**Managing Costs in BLM**

**A Telecast Originating from the BLM National Training Center**

**August 25, 1998**

This transcript is from the closed-captioning file produced during the
telecast.

It may contain errors and omissions in transcription.

Announcer: the Bureau of Land Management Satellite Network Presents Live
from the BLM National Training Center in Phoenix, Arizona\... Managing
Costs in BLM. An Executive Seminar on BLM\'s Activity Based Costing and
Cost Management Program. And Now, the Host of Your Program, Dave Brown.

Brown: Good Morning, Everyone. Welcome to Our Program on Cost Management
in the BLM. We\'re Here Today to Help Bureau Employees Gain an
Understanding Of Activity Based Costing, Abc for Short. We\'ll Talk
about What it Is, How It\'s Used and Why It\'s Such a Priority in the
Bureau. Activity Based Costing Is No Stranger in the Private Sector
Where It\'s Widely Used with Much Success. Increasingly, Abc Is Being
Introduced Throughout Federal Agencies as a Tool to Deal with Costs and
Performance. We\'ve Invited a Large Part of the BLM Work Force to Tune
in to This Broadcast. In Our Audience, We Have Managers, Budget Staff,
Key Program Staff, Nearly Everyone Who Will Have Involvement in
Implementing Abc and Cost Management in the Bureau. Here at Ntc this
Week, We Have a Group of 60 BLMers from Each State and the Centers Being
Trained in Activity Based Management And How to Implement Abc. This
Group Represents a Very Good Cross‑section of the BLM Population
Including Resource and Administrative Managers, Geologists, Computer
Specialists, Engineers, Accountants and Bureau Analysts. Upon Completion
of Their Training this Week, They\'ll Be Able to Help You Implement
Activity‑based Management in Your Office. A List of Attendees Can Be
Found on the BLM and Fiscal Resources Mis Page. The Address Is
Web.wo.gov.bfrmis2.htm. We\'re Pleased to Have with Us this Morning BLM
Deputy Director Nina Hatfield, Previously She Served as the Assistant
Director For Business and Fiscal Resources Where She Championed Abc. She
Has an In‑depth Understanding of Cost Management Issues Especially in
the Context of the Major Changes Whipping Through Government the Last
Few Years. Nina, Welcome to Our Program. Good to Have You with Us.

Hatfield: as You Know, Pat Shea and Tom and I See Activity Based Costing
as a Critical Tool to the Future Success of BLM And I\'m Happy to Join
You in this Initial Training Session.

Brown: Also Joining Sus Long‑time BLMer Roger Hildebeidel Who Is the
Deputy Assist ‑‑ Who Is the Executive Director of the Policy and Budget.
We\'re Looking Forward to Hearing Your Perspectives on the Benefits of
an Abc Program.

Hildebeidel: Thank You, Dave. This Is an Important Subject and I\'m Very
Pleased to Be Here to Discuss it with Everyone.

Brown: Later in Our Telecast, Fran Cherry, Montana Associate State
Director Will Be Joining Us to Discuss an Abc Pilot Program That Montana
BLM Initiated. Before We Get Started I Would like to Mention to Our
Viewers That Throughout this Program, We Want to Hear from You. Anytime
During the Program If You Have a Question or a Comment For Our Panel,
Please Send Us a Fax Using the Numbers Provided To Your Offices. Please
Use the Standard Ntc Fax Form and Print Your Question With a Dark
Marker. At the End of Our Presentations, We Have Set Aside Time for a
Formal Question and Answer Segment to Take Your Phone Calls. The Call‑in
Phone Number Has Been Provided to Your Office. We\'ll Let You Know Ahead
of Time When We\'re about to Begin Our Interactive Segment. We\'ll Try
to Get to as Many of Your Phone Calls as We Can Within The Time
Allotted. Any Questions That We Don\'t Get to During the Show Will Be
Answered via Groupwise. To Help Us Measure the Effectiveness of this
Telecast, We Also, Like All of Our Downlink Sites to Fax Us the Total
Number of Viewers from Your Office Who Watched Today\'s Show. Please Use
the Standard Attendance Roster and Send it to Ntc at The Conclusion of
Our Program. To Help Set Stage for Us a Bit, Roger, Would You Give Us a
Thumbnail Sketch of What We\'re Talking about Here. What Exactly Is Abc?

Hildebeidel: Thank You, Dave. I\'m Certainly Happy to Do That. I Think
It\'s Important That We Recognize What Is the Objective Of Today\'s
Broadcast. The Objective of Today\'s Broadcast Is to Tell Us and Inform
You As to Why We Are Doing Abc, What the Need for Abc Is and What It\'s
All about. We Have Here a Graphic Example, Just as a Very High‑level
Overview of an Abc Process. It Is Not Really That Complex but it Shows
That it Has Several Parts to It. These Are the Activity Costing Building
Blocks down the Vertical Or Red Part of the Graphic and the Activity
Management Building Blocks That Are Across the Blue or Horizontal Part
of the Graphic. So, it Involves Not Just Costs, but Also Involves How
You Use This Information to Manage and That\'s an Important Element of
What Our Broadcast Is All about Today. As Dave Mentioned, There Are
about 60 People Here at the National Training Center Who Are Being
Trained in the Actual Techniques of How You Do Abc Analysis. They Will
Come Back to Their Home Offices, to Your States, to Your National
Centers, with this Information and Help Start Us Down the Process of
Doing the Abc Analysis. But Everyone Wants to Know, First of All, You
Know, What Is Abc. And Why Are We Doing That? And We Want to Address
That Today. Abc Is a Technique That Applies the Actual, Full Costs of
Operations to Agency Activities. This Is Information That Is Different
from Information We\'ve Had In the past. Managers Need this Cost Data to
Help Make Intelligent Business And Recourse Allocation Decisions. This
Is Data and Information That Is Not Currently Available to Us. In Brief,
Abc, Is a Management Information and Accounting Method Used to Identify,
Describe and Assign Costs to the Functions or The Work Processes That
Consume Those Costs. Abc Assigns Costs to Activities Based on the
Consumption of Resources or the Use of Inputs, People\'s Effort, Time,
Dollars, And the Materials and Other Costs That Go into Producing an
Output. Abc, as with All Managererial Cost Accounting Approaches, Is
Focused Not Just on the Cost, but on the Outputs and Results of What
Those Costs Achieve. And It\'s Important That We Address That and
Remember That. It Is Unfortunate That We\'re Using the Term Activity in
this Technique Because Many People at BLM Confuse it with Our Budget
Activities. And It\'s Kind of a Problem We\'ll Have to Deal with. But in
Activity‑based Costing, an Activity Actually Means a Work Process,
Something That Has a Beginning and an End and in the Middle, Consumes
Resources and Produces Results or Outputs. And We\'re Going to See That,
as We Go Through this Program and Discuss Some of the Techniques of
Activity‑based Costing, That This Is a Real Value to Us as an
Organization in Helping Us Use Our Funding and Know Where Our Costs Are
Going to Focus on the Results We Really Want to Achieve. And it Is an
Excellent Management Technique in That Regard. With Abc, We Can Analyze
Financial and Performance Information Several Different Ways. By
Process, by Organization, and Even by Geography. This Is a Powerful Tool
for Us That Will Help Us Achieve Many of Our Objectives in Using Our
Funds to Do the Job That We All Want To Do. And That Is Manage Our
Resources on the Ground. But People Are Saying Why Are We Doing this? We
Have Lots of Other Things to Do. We\'ve Got Lots of Work. Why Are We
Doing this? Why Are You Washington Imposing this on Us? Well, It\'s Not
Just BLM. There Is a National Requirement That\'s Based in Law for Us to
Do Managerial Cost Accounting Method. And That Stems Back to the Chief
Financial Officers Act Passed Several Years Ago. The Chief Financial
Officers Act Has Several Parts to It. One of Those Parts Is to Improve
Federal Financial Systems. And this Act Was Passed to Make Agencies Pay
More Attention to Their Financial Systems. A Second Part Was to
Standardize Financial Practices Across Agencies So That Every Agency Was
Using the Same Terms, the Same Categories to Report Financial Condition
So the Information Could Be Aggregated and Looked at Consistently Across
Agencies. Thirdly, the Act Required the Establishment of Federal
Accounting Standards Which Are Very Equivalent to the Standards In the
Private Sector for Reporting on a Company\'s Financial Status and
Financial Condition. We Did Not Have Those Standards in the Federal
Government Before The Cfo Act Was Passed Several Years Ago. Another
Important Part of the Cfo Act That Affects Us Today Is That it Requires
All Agencies to Report Their Financial Condition to the General Public
and to the Oversight Agencies in The Federal Government like Omb and to
the Congress. And There Is a Standard Reporting Format for These Types
of Information That must Conform with the Standards. So Everybody Is
Reporting in a Similar Way. This Is Much like the Private Sector Also
Has to Do. And the Final and Really Critical Part of this Is That Our
Financial Reports Are Audited by Independent Auditors to Make Sure That
What We Report Is a True Representation of Our Financial Condition.
These Kinds of Reports Had Never Been Required Before in the Federal
Government and the Audits, in this Type of an Approach Of Auditing Our
Financial Condition, Are Certainly a New and Very Different Aspect of
What We\'ve Been Doing. If We Get Good Audits, What We Call Unqualified
or Clean Audit Opinions, this Has a Tremendous Benefit to the
Organization in Terms of Credibility for Budget Resources and
Credibility as an Agency That Knows How to Manage its Funds and Gets
Results. So It\'s Important for Us it to Do That. Let\'s Talk Just a
Minute about the Managerial Cost Accounting Standard Itself. Managerial
Cost Accounting Standard Which Is Called Sffas Number 4 Has Been Issued
by the Office of Management Budget and Applies To Every Federal Agency.
We\'re No Different than Anyone Else. We Have to Conform with the
Standard. The Standard Becomes Effective this Fiscal Year and We Are
Beginning to Take the Steps That Allow Us to Implement this Standard in
this Fiscal Year. But We\'re Going to Have to Do More next Fiscal Year
and the Years Beyond That\'s One of the Things We Want to Talk about
Today. The Standard Was Developed by a Board of Accountants and Managers
That Applies to All Federal Agencies. So, It\'s a Standard That We Have
to Implement and If We Don\'t Implement It, One of the Consequences Can
Be a Qualified Audit Opinion on Our Financial Statements. This Is
Something We Seriously Want to Avoid. We Do Want to Have Unqualified or
Clean Audit Opinions on Our Financial Statements. So, this Is Critical
That We Understand the Need to Do this. Beyond That, There Are Many
Benefits That Will Apply to Us for Implementing the Cost Standard
Through the Technique of Abc. These Benefits Result in Providing Us with
Reliable and Timely Information on the Full Costs of Our Programs, Our
Activities And Our Outputs. And I Have to Say That Those Things Are
Linked. Costs, Activities and Outputs. And It\'s Important That We Keep
That in Mind. Little Later on in this Program, I Think We\'ll Discuss
Some of The Details of How this Will Work and Specifically, What Steps
Are Involved. But at this Point in Time, I Think We Would like to Hear
Some of The Background as to Why We Really Have to Implement this
Standard. Dave, That\'s a Brief Introduction of the Topic.

