS Elements

22. LSA #1 Summary Show Slide #22: LSA #1 Summary
Facilitator's Note: On the first part of the lesson, we identified obligation management; we learned about the importance of obligation management and went over the obligation stages.
“Or”
Facilitator, have each group as a group write down one major main lesson learnt from this LSA, allow a few minutes for them to interact. Once all groups have their one major learnt lesson written, pass it to another group to compare their answer. Facilitate a discussion on each major learnt lesson mentioned by each group.

23. Cost Management - GFEBS
Managing Business Operations Efficiently & Effectively Through the Accurate Measurement & Thorough Understanding of the "Full Cost" of an Organization's Business Processes, Products & Services in Order to Provide the Best Value to Customers.
Cost
Accounting
Cost
Management
Process
Cost
Planning
Cost
Analysis
Show Slide #23: Cost Management - GFEBS
Learning Step / Activity 2. Analyze Cost Management and GFEBS
Method of Instruction: DSL - Discussion (large or small group)
Facilitator's to Learner Ratio: 1:25
Time of Instruction: 01 hr. / 05 min.
Media: PowerPoint Presentation, Handout
Facilitator’s Note: Animated Slide
Facilitator’s Note: Cost Management & GFEBS: The Controlling (CO) Module in GFEBS will provide the Army with the functionality to perform Cost Management Army-wide. Within CO Cost Planning, Measurement, Analysis, and Reporting will take place as required to support critical decision making. Cost Management in GFEBS includes Cost Accounting, Cost Planning, Cost Controlling, and Cost Analysis via the Controlling Module in GFEBS. Cost Management enables Army leadership to identify cost performance differences and provide analytic information for value and best practices decisions through the following methods:
a. Cost Accounting and Cost Analysis is the main responsibility of the Financial Manager (FM).
b. Cost Planning and Cost Controlling is the main responsibility of the Operations Manager (OM).
Cost
Controlling

24. Cost Planning
Cost Planning is the use of a Cost Model for “should-cost” forecasting to make informed decisions
Often Performed for:
Budget Requirements Requests
Costs Estimations
Output Quantities
Capacity Management
Risk Analysis
Various Time Frames: Out year / Current year, Quarterly, Monthly
Standard Rates
Defining Targets to Measure Efficiency and Effectiveness
Cost
Accounting
Cost
Planning
Cost
Analysis
Cost
Management
Process
Show Slide #24: Cost Planning
Facilitator’s Note: Who’s mainly responsible for Cost Planning? Operations Manager (OM). Review VG with students. In Cost Planning: Use cost products for “should-cost” to inform decisions. Tying together costs, from all related sources, with outcome data provides crucial, experienced-based analytic data for decision-making during Planning, Program Development, Budget Formulation, and Execution. Establishing efficiency targets for costs based on planned inputs required to perform work (labor, materials, supplies, and equipment) and outputs to effectively meet customer demand (number of trainees, number of test, etc.).
Cost
Controlling

25. Information to Make Sound Economic Decisions*
Cost Accounting
Cost Accounting translates the operational value chain into financial values
Cost Accounting is the dollar valuation of the cost measurements resulting from business operations
Cost Measurement has meaning only when considering its purpose
Defining Cost Measurement should be carefully considered and evaluated
Alternative cost methods should be evaluated under operating environment
Cost
Planning
Controlling
Analysis
Accounting
Management
Process
Show Slide #25: Cost Accounting
Facilitator’s Note: Who’s mainly responsible for Cost Accounting? The Financial Manager (FM). Review VG with students. In Cost Accounting: This accumulate and records all elements of cost, i.e., full cost, incurred to accomplish an objective. This is the measurement of actual cost in comparison to plan. The intent of this step is to provide accurate, timely and relevant cost information (financial and non-financial) that captures “full costs” – such as unfunded, free goods, overhead, and depreciation.
Purpose Is the key to Understanding the Army ERP Cost Design (GFEBS): To Provide Operational Managers With Relevant “True” Cost
Information to Make Sound Economic Decisions*

