Public Sector Governance and Accountability Series: Budgeting and ...

222 Gary Cokins
to be intangible. But the financial cost for each one is measurable. There is
no dichotomy between workers who think and plan and workers who deliver
services and tangible products.
Several years ago, one of the U.S. government laboratories, where wellpaid
physicists wrestle with theory and advances in their field, conducted a
study of the effectiveness of business processes study. Debate surrounded how
to map inputs, processes, and outputs. Some of the physicists believed their
work was unmappable. The physicists argued that one could not rigorously
define the brain’s thinking process when it comes to innovation. However,
that is not the point in ABC/M.
All work has outputs. For example, when one of this same government
laboratory’s experiments is conducted, the activity results in a completed
experiment. When a research paper is written and submitted by a physicist,
there is a completed research paper. Lots of thinking, preparation, tests,
typing and copying support, and so on may have gone into finishing the
research paper, but the costs of these activities can be appropriately assigned.
When the report is done, the aggregate output can be described as a completed
research paper—including the costly tests.
Moreover, all completed research papers are not equal in the time, effort,
and support needed and used. There can be great diversity and variation.
ABC/M measures that variation and links the costs back to how much the
organization spent in paying for salaries and supplies. The focus is not on
who funded that spending, although there is a clear audit trail back to the
source. ABC/M focuses on the facts that spending occurred, that money was
used somewhere, and that it went into something for somebody.
Seeing the true cost of outputs can produce some organizational shock.
If a completed report, after all the time, effort, and support is traced into it,
costs $325,000, that may be a surprise. If it is read by only three young advisers
to a U.S. senator and they brief the senator in a quick hallway conversation
but make no more use of that report, it is not clear whether the report was
worth the cost. Yet a significant piece of information is now available—the
true cost of producing that particular report. The $325,000 price tag would
make some other government service provider—perhaps one that is very
strapped on budget and whose mission is feeding and caring for children in
need—really think about whether appropriations are fairly distributed.
Employment by government is not an entitlement program for the workers.
The value of the contribution of work must be understood and compared
with the value of alternatives.
The purpose here is not to get emotional or political. ABC/M does not
take sides. It simply reports the facts. People can then debate the value of