Brown: Thanks, Roger for the Overview. I Would like Now to Turn to Nina.
Give Us Your Take on the Cost Management Program That the BLM Is
Undertaking.

Hatfield: Thank You, Dave. I\'ll Certainly Try to Give You a Few
Thoughts Here as We Start Out. Certainly for Those of Us in BLM, the
Real Bread and Butter for BLM Is the Stewardship of the Nation\'s Public
Lands and the Legacy for Future Generations. We in BLM Have to Protect
the Land and its Resources. Restore Degrade Areas and Foster Recreation
and Economic Benefits for All ‑‑ and I\'ll Do All of this Within Our
Mandate. In BLM, it Is about the Land and the Land\'s Legacy So the
Natural Question for All of Us Is Why We\'re Embarking upon an Odyssey
to Find out More about the Cost of Doing Business. Our Employees Have
Made it Abundantly Clear in a Recent Survey We Have More to Do than the
Resources We Have Available. So, Why Would We Want to Do this When We
Have So Many Other Requirements and Needs on Our Plate. Well, Abc
Management Is about How We Do Our Core Work, How We Can Improve How We
Do Our Work and How Many Resources We Consume In Doing Our Work. Now, I
Want to Spend a Few Minutes to Address How That Abc Management Will Help
Us to One, Meet Public and Congressional Expectations about the Use of
Are Your Resources, as Roger\'s Indicated Comply Are Current Legal
Requirements. How That it Will Provide Information to Meet the Needs of
the Business Side of Managing the Public Lands and Very Importantly It
Seems to Me, Deal with the Employee and External Concerns That We
Simplify Our Work So That We Can Do less with less. Now, over the Last
Few Years, the Public Expectations Towards Government Have Changed
Radically. Public Attitude Toward the Government Has in the Last Several
Years Been at an All‑time Low. The Public Did Not Feel like it Was
Getting Positive Benefits From the Dollars That Were Expended. Now We
Find That the Public Expectation Is That We Will Be More
Customer‑focused and That We\'ll Operate in a More Businesslike Manner.
The Public Wants to Know That We\'re Using Their Money Efficiently to
Get the Value from the Government. I Always Think about How That We in
the Government in Terms of The Kinds of Expectations That Our Customers
Have, Have Been Raised. One of the Best Examples in My Own Life Is If
You Look at L. L. Bean. You Can Call Them up on Their 800 Number. Tell
Them What the Product Is That You Want and They\'ll Send it To You
Overnight. In My Case, That\'s Always Critical, Dave Because I\'m Always
Behind on My Christmas List. That\'s the Reason Why I\'m Probably So
Enamored with L. L. Bean. But the Kind of Customer Service That L. L.
Bean Provides and The Private Sector Has Folded over into What Our
Customers in The Public Sector Expect from Those of Us Who Work for
Them. So, Our Customer Expectations Continue to Rise and That\'s One of
The Reasons We\'ve Spent a Lot of Time Trying to Identify What The
Customer Expectations Are by Doing Some Surveying. We Have to Deal with
Those Expectations. We Have to Do Things That Make the Public Understand
That We\'re Using Their Dollars Wisely in Providing the Services That
They Want. At the Same Time, the Books Are Being Balanced. Taxpayers
Want a Balanced Budget. Congress and the President Have Responded with a
Balanced Budget Plan. Now, Roger, of Course, Has Been Around in the
Budget Arena a Lot Longer than I Have but He Can Certainly Tell Us and I
Can Tell In the Amount of Time We\'ve Been Dealing with the Budget That
There\'s Increased Pressure on BLM to Compete Successfully for Available
Dollars and to Demonstrate That We Get the Most out of The Dollars That
We Have Available. In BLM, Will Never Be a Business but We Can Adapt
Tools like Abc Management to Better Account for the Resources That We
Use and Need to Manage the Public Lands. We Can Better Meet Public
Expectations That Would Provide Quality to the Public Land Customer at
the Best Possible Value. Now, There Are Also Several New Legal
Requirements That We Institute Cost Management. Roger\'s Also Referred
to One of Those and I Think We\'ll Be Talking about Some in More Detail
Later. I Would like to Spend a Moment on Two I Believe Are Very
Important to Our Ability to Convince the Department, Omb and the
Congress That We Merit the Dollars That We Need to Manage the Public
Land. The Government Performance and Results Act Is a Bipartisan
Expression of the Congressional and Public Expectation That the
Government Act in a Businesslike Manner. I Understand That Because, as a
Taxpayer, I Want to Know That We\'re Using Tax Dollars in the Most
Efficient Manner. It Does, However, Mean That We in the Government, Have
to Do Things a Lot Differently to Justify Our Budget and Obtain the
Dollars That We Need to Take Care of the Land. The Government
Performance and Results Act Requires That We Have To Identify What it Is
That We\'re Going to Achieve, Measure Our Progress in Doing What We Said
We Would Do, and Very Importantly, Report the Results to the Congress
and the American Public about What We\'ve Done in Terms of the Use of
Those Funds. Now, in BLM We\'ve Certainly Done Measurement and Reporting
in The past. Gpra Ties it Together in a Management System Unlike What
We\'ve Had to Deal with in the past. The Gpra Ties Dollars to
Performance and Results. The Focus Is Certainly on Results from the
Dollars That We Have Available. Now, the Other Legal Mandate I Want to
Mention Briefly Is One That Roger\'s Referred To, the Cfo Act Because it
Does Require We Have a Cost Management System in Order to Maintain Our
Clean Audit. That Audit Is Extremely Important Because We Have the
Situation Where the Inspector General Certifies to the Department, Omb,
Congress and the Public, That We Can Account for Our Dollars and How We
Use Them. Now, We Struggled Three Years Ago to Obtain Our First Clean
Audit Opinion. We Want to Make Sure We Can Account for Our Dollars and
Continue To Do So in the Future and Abc Will Help Us Do That. So, this
Is an Effort That\'s Not an Option. We Have to Do It. But the Important
Thing for Us in the Bureau Is to Do it in a Manner That Makes it Work
for Improving the Way That We Manage The Land. And to Me, That\'s Where
Activity‑based Costing Is Really What We Should Be Focusing on Is How it
Helps Us Focus and Manage Our Resources. Now, We\'ve Never Known How
Much it Costs Us to Do Long Gas Leasing. We Have Known How Much We\'ve
Budgeted but Not the Total Cost of Doing the Work. But the Information
That We\'ve Put Together Will Help the Field Look at the Kind of Work
Processes That They Have and Establish The Budget Requirements in the
Field, You\'ll Be Able to Tell ‑‑ Washington, Congress, the Public How
Much It\'s Actually Going to Cost You in Order to Perform the Work That
You\'re Performing. And So Activity‑based Costing Provides a Mechanism
for You to Say If You\'re Expecting this Kind of Performance out of Us,
this Is How Many Dollars It\'s Going to Take Us in Order to Achieve That
Output. Activity‑based Costing Is Also Especially Important to Us to
Establish the Cost of Operations. And That Seems to Me to Be Very
Important as We Try to Manage Our Operations and Also it Is Important to
Us as We Try to Recover Costs in Certain Arenas. The Information That We
Gather from the Activity‑based Cost Will Go Also Help Us Compare the
Costs, the Trends and the Value of The Activities That We\'re Involved
with. And this Means That Within a State, You Can Look at How the Work
Is Being Performed Across Your State, Look at Who\'s Really Doing It in
a Very Effective Manner, Get Good Ideas about How to Do The Work and to
Develop Some Trends in Terms of When It\'s Beginning to Cost Us More to
Do the Work than it Was in the past Or We\'re Doing Things More
Efficiently So That We Can Identify Some Information There That Provides
Us Some Long‑term Management Information. Very Importantly to Me Is That
it Also Helps Us to Simplify and Improve the Way We Do Our Work. This Is
a Systematic Way to Approach Simplification of Our Work Processes and a
Way to Target How We\'re Going to Simplify the Way We Do Work. The
Overall Result Is an Improved Ability to Manage the Land With the
Available Dollars and to Be More Competitive in the Quest for Dollars.
Now, as All of You Know, the Bureau Has Spent a Lot of Time and Effort
in Terms of Surveying Employees Within the Bureau. We Just Had a
Tremendous Response from Employees Throughout the Bureau and One
Employee in Discussing the Results of That Survey, Told Pat Shea That
All Offices Have the Same Complaints. Grossly Overworked Staff and No
Budget to Work with. Now, We Know That There\'s More Work than We Can
Accomplish. So It\'s Not Without a Lot Thought That We\'re Moving
Forward Aggressively on this Effort. But in BLM, We Have a Choice. We
Can Continue to Be Concerned about the Amount of Work We Have To
Accomplish with Our Budget or We Can Step Back and Say Wait a Minute, it
Is Important to Gather Information for Ourselves and Others So That We
Can Be Objective about the Costs of the Work. We Have to Take the
Organizational Time to Step Back and Say This Is Where We Are, this Is
How Much It\'s Going to Take Us to Achieve What it Is That You, the
American Public, Want Us to Achieve. Now You Can Each of Us in Our Lives
and Our Work Have Looked Around and Said Why Do We Do it like this? This
Is a Waste of Time and Effort. There Is a Better Way to Do this. Using
Abc, Employees Have Direct Input into Describing the Work That They\'re
Doing and How Much Effort it Takes to Do It. And Employees in Montana
and in Other Pilots Have Proven That ‑‑ In Developing Information about
the Way the Work Is Done, We Can Actually Simplify What Work Is Done
Because the Employees Identified Steps That They Had Been Doing
Traditionally That Needed Not to Be Done. So That They Simplified as
They Went along in Looking at Their Work Processes. We Can Certainly
Gain More Consistently among Offices. In Montana, Think You\'ll Hear
from Fran Later about How They Were Able to See Where They Could Gain
More Consistency in Terms Of the Way They Approach the Work. Very
Importantly, We Can See Who Has the Best Idea about How We Should Do the
Work. This Effort Allows Us to Look at the Work, Simplify the Work, And
We All Know That That Needs to Be Done. Now, We\'re Moving from the
Really Good Work That Montana and Other Pilots Have Done. I Personally
Can\'t Thank Montana Enough for Developing the Templates That BLM Will
Work with to Help Other Offices Provide The Data Without Having to
Reinvent the Wheel. Montana Undertook a Tremendous Effort Last Year and
All of Us in BLM Are Going to Benefit from That Work in the Coming Year.
I Thank Montana and the Other Organizations That Have Done Work On
Pilots So That We Can Tell Anyone the Costs of Doing Work With Millions
of Dollars, Millions of Our Dollars. For All of Us in BLM, the Bottom
Line Is That the Abc Management Allows Us to Produce the True Costs of
the Program Operations. Helps Us Establish and Justify the Budget and it
Identifies Opportunities to Improve the Way We Do Our Work. Now, I\'ve
Been Carrying a Little Quote Around for a Number of Months Now from
Edward O. Wilson Who Recently Wrote That We Are Drowning in Information
While Starving for Wisdom. The World Henceforth Will Be Run by People
Able to Put Together The Right Information at the Right Time, Think
Critically about It and Make Important Choices Wisely. Well, Now Is the
Right Time for BLM to Embrace Abc. So We Have the Right Information to
Make the Right Choices about The Management of Our Public Lands. So,
Dave, I\'m Looking Forward to the Rest of Our Session.