26. Cost Analysis
Cost Analysis is the integration of functional outcome data with cost data to produce valid and verifiable information to conduct various forms of analysis
Cost
Planning
Controlling
Analysis
Accounting
Management
Process
Sample types of analysis include:
Organizational performance
Analysis of alternatives
Variance analysis
Economic analysis
Cost / Risk assessments
Trending
Show Slide #26: Cost Analysis
Facilitator’s Note: Who’s mainly responsible for Cost Analysis? The Financial Manager (FM). Review VG with students. In Cost Analysis: It will acquire and integrate functional outcome data with cost data and produce valid and verifiable information. In addition, it provides understanding of what drives cost or causes variance from plan. Cost analysis can explain variance between plans and actual to support controlling and forecasting, provide operational managers with full cost view of producing products/services, and support economic, life-cycle cost and cost benefit analysis for resource-informed decision making.

27. Cost Controlling
Cost Controlling is to take “Best Value” and/or “Best Practice” actions to realign the organization to achieve the defined objectives
Actions taken based on information provided from Cost Analysis results
Redeployment of resources between outputs
Change outputs (e.g. do more or less)
Update/revision of plan information (e.g. updated Std. Rate)
Execution of trade-off decisions (e.g. OT versus external support)
Cost
Planning
Controlling
Analysis
Accounting
Management
Process
Show Slide #27: Cost Controlling
Facilitator’s Note: Who’s mainly responsible for Cost Controlling? The Operations Manager (OM). Review the VG with the students. In Cost Controlling: It will use cost products for “best value” and “best practices” actions. Additionally, it takes action based on analysis to reduce cost, improve process and address changing demands based on internal and/or external factors. Cost controlling requires that operational manager make informed decisions on resource consumption and refine/reengineer processes to continuously improve and drive efficiencies.

28. LSA #2 Check on Learning
Q1: The Cost Management Process Consist of what 4 Elements? A1: Cost: Controlling / Accounting/ Planning/ Analysis Q2: Which Element translates the operational value chain into financial values? A2: Cost Accounting Q3: T/F Cost Analysis is to take “Best Value” and/or “Best Practice” actions to realign the organization to achieve the defined objectives. A3: False: Cost Controlling
Show Slide #28: LSA #2 Check on Learning
Facilitator's Note: Read and ask the following check on learning question and facilitate discussion on answers given.
Note: Animated slide
Q1: The Cost Management Process Consist of what 4 Elements?
A1: Cost: Accounting/ Analysis/ Controlling/ Planning
Q2: Which Element translates the operational value chain into financial values?
A2: Cost Accounting
Q3: T/F Cost Analysis is to take “Best Value” and/or “Best Practice” actions to realign the organization to achieve the defined objectives.
A3: False (Cost Controlling)

29. LSA #2 Summary Show Slide #29: LSA #2 Summary
Facilitator's Note: On this part of the lesson, we identified The Cost Management Process and it’s relationship to GFEBS. We also discussed it’s 4 elements; Cost Accounting, Cost Analysis, Cost Controlling, and Cost Planning.
“Or”
Facilitator, have each group as a group write down one major main lesson learnt from this LSA, allow a few minutes for them to interact. Once all groups have their one major learnt lesson written, pass it to another group to compare their answer. Facilitate a discussion on each major learnt lesson mentioned by each group.

30. Questions Show Slide #30: Questions?
Facilitator’s Note: Field any un-answered questions from the students.

31. TLO Summary Action: Perform Cost Planning
Conditions: You are a Budget Analyst with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors.
Standards: With at least 80% Accuracy learners must demonstrate proficiency with:
Define and Communicate the Cost Planning Process
Analyze Cost Management and GFEBS
Show Slide #31: TLO Summary
Facilitator’s Note: Restate the TLO
Action: Perform Cost Planning
Conditions: You are a GFEBS data processor with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors
Standards: With a minimum of 80% accuracy, learners must demonstrate proficiency with:
Define and Communicate the Cost Planning Process
Analyze Cost Management and GFEBS