Inter-departmental sales

• Transfer costs of inter-departmental sales

  When multiple departments (modules) are using FullCost, sales to one another create circularity, just as internal sales do.

  Requirements: Tools to link cross-module sales, and to account for circularity with the fewest manual iterations based on an algorithm to forecast the ultimate effect of the cross-module "ripples."

Present budget

• Prepare and present reports by business unit to client executives

  Prime contracts and subcontracts are aggregated. The cost of each deliverable now represents the total cost to shareholders, fully loaded with its fair share of all indirect costs.

  Budget reports are generated -- both a traditional view of the expense-codes by group and the full cost of each of the various client deliverables, corporate-good activities, and internal ventures.

  Requirements: Budget reporting that amortizes indirect costs, links primes and subs, spreads costs among members of consortia, and portrays the data through a variety of filters.

  Key learning: What is the full cost to shareholders of each product and service?

  The budget is summarized by business unit for review with client executives. They may view it by corporate strategy, by type of product/service, or other filters and summaries to understand what they're getting for a given level of budget. They may analyze "what if" scenarios to consider various levels of funding. Clients decide what they would like to defend in the budget negotiation process.

  Key learning (internal): Clients must buy what we sell (customer focus). Do our clients really want what we're producing? Can we eliminate unneeded activities?

  Key learning (clients): Clients will have to help justify their requests in order to get them funded.

• Prepare and present reports to Finance staff, auditors

  Reviews of the budget with Finance and Audit staff build understanding and gain concurrence on its validity prior to the budget decision process.

Negotiate budget

• Submit budget to enterprise budget decision process

  The budget decision process becomes a business-like negotiation in which clients defend their requests and executives decide what the corporation will and will not buy.

  Key learning: The organization cannot fulfill every client request with a finite budget. Exactly which deliverables will be funded by the approved budget?

• Negotiate final budget by deciding funded deliverables