Brown: Thanks, Nina. We Do Have a Fax. Let Me Ask You to Comment on It.
What Are the Consequences of a Qualified Audit Opinion?

Hatfield: Well, the First Consequence Is That it Decreases The
Satisfaction and the Trust That the Department Omb and Congress Have in
Our Ability to Manage the Money. And So in Order to Demonstrate That We
Are Capable of Managing Money, It\'s Absolutely Critical That We Don\'t
Fall into the Posture That Some of Our Sister Agencies Have Done in
Terms of Having Qualified Opinions and We Run the Risk First of All of a
Lot More Intrusion in Terms of the Way We Manage Our Own Budgets And We
Also Will Be in the Situation Where We Will Have Increased Requirements
Imposed upon Us in Order to Get Our Financial Books in Proper Order.
There Is Absolutely No Option in Terms of Having a Good Financial System
and Either We Do it or Someone Will Do it for Us and BLM, We\'ve Made
the Choice We Want to Do it and We Want To Do it Really Well. Besides,
I\'m a Taxpayer. You\'re a Taxpayer. Taxpayers Deserve Value for Their
Money and Taxpayers Deserve to Know That We in BLM Are Handling Their
Money Well and We Can Account for It. That\'s What a Qualified Opinion
Is. Our Audit Opinion Is a Third Party Look at Our Books, How We\'ve
Kept Our Books and Us Being Able to Show the Outside World We\'ve Done
Well in Terms of Spending the Money. That\'s What We\'re Talking about
Here.

Brown: Thanks. We\'ll Be Getting Back to Nina in the Second Segment of
Our Program to Talk about the Priority That Abc Is Receiving and its
Potential Value for Management. Nina Will Be Also Taking Your Questions
Later in the Program. As You Have Just Seen, While We\'ve Always Had
Cost Management Concerns to Deal With, Never Before Has the Process Been
So Tied Together with Budget and Performance. What Also Makes this
Different than Before Is That Now It\'s in Law. We Are Required to Do
It. This Very Different Approach to Cost Management Emphasizes Strategic
Planning, Cost Management, Performance and Results. Abc Will Be Used to
Help Us Effectively Manage Our Programs Both Strategically and on a
Daily Basis, Rather than Being a Cost Management Program for External
and Upward Reporting. Roger Hildebeidel Has Been Very Involved in the
Design, Planning And Implementation of this New Cost Management Program
in the BLM. Roger, Would You Take Us a Bit Deeper into Why We Are Doing
Abc, What We Can Expect to Get out of it and How We\'re Going to ‑‑ How
Are We Doing with Implementation?

