Parallel working group session WGA: Leadership and support for full costing implementation Margarida...

Parallel working group session

WGA: Leadership and support for full costing implementation Margarida Mano | University of Coimbra

European University AssociationEuropean University AssociationCountry Workshop in PolandCountry Workshop in Poland

Universities Implementing Full CostingUniversities Implementing Full Costing

University of WarsawUniversity of Warsaw13 May 201113 May 2011


1 | Context1 | Context

• Exponential Growth of the Portuguese Higher Education System (80s and 90s)

• Recent decrease in the number of “traditional” undergraduate students

• Pressures on state funding

• Research's competitive context

• 2000: Change in the Education Accounting System

• 2007: Change in the Legal Framework - RJIES

Candidatos Vagas

1989 51,241 21,817

1990 58,478 25,081

1991 55,741 28,479

1992 58,689 29,194

1993 57,916 32,007

1994 66,464 32,289

1995 80,009 33,541

1996 62,307 35,899

1997 52,122 39,703

1998 52,652 42,224

1999 48,051 45,156

2000 50,755 46,965

2001 45,210 48,229

2002 46,292 48,468

2003 41,662 45,357

2004 42,595 46,057

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,0001989

1990

1991

1992

1993

1994

1995

1996

19971998

1999

2000

2001

2002

2003

2004

Polytechnic University TotalPublic 28 15 43Private 110 14 124Total 138 29 167

Portuguese Higher Education SystemPortuguese Higher Education System


1 | Context1 | Context Portuguese Higher Education SystemPortuguese Higher Education System

• Charter of Accounts for the Education Sector. CA-Education since 2000 (Order no. 794/2000, 20

September). Cost Accounting became compulsory.

BUDGET PATRIMONY

CA

• Budgetary statements• Indicators for the use offinancial resources

• Costs for services, activities and products• Deviations• Income statement [IS] per function

• Control of transactions with third party• Fixed assets (CIBE)• IS total• Balance sheet

Registers transactions ofbudgetary management

and control of expenditure and revenue

Establishes costs per function

Establishes costs and income in the overall

• In 2007, only two Universities used this system, being the University of Coimbra one of

them.


1 | Context1 | Context Institutional context: UCInstitutional context: UC

The University of Coimbra (UC) is the oldest university in Portugal – it was founded in 1290 - has a comprehensive mission where research, T&L and cultural/social dimensions are pursued.

8 Faculties 41 Research & Development Units 22.500 students (with 2955 international students – 39 countries) Academic staff: 1500 Administrative staff: 1100

www.uc.pt


In 2000, there was a set of factors which contributed towards this purpose:

Strategic – the UC felt the need to have a tool for strategic management

Managerial – due to the increased complexity of activities, the UC felt the need to develop a

coherent model to manage the activities

□ Vertical structure organized per organic units with relevant autonomy, which allows the

control of costs, income and results by independent units.

2 | Developing FC at UC2 | Developing FC at UC

Conceptual Model for UC’s Cost AccountingConceptual Model for UC’s Cost Accounting

Central Structure Humanities Law Pharmacy Economics

PsycologySports

Reclassification Reclassification Reclassification Reclassification Reclassification Reclassification Reclassification

Cost Centres Cost Centres Cost Centres Cost Centres Cost Centres Cost Centres Cost Centres

Activities Activities Activities Activities Activities Activities Activities

Other Programmes

Other Programmes

Other Programmes

Other Programmes

Other Programmes

Other Programmes

Other Programmes


TimelineTimeline

□ 1st phase – Academic year 2002/2003 – Test

test at the Faculty of Economics as pilot-project

□ 2nd phase – Academic year 2003/2004 – Implementation

development at the Faculties of Humanities, Law, Psychology and Sports since October

2003 (first report with integrated information for the academic year 2003/2004)

□ 3rd phase – Academic Year 2004/2005 – Post-Implementation Monitoring

Faculties readjusted some of the allocation keys, based on the experience of the previous

year

□ 4th phase – Academic year 2005/2006 – Extended Implementation

Implementation in all the Faculties

□ 5th phase – Academic year 2010/2011 – Structural Revision Implementation of the shared services centre and administrative reform impacted on the

Faculties.



□ Cost accounting reflects the functioning of the institution and therefore it requires permanent updating, thus needing ongoing and constant improvement;

□ criteria definition for cost allocation as regards academic staff per activity is one of the most important and most complex analysis in the process;

• time accounting• framing rules• casual allocation• Faculty Directors are responsible for the criteria definition

□ the implementation of cost accounting requires the continuous collaborative work of the units and the processing and analysis team.

