Transcript Full Cost Accounting at UCLA - University of California

Full Cost Accounting
at UCLA
Judith Freed
Administrative Information Systems
University of California Los Angeles
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
UCLA Administrative Information Systems
UCLA and AIS by the numbers
UCLA
 27,000 FTE (employees)
 37,000+ Students
AIS
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350 MIPs CPU
4 terabytes of data storage
115 servers
50+ campus wide
applications
 6500 admin users
 128 budgeted FTE
 $20M budget
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
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
UCLA Administrative Information Systems
Benefits of FCA
 Broadens and elevates the decision-making
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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
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
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)
UCLA Administrative Information Systems
Calculations: Establishing Rates
 Primary cost is
Programmer Rate
7%
19%
74%
Salaries & Benefits
Administrative Overhead
Equipment, Supplies & Expense
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
UCLA Administrative Information Systems
Calculations: Establishing Rates
 Primary cost is
CPU Rate
mainframe hardware
and software
53%
36%
 Salaries/benefits of
11%
personnel associated
with mainframe
Salaries & Benefits
Administrative Overhead
Equipment, Supplies & Expense
 CPU Rate = Total
costs divided by CPU
minutes consumed
UCLA Administrative Information Systems
Calculations: Establishing Rates
 Primary cost is
Storage Rate
71%
19%
10%
Salaries & Benefits
Administrative Overhead
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
Equipment, Supplies & Expense
UCLA Administrative Information Systems
Calculations: Establishing Rates
 Primary cost is printing
Print Rate
14%
11%
equipment, supplies and
distribution charges
 Print Rate = Total costs
75%
divided by number of
images
Salaries & Benefits
Administrative Overhead
Equipment, Supplies & Expense
 No rate variation on type
of print
UCLA Administrative Information Systems
Calculations: Establishing Rates
 Primary cost is salaries
Server Support
15%
19%
66%
Salaries & Benefits
Administrative Overhead
Equipment, Supplies & Expense
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
UCLA Administrative Information Systems
Calculations: Establishing Rates
Direct Costs
 Key entry
 Microfiche
 Hardware/Software
used exclusively by
a service line
UCLA Administrative Information Systems
Sample Full Cost Statement
AIS FULL COST STATEMENT
MONTHLY COST REPORT
Period:
System Supported:
Customer Name:
Project Account (FAU):
Resources Used
PURCHASING/AP
Sue Abeles/William Propst
4-660515-19900-03-3270/4-662051-19900-03-3270
Usage
Application Programming
Staff Programmers
Contract Programmers
CPU Usage (Minutes)
Storage (MB)
DASD Usage
Tape Usage
Printing (Images)
DP & NS (Units)
Passthrough Expenses (Dollars)
Fiscal Year-to-Date Total:
1st Quarter Cost
2nd Quarter Cost
3rd Quarter Cost
Year To Date Cost
Annual Core Funding
Annual Contract/Variable Funding
Annual UTIPP Allocation
Variance
July 2003
Rate
699.50
0
11022.38
Costs
$80.66
N/A
$6.93
$56,421.67
$0
$76,385.09
$1.27
$1.27
$0.026
$597
$18,394.85
$18,105.67
$7,591.13
$597.05
$0.00
Monthly Cost
Monthly Core Funding
Monthly Contract/Variable Funding
Monthly UTIPP Allocation
Variance
$177,495.45
$156,062.33
$16,621.29
$0.00
($4,811.83)
14,484.13
14,256.43
291,966.50
1.00
Monthly Total:
$177,495.45
$0.00
$0.00
$177,495.45
$1,872,748.00
$199,455.51
$0.00
$1,894,708.06
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
UCLA Administrative Information Systems
Project Estimate (in thousands)
FY04 FY05
FY06
FY07 4 year
Total
Application
Programming
$ 250 $ 250
$ 100
$ 100
Consulting Services
$ 150
Software Package
$ 200 $ 36
$ 50 $ 50
Project
Components
Server HW/SW
$ 150
$ 36
$ 36
$ 50
$ 308
$ 150
$ 128
$ 143
$ 271
$35
$ 70
$ 70
$ 175
$ 650 $ 371
$ 334
$ 399 $1754
Application Maintenance
Server Maintenance
Total by year
$ 700
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
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”
UCLA Administrative Information Systems
The Bigger Picture at UCLA
 Full Cost Accounting
 Service Level Agreements
 Balanced Scorecard
 Project Control Documents
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
UCLA Administrative Information Systems
Full Cost Accounting at UCLA
Questions
UCLA Administrative Information Systems