Hildebeidel: Sure, Dave. I Would Be Happy to Do That. Nina Has
Effectively Set the Overall Stage of Why We Need to Have a Cost
Management Program and What Benefits it Will Have For Us as an Agency
and How the Public Outside of BLM Really Understands the Idea That Your
Good Fiscal Stewards of Your Money. This Is Something That Clicks with
the Public Just as it Does That We Pay Our Bills on Time. Clicks with
the Public. So, I Think We\'ve Set Stage and Nina Has Very Effectively
Indicated Why this Is Important for Us. What I Would like to Do Is Take
a Few Minutes and Talk a Little More about the Cost Standard and What it
Involves. Why the Abc Technique Particularly Was Chosen to Help Us
Implement That Cost Standard and Some of the Relationship to Our
Traditional Budgeting and Our Traditional Budget Processes. First of
All, We Want to Talk a Little Bit about the Management Cost Accounting
Standard That I Referred to Earlier in the Opening. The Cost Standard
Has Five Elements to It. It Has a Cost Accounting Element. This Means
That for Both Internal and External Reporting, We Have to Present Our
Financial Situation in Terms of Costs. This Is Very Different from Some
of the Things We\'ve Done in the Past Where We\'ve Focused on Budgets
and Appropriations and Obligations. But this Puts it More in the Terms
of Costs. That Is the Resources Were Actually Used to Accomplish
Something. The Second Part of the Standard Talks about Responsibility
Segments and this Is Really Just Saying That Somebody Is Responsible for
the Things That Incur Costs So You Identify Who\'s Responsible for Them.
And We\'ve Done That in Our Implementation Process. The Third Concept Is
Full Cost. This Is a Little Bit New for Us Because We\'ve Not Been Used
to Working in Terms of Full Cost of Processes We\'ve Been Used to
Working with Pieces or Budget Cost Rather than the Full Costs of A
Particular Output. We\'ll Get into this in a Little More Detail Later
but it Is an Important Concept. The Fourth Part Talks about Inter‑entity
Costs. This Is Brand New to Us and to All Federal Agencies Because What
This Element Says Is Not Only Do You Have to Account for the Costs That
Are in Your Own Budget, You Have to Also Reflect the Costs in Somebody
Else\'s Budget That You Benefit from. So, Things like Pensions Paid to
Retired Employees Which Are Paid for out of General Funds but Not in
BLM\'s Budget Are Still Part of Our Costs Because They Influence Our
Cost Decisions and Our Output Decisions and So We Have to Account for
Those in Terms of Our Full Cost Approach. This Is a Very New and
Important Concept That We\'ll Be Dealing With in Implementing the
Standard. And Abc Helps Us in this Regard. We\'ll Talk about That, Too,
in a Minute. The Fifth L the Standard Is the Costing Methodology.
Costing Methodology Is Really Where Abc Comes into Play Because The
Standard Says You Can Choose among Several Costing Methodologies. We\'ve
Chosen Abc Because of the Benefits That Abc Provides Not Only in
Implementing the Standard but to ‑‑ Helping Us Manage The Organization
and Nina Has Very Effectively Indicated What Some of Those Benefits Are
for Us. One of the Things That We Need to Stress Is That in the Standard
Itself, the Standard Talks Not Only about Cost but Also Talks About
Outputs and Results. So, It\'s Not Just a Matter of Money and Costs but
It\'s Also a Matter of What Did We Achieve with Those Dollars and What
Results or Outputs Did We Attain. That\'s Very Much in the Standard to
Link Costs and Outputs. We Need to Keep That Fully in Mind Because it
Helps Us in Terms Of Our Ability to Use the Technique in Actual
Management Situations. So, Let\'s Go Ahead and Talk a Little Bit about
Why Did We Choose Abc as Opposed to Some of the Other Methods. The
Activity‑based Costing and Management Approach Is One That Implements
the Standard but it Has Definite Benefits for Us Internally as Well. The
Activity‑based Management Concept Has Been Proven to Help Manage Costs
in the Private Sector and Industry and Companies in The United States
Have Used this Technique for the past Ten Years and Have Been Successful
in Helping Improve Their Bottom Line by It. It Also Works in Other
Government Agencies. Here at the Training Center Yesterday We Had
Representatives From the City of Indianapolis and from the Nasa
Organization of The Federal Government, National Aeronatics Space
Administration To Tell Us How They\'ve Used Abc to Help Them Save Lots
of Money In Their Programs and Do a Better Job of Achieving Their
Objectives, Be it Cleaning the Streets of Indianapolis or Sending
Missions into Space. So, the Technique Has a Value in a Wide Range of
Areas and it Does Produce Good Information for Managers to Use in Their
Own Program Operations and I Think That\'s One of the Key Factors of Why
We Chose the Abc Method to Implement the Standard. Activity‑based
Costing Can Provide a Framework for Implementing Costs, the Workload
Data Outputs Results Around the Budget Execution. So, it Has Some Direct
Links to What We\'re Trying to Do. How Would We Use this? Well, There
Are Several Ways in Which We Could Use this Technique to Help Us in
Direct Decisions. One of Those Is in Cost Comparisons. We Need to Do
Cost Comparisons. Particularly in Terms of Inhouse Vs. Contracting out
Decisions. And If You Don\'t Have Comparable Costs, If You\'re Comparing
Your Inhouse Costs on One Basis and Your Contracting out Costs on a
Different Basis, You Don\'t Make Good, Solid Decisions about Which Way
to Go. You\'re Getting Distorted Information. So, the Abc Technique Can
Help Us in Having Comparable Information from One Source to Make Some of
These Choices That We\'re Faced with and Thus Manage Our Resources
Better. Another Way We Can Use the Abc Information and Nina Already
Alluded to That Is to Justify the Fees We Charge for Services. There Has
to Be a Basis for the Fees Charged and Abc Can Help Us Provide That
Sound Basis That\'s Reliable and Auditable. It Can Help Us Justify the
Charges We Have for Reimbursable Agreements with Other Agencies. Again,
Same Reason. It Can Help Us Support Resource Allocation Decisions. In
Other Words, Take Your Dollars and Put Them Where You Get the Best Bang
for the Buck. With Good, Reasonable Information on Costs, it Will Help
Us Put Our Dollar Where Is We Get the Best Returns and Achieve Our
Mission Goals, like Nina Said, Our Goal Is to Manage the Land, But There
Are Lots of Ways in Which We Can Do It. Some of Them Are More Costly
than Others. It Provides Us Cost Data for Process Improvement. Again,
Simplify. How Can We Simplify. Without Good Cost Data, It\'s Hard to
Know What a Current Process Is Costing and It\'s Even Harder to Show
That You\'ve Made an Improvement and Simplified the Process and Reduced
the Cost. Abc, as a Technique Can Help Us Make These Kinds of Judgments
And Provide Good Data That Supports Them and Backs Them Up. The Bottom
Line Is We Really Want to Get the Best Use out of the Dollars We Have.
Because as Indicated Earlier, the Budget Game Has Changed. It\'s Not
Just a Matter of Going Forward and Asking for More. It\'s Really a
Matter Now of Demonstrating That You Can Use What You Have Most
Effectively to Get Your Job Done. So, this Really Has Application in a
Lot of Arenas. I Would like to Use Just a Quick Example to Say, You
Know, Show How We Might Achieve this Result. Say, for Example,
Theoretically, We Needed to Decide on Selecting a Metallic Wire to
Conduct Electricity. And We Had Three Choices of Metals. One Metal Was
Extremely Good, the Other Was Pretty Good but Not As Good as the First
One and the Third One Did the Job Effectively but Not as Good as the
First Two. What\'s the Obvious Choice Based on That Information? You
Choose Metal a Because It\'s Not Most Conductive of Electricity but You
Add Another Element. Metal a Is Gold. Metal B Is Silver. Metal C Is
Copper. What Is the Cost Difference Between Gold and Copper? Obviously
Very Significant. So If You\'re Choosing a Metal to Use in Wiring Your
Home, Which One Would You Choose? Given All of the Information,
Obviously Most Homes Are Wired With Copper Wiring. Because the Cost
Difference Is Tremendous. It Still Performs the Needed Function. And
this Really Leads to the Point of What Is the Difference Between Budgets
and Costs. Costs Are the ‑‑ Budgets Are the Amount of Money You Have to
Do Something, Whether It\'s Wire Your House or Build a Fence or Process
an Application. The Costs Are How You Use That Budget to Achieve the
Job. If Your Objective Is to Spend All of Your Budget, You Would Wire
Your House in Gold. But If Your Objective Is to Wire Your House Most
Effectively, You Take into Account the Costs of What it Takes. I Think
That That\'s the Differential in this Situation. We Spent a Lot of Time
on Figuring out How to Spend Our Budget. We Haven\'t Spent the Kind of
Time it Takes to Figure out How to Get the Most out of the Dollars in
That Budget to Achieve Our Objective. That\'s a Big Difference. We All
Know That There\'s Still Going to Be Emphasis on Spending Our Budget but
it Is Important to Remember That the Emphasis on How We\'ve Spent Our
Budget and What Results We\'ve Obtained Is Achieving at Least the Same
Level of Scrutiny as the Fact That We\'ve Spent the Budget to Begin
with. And People Outside the Government Are Certainly More Interested In
How We Spent the Dollars than the Fact That We Spent Everything That
Somebody Else Gave Us. Because It\'s Not Our Money Anyhow. It Is Theirs.
Let\'s Look at Another Example of How Abc and Cost Information Can Help
Us. We Need to Make Some Comparison Between Hiring Somebody in the
Organization Versus Contracting out. Unfortunately, since Our Current
Financial System Has Been Geared Toward Budget Uses in the Past, it
Doesn\'t Give Us Full Cost Information and Underprices Inhouse Labor
Costs. Most Bureaus, Employees Are Familiar Only with Direct Work Month
Costs. 10 Work Months per Year and the Direct Cost. This Kind of
Approach Does Not Cover Full Costs. It Excludes Leave Cost Which Is
Certainly Critical to the Overall Price of Using the Work Force in BLM.
But It\'s Just Not Allocate to the Field. So They Don\'t See It. You All
Don\'t See it and You Leave it out of the Calculation. It Doesn\'t
Include Inter‑entity Costs or the Support Costs of Overhead and Other