Practical IssuesPractical Issues



Financial□ the development of this project has costs which, in Portugal, have to be fully assumed by Institutions (there is no government support to this kind of projects);□ at UC there was an important institutional effort and the project only progressed because there were basic internal competencies and a strong commitment

Technical□ assessment of a full costing system □ risk assessment□ legal barriers (ex: ownership of buildings; depreciation; insurance; real cost of historic buildings)

Accounting□ new requirements (coding, reporting, etc.)□ cost accounting conciliation with the financial statement

Cultural□ time measuring and recording by HR (timesheet)□ to face “sensitive” questions within the institutions □ resistance to change

BarriersBarriers



CLEAR CENTRAL VISIONCLEAR CENTRAL VISION

• the importance of the project was strongly assumed by the University Top Government (Rector)• national and international benchmarking was performed• a single information system was chosen

KEY ROLE OF FACULTIESKEY ROLE OF FACULTIES

• participation of Faculties – ensuring Faculties’ individuality• Directors of the Faculties assume the responsibility for the important decisions (criteria, time distribution, …)• commitment to the project

3 | 3 | Leadership and support for full costing Leadership and support for full costing implementation at UCimplementation at UC


THE IMPORTANCE OF A PILOT TESTTHE IMPORTANCE OF A PILOT TEST

• SELECTION OF A PILOT FACULTYSELECTION OF A PILOT FACULTY

• medium size• diversified structures• board committed to the project• non-resistant culture (ex. UC - Faculty of Economics)

COMMUNICATION AND INFORMATIONCOMMUNICATION AND INFORMATION

• explanation of benefits to all intervenients and relational model• establishment of communication flows and clear routines• team meetings




PROJECT DEVELOPMENT TEAM PROJECT DEVELOPMENT TEAM

• specialised competencies• centralised structure• pro-activity and dynamism• small structure


The implementation of Cost Accounting:The implementation of Cost Accounting:□ has transversal impact on the Institution;□ enables the opportunity to clarify within the activities and at institutional level: assessment and certification; □ is a support for Change: technical, of management and cultural.

Management and organization structures and processes Resource Allocation Model New criteria: in the development of the activity and in the activities' sustainability People: involvement and commitment Organizational Culture change


The Cost Accounting Project at the University of Coimbra began in 2000□ the main driver was the internal wish to have the support for an adequate managerial and strategic system □ the project was developed without any external funding or incentive from the Government, there being a strong internal effort.


September 2008 – new statutes of the UC

Implementation of a Shared Services CentreImplementation of a Shared Services Centre

4 | 4 | Recent institutional developmentRecent institutional development

2008 2009 2010 2010/2011

The UC Shared Services Centre will include six macro-servicesThe UC Shared Services Centre will include six macro-services


• Defines strategic policies and guidelines

• Informs and controls corporative goals

• Ensures value to the different participants

• Management report

• Provides services according to the Units needs

• Transactions processing

• Information processing

• Operational report

ORGANIC UNITS

UNIVERSITYS´GOVERNING BODIES

Focus on consolidated resources management

Focus on core activities

SHARED SERVICES CENTRE

Focus on non-core activites

• Defines policies and strategic guidelines with functional impact on the SSC

• Decision and approval

• Reports consolidated information

• Defines the services needs

• Establishes SLAs

• Analyses information and starts processes

RELATIONAL MODELRELATIONAL MODEL



SECTORAL BENEFITS OF THE SCS

Benefits for the Faculties and other units

• Takes away from the Faculties management the weight of support activities so that they can focus on strategy and management properly

• Best support to decision making

• Reduces tensions between management and support staff

• Faculties are responsible for their own cost management

Benefits for the Administration

• Creates and develops specialised skills

• Increments financial and operational control

• Improves the support areas towards meeting different parties’ needs

• Motivates staff

• Allows for the provision of new services and a more efficient procurement process

GLOBAL BENEFITS OF THE SCS

• More efficiency with the same resources

• Services based on best practices

• Standardisation of policies and processes

• Increment in productivity

• Enhanced skills due to specialisation

• Implementation of multiple small wins

• Minimisation of the number of systems



How to ensure that GAINS>LOSSES?How to ensure that GAINS>LOSSES?

- Active participation in the initial requirements definition phase

- Faculties commitment governance structures

- Service Level Agreements (SLAs)

- Regulation Body (macro structure)



5 | Final remarks5 | Final remarks

The importance of leadership in UC was supported by:The importance of leadership in UC was supported by:

• the Rector’s involvement and commitment

• the focus on the mission and on the implementation of the project

• participation and commitment of the Direction of Faculties: in respect

to the specificity of each Faculty

• taking advantage of the synergies arising from the common gains

(efficiency)

• transparency of communication and information regarding the project

• competence and commitment of the technical team


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