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Transparent budgets, fair allocations, managed expectations, portfolio management, accurate rates -- knowing the full cost of your products and services is essential. Whether you're a shared-services organization, an internal service provider, a budget director implementing activity-based budgeting, service-based costing, or chargebacks, or simply want to run your organization in a businesslike manner, you need a reliable method and capable tools to identify and cost your products and services. The Full-cost Maturity Model (FMM) is a standard metric of an organization's capability to plan its business (its operating plan) and the full costs of its products and services (its budget, allocations, and rates). It's the result of over ten years of research and the experiences of over 25 corporate, government, and non-profit organizations. FMM asks: How clearly can you define your products and services, and document what they really cost shareholders/taxpayers/donors?
FMM is not a product, although there are software products that can implement it. FMM is a framework that neatly pulls together all the processes that create your operating plan, product/service catalog (with costs), budget, allocations, and chargeback rates. The focus of FMM is on business and cost planning, not your accounting and tracking systems. It addresses the processes by which an organization develops its operating plan, budget, allocations, and rates. It is not a metric of financial accounting systems, broader resource governance processes, or billing systems -- although all of these other things are founded on the budget and rates. FAQ: Don't we need to get our cost tracking in line before implementing FullCost?....
Definition of Full Cost:FMM explains exactly how these processes should work to produce a clear definition of your products and services with an estimate of the full cost of each -- presented in your budget, allocations, and rates. Summary of what goes into "full cost"....
Five Maturity Levels:FMM defines five levels of capability -- from simple cost transparency to fully burdened rates -- and all the essential elements (methods, processes, and tools) required to make each level work. Each level builds upon the last -- adding details and delivering more benefits. This allows you to start simple and then evolve over time. FMM is a practical framework used to help an organization (e.g., an internal service provider like IT) assess where it is in the maturity process, decide the target level needed to support its governance and tracking processes, and guide the implementation of exactly the methods and tools required to attain or fine-tune that target level. How FMM is used to assess your organization....
The Report:The "Full-cost Maturity Model" report examines the problems caused by traditional budgeting and costing methods. Problems solved by knowing your full costs.... It presents a detailed vision of the solution -- calculating the full cost to shareholders/taxpayers/donors of an organization's products and services. It catalogs the benefits of doing so. Then, it introduces the Full-cost Maturity Model (FMM) which explains the practical challenges of implementing full costing, and a step-by-step path forward. A set of Appendixes provide all the details necessary to measure the current maturity level of an organization, identify gaps, and plan the implementation of a full-cost model. Detailed processes and software to implement any level of maturity are available under license. View the report (minus the implementation details) online....
Other Resources:
Book: Internal Market Economics: practical resource-governance processes based on principles we all believe in....
Software, methods, and consulting to implement a full-cost model.... Meeting planners resources (including presentation abstracts)....
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