Supporting Services That Are Not Visible. We Tend to Make Decisions on
the Basis in House of a Very Low Cost or Apparent Cost for an Inhouse
Employee Vs. A Much More Apparent Higher Cost of Contracting out. But
the System Doesn\'t Really Give Us a Level Playing Field for That
Information. And I Think That\'s Where Abc Will Have a Great Deal of
Value for BLM in Helping to Make Better Business Decisions in Getting
Our Dollars to Stretch Further to Produce the Results. A Second Area in
Which Abc Will Help Us Is to Manage Overhead Costs. Overhead Is a
Significant and Often Difficult Element of Costs To Get a Hold Of. It\'s
a Very Elusive Thing. But in Abc, There Are Techniques That Allow Us to
Identify and Work with Those Costs. Folks Here in Phoenix Will Be
Trained in How That Can Applied to Softer Overhead Costs. It Is
Important If We\'re Going to Get More of Our Resources into
Accomplishing the Work, That We Control and Manage Our Overhead Costs.
Here\'s Where I Think Abc Will Help Us a Great Deal. So the Bottom Line
of Why Use Abc Is That Without Reliable Cost Information, Managers and
Employees Are Lacking One of the Key Tools for Effective Decision
Making. And We Want to Change That. It\'s Important to Be Different in
BLM in the Future. Let Me Take a Few Minutes and Just Talk a Little Bit
about the Steps of Abc. A Lot of the Terminology I\'m Sure Is Unfamiliar
to Most People Yet it Has Very Familiar Applications. Let\'s Talk about
Doing Activity Analysis. This Has Nothing to Do with Cost. This Is
Analyzing the Work Process. What Is the Work, What Are the Inputs, How
Much Is Done, Where Is it Done? What Are the Outputs and Who Are the
Customers? This Is a Pretty Standard Kind of Work Process Evaluation.
But it Is a Key to Getting the Value out of Managing the Costs And
Knowing this Information. And So 80% of What We Learn, I Think, Through
an Abc Approach Relates to the Work Processes Itself. Now, What Work
Process Are We Talking about? What Are Activities? As I Mentioned
Earlier in the Broadcast, an Activity Is ‑‑ It\'s A Work Process. It Has
a Beginning and an End. Does Something, Uses Resources, People\'s Time,
Money, Materials, Et Cetera, Produces a Result. That\'s an Activity. In
BLM Terms, it Can Described in Very Familiar Kinds of Things. For
Example, in What Has Been Done in the Wild Horse and Burro Pilot
Project, We Have a Sample List of Activities and Tasks. A Lot of Us in
BLM Will Recognize These. An Activity Is Manage Wild Horse Herds. We
Have Tasks That Talk about the Different Ways of Doing this. Nepa and
Analysis. Having to Define These and What Goes into Them, We Can Look at
The Cost Around What Comes out of Them and We Can Have a Relationship of
Cost and Versus Output That Helps Us Determine Where the Dollars Are
Going and Where We Can Do Things to Help Get the Most out of the Money.
Where We Can Stop Doing Stuff That Doesn\'t Lend to the Ultimate Goal
and Where We Can Do More to Help Us Achieve More Results. So, this Is a
Very Powerful Tool. A Similar Example or Example from the Wild Horse and
Burro Program Goes on the Other Side and That Is the Adoption. And We
Have Tasks There. We Can Do the Same Thing. So, I Think from These
Examples, You Can See That What We\'re Talking about in Terms of
Activities Are Not Foreign Concepts to The BLM but They\'re Being
Presented in a Little Different Manner And They\'re Being Subject to a
Structured Kind of Analysis Process. What Are the Results That We\'re
Look for? It\'s Not Just Analysis. We Want to Know Some Things as a
Result of the Analysis. Which Want to Know What Value Was Add by the
Process, What Was The Cost of the Process, What Were the Costs of the
Outputs and What Are the Costs by Consumer Customer Categories Because
Some Customers Are High Cost Customers and Others Could Be Low Cost
Customers. This Is Information We Haven\'t Had Before in the Bureau or
the Government. But it Can Help Us in Making Our Decisions about How We
Address Serving Our Customers and Doing Our Mission Work. So it Is
Important That We Recognize Some of These Values. Ultimately, the
Benefit of Doing Activity ‑‑ Activity‑based Costing and Management Is
That We Use Dollars More Effectively, We\'re Able to Improve Our
Process, That We\'re Able to Serve Our Customers Better and Deliver
Better Results. Because That\'s the Bottom Line. That\'s What We\'re
Look for in this Use of this Technique. The Bottom Line Put More Dollars
into Direct Mission Work. That Delivers the Best Results and Get the
Best Return for the Dollars. You Can\'t Do this on the Fly or by the
Seat of Your Pants. You Need Some Kind of Structure Process That Allows
this to Happen. Abc Is the Kind of Tool with a Minimum Amount of
Investment and A Good Faith Effort That Will Allow Us to Get to These
Goals. Are We Asking Everybody to Start over? And Start from Scratch
with No Help? Absolutely Not. We Have Done Some Work and There Have Been
Folks Who Have Been Working Diligently for the past Year and a Half in a
Couple of Arena Os to Pioneer the Effort and to Prove That it Really
Does Work in BLM, Does Work in a Government Setting. It\'s Not Just Some
Theoretical Thing Sitting out There. And These People Have Done
Considerable Effort to Prove the Technique and the Oil and Gas Leasing
Work That Was Done over a Year Ago and the Wild Horse and Burro Program,
Analysis and Es That\'s Being Done this Fiscal Year and in the Montana
Organization Where They\'ve Looked at Their Entire Activity over This
Year and Have Applied Abc Techniques to It. These People Have Charted
the Course for the Rest of BLM. So, We\'re Not Just Saying Start, No
Help. We\'ve Got Some Templates. We\'ve Got Work That Other People Have
Done That Have Identify The Pitfalls and the Values and That Work Is
Going to Be Available to the Other 11 States and the National Centers as
We Start out next Fiscal Year. Now, it Doesn\'t Mean Everything\'s
Cut‑and‑dried. We Have Some Templates, Those Templates Are Guides to
What We\'re Going to Do in the Other States. But They\'re Not Locked in
Stone and Can Be Adjusted and Tweaked To Represent Specific Situations
but the Goal Is to Come up with Some Common Set of Definitions of Our
Work Processes and to Apply Costs to Them, Across the Bureau. So That We
Do Have Standards Sets of Data That People Can Use to Manage Effectively
Throughout the Bureau. And That\'s Where We\'re Trying to Head. Question
Is How Are We Going to Get There? What Are You Going to Be Required to
Do next Fiscal Year and What Is it Going to Take? I Would like to Spend
Just a Few Minutes and Shift Gears and Talk about What It\'s Going to
Take in the next 12 Months to Do The Job. Starting in October, this
Fiscal Year, this Year, the Beginning Of Fiscal Year Fy 1999. The States
Not Involved in Abc, Everybody but Montana and the National Centers Will
Initiate the Abc Effort. This Is Initiate. It Isn\'t Flip a Switch and
Be There. We\'re Going to Initiate the Effort. And That Will Start in
October with Orientation Sessions and Follow‑up to the Training That\'s
Been Held Here in Phoenix. Goal Is That by January of \'99, All of the
States Will Have Finished Their Activity Analysis, Using the Work
That\'s Been Pioneered by the Pilots and the Templates and Adjusting
Those to Their Own Situation. And They\'ll Have That Identified and
Completed by January of Next Year. Then Within a Couple of Months by
March, Do the Cost Gathering And Cost Spreading for Those Activities.
And Then by May, Identify and Document Their Outputs, Results, That
Relate to Those Various Work Processes and Have a Cost and Efforts All
Start to Relate. So That by July, Each State Will Have an Activity Cost
Management Model That Includes the Data and Shows These Relationships
Between Their Costs, Their Work Processes and Their Results So That They
Can See Where the Effort Is Going, Who\'s Using it and What Is it
Producing. And Finally, by next August, We Hope to Have this Information
Available So That on a Bureauwide Basis, it Can Be Used to Help Do the
Fy 2000 Preliminary Work Plan. The Goal Is to Put the Dollars We Have
into Those Areas That Give Us the Best Return and Help Us Achieve Our
Mission Goals. That Is Where We\'re Trying to Get. With Using Our
Budget. Are You Going to Be Doing this Alone? No. There Are Some
Activities That Are under Way to Help You. We Have Some National Level
Activities to Provide Implementation Assistance to the Field. These Are
People from Washington, from the National Business Center and Contractor
Folks Who Are Familiar with the Technique, They\'re Here this Week in
Phoenix with the Trainees Helping to Train the People Who Are the Core
Team from Your State and They\'re Going to Be with Us to Help Us
Implement this Through The Fiscal Year. We\'re Going to Put Some of the
Abc Data into Our Management Information System and We\'re Going to
Begin Linking Our Abc Information to Budget Processes. So, These
Activities Will Be Going on During the Coming Fiscal Year and They Will
Be There to Help You Accomplish What it Is We\'re Going to Be Doing. In
Summary, What\'s next\... Trying to Achieve a Full Cost Information
Environment for Management Use in Fy 2000. That\'s the Goal of Where
We\'re Trying to Head. The Specific Steps of What\'s next Include
Training, Going on Now And it Will Continue Throughout the next Year. It
Includes Taking the Key Folks Who Are Here as Part of Your State Core
Team and Augmenting Them with Additional Folks Who Will Help Implement
this Process Throughout Each State Organization. It Talks about
Initiating the Abc Analysis in Fiscal Year \'99 at The Beginning and
Completing it by the End of the Year. It Is Not Just Something That Will
Happen on One Day or One Month. But the Ultimate Goal Is That We Want to
Use the Information for Decisions Because That\'s Where the Value of
this Really Pays Off. Our Target Basically Is to Have a Full Cost
Management Environment in BLM as a Way of Doing Business. As a Way of Us
Being Able to Assure to the Taxpayers and the American Public That We,
as an Agency, Are Effective and Are Efficient in Delivering to Them the
Services They Expect from Us. So, That, in Very Quick Time, Is a Big
Overview of the Abc Approach and Why We Need to Do it and What\'s
Involved with It.

