Factors that Affect Success in Implementing Activity Based Cost Management in a Government Organization: A Comparative Case Study Analysis

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Authors
Gray, Scott W.
Subjects
Cost Management
Cost Measurement
Activity Based Cost Management
Implementation
Success Factotrs
ABCM
ABC
ABM
Advisors
Euske, Kenneth J.
Hocevar, Susan P.
Date of Issue
2000-06
Date
June 2000
Publisher
Monterey, California: Naval Postgraduate School.
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Abstract
In an era when the American public is focused on government financial accountability, leaders within the federal government are seeking ways to understand their costs. In December 1999, the Department of the Navy released its strategic plan to understand and manage the Total Ownership Costs of its assets and services. The plan gives local commanders the authority to choose which cost management tools to use, while strongly encouraging them to use Activity Based Cost Management (ABCM). To assist Navy commanders in their decisions, this research examines the factors affecting ABCM implementation in five divisions of one government bureau. The study categorizes the factors into behavioral, organizational, technical implementation, and work technology aids and hindrances. Relationships between a factor's presence in a division and its success in implementing ABCM indicate the factor's relevance. Technical implementation factors do not appear as relevant as factors related to behavior and work technology in driving ABCM implementations toward success or failure. However, among the factors identified, behavioral aids, such as an atmosphere of trust and cooperation; organizational aids, such as using ABCM as a tool to support innovation; and work technology aids, such as routine work processes, appear to drive ABCM toward success.
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Approved for public release; distribution is unlimited.
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