The tools designed for planning, budget negotiations, and rate setting are quite different from those designed for tracking (cost accounting).

Planning tools are used once per year, and are designed to allow managers to develop their assumptions, forecasts, and plans. They're designed to engender ownership by individual leaders, since every empowered manager must plan his or her own internal entrepreneurship (and then live up to the plan). They're designed to be highly interactive, allowing managers to see "what if" scenarios as they plan their businesses.

Also, Planning tools include analytic tools that aren't needed in actuals-tracking systems, such as labor billable-time ratios, blended rates for employees and contractors, new services and speculative projects which may or may not be funded (with various levels of probability), analysis of internal primes and subs on project teams, decision support for internal sales, and the cost model itself.

Tracking systems are built on accounting systems. They collect data on actual costs, and produce reports for both pursers and providers on the actual costs of products and services.

Pursers need to track their checkbooks, understand where their money is going, and view remaining spending power. Providers need to understand their costs and their revenues (a profit-and-loss statement), and their balance sheets (in more advanced stages of an internal economy). These views are generally added to (built on top of) existing data collection and accounting applications.

Planning tools provide a one-time input to tracking systems, including the catalog of products and services, rates for each, and the budget for the purpose of tracking actuals against the plan.

There is little advantage to making them one and the same system. In fact, combining them has risks. Doing so may imply that the priorities discussed in the budget are to be followed all year long, undermining the purchase-decision (portfolio management) process. And it may undervalue sources of revenue other than the core budget, such as additional fee-for-service work. Meanwhile, there are many advantages to building a plan in a more accessible, flexible environment.

White paper: Where To Build Your Product/Service Cost Model
within your planning tool or your actuals-tracking systems?

White paper: Categories of Financial Systems
a simple framework of available tools and methods

How planning tools link to actuals systems....

FAQ: Don't we need to get our historic data ready before implementing FullCost?....