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Guide to Costing

Table of Contents

Financial Management and Analysis Sector - Foreword Executive summary Introduction Objective of this Guide Guiding principles 1. Costing requires consultation and judgment 2. Costing is done for the purpose intended 3. Costs do not always vary in proportion to changes in volume 4. Costing is done consistently for the same purposes 5. Costing, pricing, and funding are not the same things 6. Data and documentation must be reasonable, consistent, defensible, reconcilable, and current 7. There must be a balance between the desired elements and the affordability of the costing function The Guide and different costing purposes Cost recovery Make-or-buy decisions Level-of-service decisions Cost-benefit decisions Capital investment decisions Costing of a new initiative - incremental funding Program Activity Architecture (PAA) Reorganizations Cost efficiency decisions The seven-step approach to costing Annex A - Glossary of key terms and concepts Introduction Annex B - Costing tool kit Introduction Costing Examples of why costing is needed Step 1 - Cost purpose - How is the cost information to be used? Step 2 - Cost object Step 3 - Cost base Step 4 - Cost Classification Step 5 - Cost assignment Step 6 - Calculate, validate, and confirm results Step 7 - Sign-off Summary of the seven steps Application of the seven steps to costing Annex C - Case study of a make-or-buy decision 1.1 Introduction to make-or-buy 1.2 Objective 1.3 Assumptions 1.4 Net present value (NPV) 2.0 Application of the seven-step approach to costing Annex D - References Legislation Policy instruments Other references
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Date Modified: 2008-07-08
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