Brown: Thanks, Roger. It Sounds like We\'re in Stole for Some Dramatic
Changes in the Weeks and Months Ahead. In at this Point We\'re Going to
Take a 10 Minute Break. When We Come Back, We\'ll Be Joined by Montana
Associate State Director Fran Cherry. He\'ll Share the Results of the
Montana Abc Pilot Program. Hang in There. There\'s a Lot More Coming up
after the Break. We\'ll See You in a Few Minutes!

Brown: Welcome Back to Our Program on Cost Management in the BLM. I
Would like to Welcome to the Program Fran Cherry, Montana Associate
State Director. Fran, We\'re Look Forward to Your Presentation on the
Montana Abc Pilot Program.

Cherry: Thanks, Dave. We\'re Anxious to Present it to You. Glad to Be
Here.

Brown: I Would like to Mention Upcoming Telecasts Here on the BLM Is the
Light Network. Next Thursday, September 3, an Irm and Almrs Forum Gives
You a Look at BLM\'s New E‑mail System, Lotus Notes and How this State
Of the Art E‑mail Package Will Enhance the Way We Communicate With Each
Other and the Rest of the World. On September 16 and 17, a Two‑day
Interagency Satellite Course On Environmental Assessment Level Analysis
Will Provide with You A Working Knowledge of the Ea Process That
Implements the Full Mandate of Nepa. On September 29th, an Overview of
BLM\'s New Management Information System or Mis. Will Be Presented for
Managers and Employees. This System, Which Will Be Implemented in Fy‑9,
Will Be the Bure Roar\'s Primary Source of Financial, Performance and
Customer Satisfaction Information. With All That Said, Let\'s Hear about
the Montana Abc Pilot. So, Fran, I\'ll Turn it over to You.

