Linkedin
Facebook
Email
more
Our client, a pivotal regulatory service provider for a vital Australian industry, sought a streamlined and enduring solution for calculating activity-based costs.
The imperative was to develop a transparent and accurate model that could seamlessly integrate data from diverse sources, applying pertinent business rules for precise regulatory service cost calculations.
Challenges
Previous attempts at creating robust models were hindered by complexity, requiring extensive manual intervention and specialised expertise which exposed the process to a variety of human errors and limited transparency.
The task was to build a scalable, user-friendly model capable of handling data from both bespoke and commercial databases, ensuring accuracy and transparency in cost calculations.
Why RSM
After inviting tenders from multiple firms, the client selected RSM based on our demonstrated client focus and proven experience in cost modelling.
This was RSM's first collaboration with this Commonwealth government client, necessitating a rapid understanding of the intricacies of their business and service delivery model.
Data-Centric Approach
Central to our solution was a meticulous understanding of the client's data landscape. RSM worked closely with the client to extract insights from their existing dataset, developing automated business processes that enabled seamless cost allocation calculations.
The model was designed with adaptability in mind, accommodating changes in the structure of the underlying data for future scalability.
Dynamic Forecasting and Reporting:
Using data analytics to identify the previously hidden cyclical nature of service demand, RSM went beyond basic cost calculations.
We developed a dynamic forecasting model that predicts annual demand for services and projected revenue. Embedded within the model were dynamic reports, providing the client with a comprehensive view of costs, revenue, and demand across various categories tailored to their specific business and regulatory reporting requirements.
Outcomes
Through this collaborative effort, the Commonwealth government client achieved a remarkable reduction in annual performance reporting time, from three months to less than a week. The enhanced timeliness achieved through the data driven ABC model streamlined cost allocation processes, enabling quicker decision-making and improved cost management.
Further, the ability to rely on effort, confidently and transparently, as a cost driver, moving away from cost centres as the determinator of activity costs removed the silos in service delivery costs and provided a true depiction of cross-team costs for each activity.
Overall, the model significantly improved the accuracy and reliability of outcomes, marking a transformative shift in the client’s approach to activity-based costing and financial analysis.
Conclusion
RSM's innovative approach, based on a deep understanding of the client's data landscape, resulted in a robust activity-based costing model. This solution not only addressed immediate challenges but also laid the foundation for long-term reliability, positioning the client for sustained financial viability in their provision of regulatory services.
FOR MORE INFORMATION
If you would like to learn more about the topics discussed in this article, please contact your local RSM office.