Cherry: Thanks a Lot, Dave. I Think I Would like to Start Things off
with One of My Favorite Quotes. Steven Wright Once Said, I Have a
Microwave Fireplace, You Can Lay down in Front of the Fire All Night in
Eight Minutes. It Seems like Our Jobs Are Also Being Compressed Even
Though We Don\'t Have a Microwave. Living in a Time of Ever Increasing
Change, We Have Tough Problems to Face in the Bureau. Going along with
What Nina Said, 80% of the Technical Innovations Have Occurred since
1900. Coupled with That Our Field Offices Are Constantly Being Asked To
Do More. The Question Though Is How Do We Work Smarter with Our
Decreasing Capability over Time? These Are Some of the Reasons That
Montana Volunteered to Work On this Effort. The Work on the Abc Pilot
Has Produced Lots of Information for Us to Date. Usable, Good
Information. The Team Started out by Developing Standard Activities,
Drivers And Dictionaries. They Then Used the Information to Prepare
Gathering Worksheets. Don\'t Worry about What the Terms Mean, You\'ll
Learn to Love Them Later On. However, Even Though We\'re Not Through the
Process Yet in Montana, it Has Already Provided Us a Whole New Way to
Look at How We Do Business. What I Want to Make Sure That Everyone Is
Well Aware of Though Is It\'s Not Going Back to Detailed Cost Accounting
When We Used To Spend Hours Filling out Our Time Sheets. It Is More the
Effort That Roger Explained to You Earlier. We Had to Decide Very First
off on the Process of What Kind of Methodology We\'re Going to Use. We
Had the Choice Between an Organizational Approach or a Process Approach.
We Chose in Montana to Use the Organizational Approach Because We Felt
it Allowed the Employees to Use Familiar Data and We Could Base it on
the Current Worksite and the Jobs That They Do. We Also Felt it Allowed
for Broader Experience by More Employees And I Think Most Important for
Us, More Easily Transferable to Other Organizational Units. El Forms
Were an Interesting Experience for Us. When We Started out the Process,
We Used the Classic Abc Forms That Came from Research and Industry. They
Had Been Slightly Modified to Put the BLM Logo on Them and Some of the
Other Things We Thought We Might Need. About a Month into the Process,
We Realized We Needed to Greatly Change the Forms to Reflect BLM\'s
Needs and Terminology So They\'re Kind of Custom Built by this Time to
Reflect What BLM Wants to Do. Third Issue, as We\'re Describing That
Effort Was the Volume of Input. We Had Large Volumes of High Quality
Data Come In. However, That Data Lacked Consistency. A Quick
Illustration of What I Mean by That. We Have 12 Resource Areas in
Montana. The Activities That Were Identified from Each of Those Resource
Areas Varied in Numbers from 6 Activities to 25. Around That, as We
Analyzed That, Indicated Whether an Office Was Grossly Term as a Lumper
or a Splitter. We Then Felt after We Had about 200 Activities That We
Needed to Pull a Team Together. And That Team Reduced the 200 Activities
into 52 Standard Activities with Some 260 Associated Tasks. That Sounds
like a Lot Work and it Was. But What We Found out as We Looked at Those
Is People Were Describing Inspections, Oil and Gas Inspections and
Activity and Mine Inspection and Activity. However, They\'re Both
Inspections So That\'s the Kind of Standard Descriptions That We\'re
Going for. We\'ve Already Recognized Some Organizational Benefits to the
Montana Dakota Organization from this. First Is the Knowledge Transfer.
To Have a Common Understanding of What We\'re Talking about Before the
Board So We\'re All Using the Same Terminology. The Knowledge of the
Origin of the Data and the Ability to Apply To Decision Making Is
Tremendously Been Increased this Early in The Process. Quick Example of
That Is Even as We\'re Pulling the Initial Sheets Together Before Any
Analysis Had Been Done, One of Our Field Managers Look Looked at the Fte
Allocations and One of the Processes and Decided That Was Really a Low
Priority That He Didn\'t Want to Spend That Much Time on it and Has
Already Made Changes to Reflect a Higher Priority Workload. Saved Him
Money Upfront. So Far Our Employee Response and Cooperation Has Been
Excel Ent. Some Concerns but the Folks Are Starting to See the Benefit
of The Process. Some Lessons Learned. Role of Management Is Critical in
this Effort. It Needs to Lead and Be Heavily Involved in the Process.
Literature Shows Us about 1/2 of the Abc Efforts Fail. Most of Those
Failures Are Attributed to the Lack of Management Commitment and
Involvement. We Found That We Need Management to Positively State the
Objectives and Come Through with Positive Reinforcement and Hands on
Participation. At First, There Was a Lot of Skepticism That Abc Could Be
Applied to BLM Work as We Know It. But We Believe That We\'ve Well
Proven That Abc Can Work for BLM. We Think That It\'s Already Very
Applicable and Easily Applied to Regularized Functions Such as Leases
and Permits and Other Authorizations. These Are a Direct Takeoff of What
Private Industry Is Doing Already. Some Soft Functions, That\'s a Term
We\'ve Invented in Montana Are Somewhat More Difficult. These Need to Be
Described as Well as Possible with Heavy Management Involvement and a
Quick Example of Something like That Would Be Our Wildlife Biologist and
Our Managers Working With Other Agencies on Endangered Species
Determinations. A Lot of Coordination, a Lot of Work Not Quite So
Readily Identified. About 2/3 of the Way Through this Process, as I
Stated Earlier, We Realized We Could Start Applying a Lot the Findings
That We\'ve Come up with to Date. And What It\'s Really about Is
Improving the Way We Do Work. Another Thought Was That of Overhead
Costs. It Was How Do We Attribute Overhead Costs. We Found They Could Be
Spread and They\'re Easy to Account for. Our Field Office Had Been Doing
That Before We Went into the Abc Process. One of the Things We\'ve
Really Found out Is That Abc and I Think That\'s What this Program
Starts to Do Today, Needs to Be Shared With Our Employees and it Needs
to Be Marketed to Our Own Employees. Our Employees Need to Know That
It\'s Not Just Them Giving Figures to Management and Moving Things up
the Chain of Command. Our Employees Need to Be Involved in All of the
Changes and Understand Why and What\'s Being Done. One of the Mistakes
That We Made and What We\'ve Learned from Is That the Entire Management
Organization of a State or Center or Office Needs to Be Involved from
the Start and Not Just Pick up Pieces Here and There and Bring People on
Board as They\'re Ready But to Get Everyone on Board at the Same Time
Would Have Helped Us. We Hope Other States Learn from That. Some of the
Pitfalls We\'ve Experienced in Montana. First, Way Too Much Detail.
Folks Tend to ‑‑ Once They Get into this Process and Understand It, Want
to Describe Their Jobs in Infinite and Exquisite Detail To Us. One Thing
That We Found and a Check We Now Use, Is this the Level of Reporting We
Want to See in a Year or a Year and a Half Down the Road. We Get Back to
More Common Definitions at That Point. We Have Had Several Employees
That Start to Feel Threatened by This Process Simply from the Standpoint
as They Describe the Way They Do Work and Then Someone Else Does it
Differently and May Be Able to Do it in less Time. Will They Suffer Job
Loss or Certain Functions Being Taken Away From Them. We\'ve Tried to
Make it Sure That\'s Not the Point of this. Our Point Is to Do Cost
Analysis to Make More Money Available to The Field Level. We\'ve Also
Found it Important to Watch Time Lines. We Were Going Through the Throws
of Inventing this as We Were Going on So the Time Lines Expanded on Us a
Little Bit That We Didn\'t Want it to Do. But it Does Take Some Time and
People Need to Be Watching to Make Sure That Everyone Comes in on Time
and on Target with What They Needed. I Stated Earlier That the Forms
Required Some Significant Modification to Fit the BLM Needs. One Problem
That We Haven\'t Solved Yet and We\'re Looking to Our Contractor in the
Washington Office Is That of Tracking Input. As We Got Through the
Process, Started Out, as I Said with 200 Activities, Additional
Information We Found and Now, as We Get To the Cost and Analysis, We\'ve
Generated over 1200 Forms. We Really Do Need a Better Automated System.
We Need to Retrieve That Stuff on a Regular Basis and on an Easy Basis.
I Think the Big Question Most of the Field Managers Are Asking Is How
Much Time Is Required from Employees. That Was Asked from Me from Day
One. We\'ve Got a Lot to Do. You\'re Adding Something Else to Our
Workload. How Do You Expect Us to Do this When We Have Real Work to Do.
What We Found Though Is Initially Quite Heavy and but That Drops Off
Quickly Once after People Learn the Process and Learn How to Work with
the System. I Think It\'s a Real Steep Learning Curve but it Goes Very
Quickly. We Found That You Need a Full‑time Coordinator. Someone That
Does Nothing but Watch this Process and Be Totally Involved in It. We
Felt the Need to Add an Implementation Team So Everyone\'s Working on
the Same Page So That the Messages Are Being Sent in The Same Time and
Same Direction Across the Field Organization. Everyone\'s Wondering
about the Costs. So Far, Montana\'s Total Time in this Effort Is about
2.54 Fte. When You Think about That, That\'s 25 Work Months. That\'s Not
Too Extensive. With Our Associated Miscellaneous Costs, We Have about
\$134,000 Invested in this Process So Far. And We Set up a Special Cost
Code to Make Sure We Could Get Accurate Cost Data. We Think That Number
Is Considerably High to What it Should Be For the Rest of the Folks
after this Pilot Has Been Done. As They Can Use Those Prepared Efforts.
They Don\'t Have to Reinvent Anything. What I Would Hope Other States
Would Do Is Look at What Montana Has Done, Adapt That to Their Own
Needs. We\'re Not Saying Montana Has the Right Answer but You Don\'t
Have To Reinvent the Wheel on this One and Can Vary the Forms We\'ve
Completed, the Activities and Make Sure They Fit Your Needs Without
Having to Reinvent Everything. Some of the Expected Benefits We Can See
for Montana and the Bureau Is Improved Cost Effective Mission
Performance. We Can See Already That We\'re Spending Money Where We
Shouldn\'t In Certain Areas and That We Think We Can Get More Mission
Critical Quickly. We Think it Strengthened the Ties Already Between the
Mission, Our Programs Action Projects and Will Make Our Budget Requests
Much Stronger. And We Think We\'ll Have Maximum Program Benefits Within
Our Constrained Budgets. It Is a Great Tool for Managers to Start
Working Smarter. We\'ve Seen Field Managers Saying I Saw That You Did it
this Way In Your Form and I\'m Doing this Way. What Are You Doing to
Save Some Money. Our Folks Are Starting to Get Together. A Lot of
Informal Work Coming out of this Which We Think Is Helpful. The Other
Thing I Think Helps for the Bureau Is the Consistency And Compliance
with Sound Business Practices. I Think the Employees in Montana Deserve
a Great Deal of Thanks Right Now. They Took this Job on Without Really
Knowing What it Was. Devoted a Lot of Time and Effort to It. A Lot of
Frustration but I Think the Payoffs Are Now Starting to Come to Us. I\'m
Just Tickled to Death Our Folks Were Able to Do this and Do It Well. And
We\'ve Been this Much Involved in It.

Brown: Thanks, Fran. I Would like to Mention to Our Viewers That in a
Few Minutes, We\'ll Be Opening up the Phone Lines to Hear from You. So,
If You Have a Question or Comment or If We Possibly Stirred Something up
You Would like to Reflect On, Please Give Us a Call Or Send Us a Fax. We
Would like to Hear from You. We\'ll Get to as Many of the Questions We
Have in the Time Remaining. Now, Fran, We Would like to Go Back for More
Information.

Cherry: I Think the Big Question We Have to Face Is Will it Make Things
Better? I\'ll Use Another Saying Right Here. You Get Something out of
Something. Depending on What You Put into It. This Is Really True for
Abc. There\'s No Magic Bullets or Answers Here. There\'s No Clear Light
and a Vision out of this. It Is Simply the Work That You Put into It,
You\'re Able to See It at the Other End. It Requires Management
Commitment and Involvement. We Critically Need All Employees to
Participate in the Effort to Make Sure That We Truly Capture the Costs.
What Are the Payoffs for Montana Right Now? We\'re Just Getting into the
Analysis of the Data. Just Starting That Phase. We\'re Already Seeing
Quick Results. Let Me Give You Three Examples of Areas We Can Already
See Where We Want to Do More Exploration. First, Anecdotally Around the
Bureau We Knew That Nepa Analysis And Nepa Work Was a Big Cost Area for
Us and Something We Felt We Spent a Lot of Time In. We\'ve Nailed That
down and That\'s Our Biggest Single Cost Item We Have in the Field
Organization Is Nepa Analysis and Nepa Work. This Leads Us to a Lot of
Different Directions and I Think One Thing That the Entire Bureau Needs
to Look at Is How Do We Become More Efficient than the Nepa Process
since That Takes So Much of Our Efforts at the Field Level. Another One,
this Is More Informal than a Formal Sense, Is the Role of Adjudication
in the State Office. As We\'ve Been Undergoing ‑‑ Getting More Resources
to the Field And Some of Our Budget Woes, Some Questions Have Been Asked
About Our Adjudication Branches in the State Office. What Role Do They
Play. Since No One Sees Those Folks, They\'re Doing Work on Maps and
Notating the Records. We Found Quickly as We Were Going Through the
Activity Processes What a Critical Role Those People Play and How Many
Things Go Back and Forth to Those Folks to Make Sure That It\'s Done
Right. It\'s Really Validated the Role of Our Adjudication Teams. Think
the Other Team We\'re Already Seeing Is the Reduction to Standard
Activities. That\'s Going to Help Us, I Think as We Go down the Line in
the Future Because, as I Said Earlier Using My Example of Oil and Gas
Inspections Versus Coal Inspections, Do We Need to Invent Two Completely
Different Processes to Do Inspections or Can We Have a Common Effort but
the Results Are Somewhat Different Because We\'re Dealing with Different
Commodities. Some of the Future Views I See Goes by My Example of
Inspections Again. How Many ‑‑ What Are the Numbers of Inspections per
Individual That We Have. Not Just in Terms of More Inspections for Our
Folks but What\'s The Optimum Level of Efficiency. What Is the Optimum
Number of Inspections Our Folks Can Do While Maintaining the Health of
the Land. Hopefully We Should Reach Some Kind of Parody to Make Sure
We\'re Doing That in the Most Efficient Way. Another Look at the Future,
That I Think Comes Loud and Strong Out of this Is in Authorization
Process. What Are the Numbers of Steps Involved in Authorizations. Why
Are Some Offices Doing it Different than Some Other Offices R Some More
Efficient than Others. Are There Ways We Can Streamline or Do it by
Remote Application As We Get into Just the Authorizations. I Guess in
Closing in Kind of a Summary of this Whole Thing, I Want to Talk Just a
Second about Change. Because I Think That\'s Important as We Deal with
this Effort. And Our People Respond to Stress in this Agency by Working
Harder. We\'ve Seen That Time and Time Again. With He Give Them Another
Task to Do and They Work Harder and Harder. Unfortunately All of Us like
to Stick to Our Old Habits. We\'re Betting the Future on More of the
Same and How Can We Be More Efficient in Look at this or That. We Always
Tend to Do it the Same. We Always Want to Do it Right. We Want to Be
More Efficient. Some of the Solutions We\'ve Used in the past Don\'t Fit
the Problems of the Future. Let Me Illustrate That Point Because I Think
It\'s Important. As We Can See by the Year 2000 Computer Problems, a Lot
of Today\'s Issues Are Actually Caused by Yesterday\'s Solutions. We
Thought We Had a Problem When Data Was Critical on Those Computers to
Only Put That to Those Two Digits In. Now We Have a Problem That\'s
Consuming a Lot of Our Time. We Can\'t Handle Change Very Well If We
Don\'t Change Ourselves. How Much Faster We Do Things Can ‑‑ Can We Do
Things If We Keep Doing Them the Same Old Way. Trying Harder While Using
the Same Old Tools, Techniques and Thinking Patterns Creates Frustration
and Depression. We Found Already That the Abc Process Allow Lows Us to
Take a Fresh Look, Ways to Simplify, Ways to Search for Different
Solutions. A Lot Easier Ways to Do Business. We\'ve Already Found Ways
to Look for Short Cuts and Find Short Cuts. Ways to Save Time, Money and
Effort in the Processes. We Think this Can Be Done Without Sacrificing
High Standards. We\'ve Found We Can Eliminate Unnecessary Steps. We Need
to Simply Ask Ourselves Why Are We Doing That? We Can Find Several
Better Approaches. We Can Innovate More than We Have. We Simply Need to
Bust out of the Old Comfortable Routines. As Stated by Everyone on the
Panel, the Abc Process Allows Us to The Tools to Begin the Process and
Account for the Costs. It Doesn\'t Do the Work of Thinking and it
Doesn\'t Make Us Smarter Intuitively and it Makes Us Have the Tools That
We Need To Do That. We Still Have To, as Managers, Take the next Step
and Make Something Happen with the Data That We\'re Generating. We in
Montana and the Dakotas Are Excited about the next Steps In the Process
and Look Forward to Going on with this Process. Thanks, Dave.

Brown: Thanks, Fran for Sharing Some Very Real World Experiences with
Abc. Before We Take Faxes and Calls, I Would like to Ask You, Fran,
Where Does Montana Go from Here with Abc?

Cherry: Interesting Question. One That Our State Management Team Is
Wrestling with Right Now As We\'re Going on with the next Fiscal Year.
We\'re Still Finalizing the Data Collection Phase. We\'re about 3/4 of
the Way Through That. Probably Further along than That but We\'re Now
Entering the Management Phase, the Analysis Phase. Last Week in Our
State Management Team Meeting, We\'ve Determined We\'re Going to Pull
Together a Team of Managers and Employees to Start Taking a Look at
Crosscutting Issues, Look at How Different Offices Are Doing it
Different Ways. Start Analysis. I Think That\'s the next Logical Phase
of the Process.

Hatfield: I Think It\'s Important We Talk about this in Terms Of Abc
Management. We\'re Not Just about Just Gathering Data. We\'re Trying to
Put Together Data That We Can Use.

Cherry: I Couldn\'t Agree More. It If One Looks at the Information out
There, You See Abc but There\'s a Big Abm. Management Is the Big Issue.

Brown: We Have Faxes That Have Already Come to Us. First One We\'ll Give
to Nina Hatfield. Comes from Eastern States Which Is Appropriate. Is Abc
for State Application Only? How Will the Washington D.c. Operations
Apply Abc to Analyze Their Costs?

Hatfield: Well, I Think That\'s a Good Question. While the Primary
Emphasis Is Obviously Going to Be with the States Because That\'s Where
the Operational Work Is Done and That\'s Where I Think We Can Really
Garner Huge Benefits by Trying to Simplify the Way We Do Work, Clearly
the Washington Office Is Going to Be Involved Because Those Support
Costs from The Washington Office and State Office Have to Be Accosted
into The Work Process as Montana\'s Been Trying to Do and Our Ultimate
Result Here Will Be Information about the Entire BLM Budget Just Not the
State\'s Budget but the Center\'s Budgets and Headquarter\'s Budget So
the Short Answer Is Yes, We\'ll Be Doing It in Washington, Too.

Cherry: the Oil and Gas Pilot Was Done and the Wild Horse and Burro Done
Also Had a Washington Component of Those.

Brown: We Have a Question from Nevada. We\'ll Direct this to Roger. The
Process Focuses on Cost of Activity However to Make Allocation
Decisions, You Also Need to Know the Value of the Activity. Where Will
That Value Information Come from?

Hildebeidel: That\'s a Very Good Question. The Value Information, of
Course Comes in Looking at the Process Itself and What Does the Process
Produce. The Result Has to Have Some Value, Somebody Needs to Want It,
Customers or ‑‑ It\'s an Important Piece into Another Part of the
Process. So the Value Is What Does this Process Contribute Either to a
Customer Demand or to Something Else in Our Work That Leads Us To
Achieve a Result That We Desire. And That\'s Where You Look at It. You
Look at it in Terms of Describing Outputs and the Value Is How Much Cost
Goes in to Producing That Result. And Some Processes of Course Produce
Value. Some at Higher Costs than Others for the Same Thing. That\'s Part
of What I Think Abc Helps People Look at Is How to Continue to Get Value
out of the Process and Do it at the Most Efficient Cost Level.

Hatfield: Also an Important Part of the Analysis.

Hildebeidel: Right, Part of the Activity Analysis Done to Help You
Determine That. Like Fran Said, it Doesn\'t Do the Thinking for You but
it Gives You the Tool to Help You Make That Determination.

Brown: We Have Several Questions Here Relating to Coding. And Let\'s Let
You, Roger, Take a Crack at a Couple of These. Question Is There\'s a
Lot of Concern about Creative Coding. How about That Be Addressed in Abc
Implementation and Another Fax from Colorado, Similarly Says Will this
Process Require a Total Rewrite of the Cost Code Handbook?

Hildebeidel: Ok. Let Me Answer Colorado\'s Question First. The Process
Does Not Require a Rewrite of the Cost Coding Handbook. The Cost Cutting
Handbook Is Based upon the Activities and Programs That We Have in the
Budget and Helps Us Ascribe Dollars To Those Various Programs like Range
Manage and Riparian, What Have You. We May Do Some Linking of Our Cost
Coding to Abc Processes Later On but First of All, We Have to Do the
Analysis and We Have to Compare the Processes and See That We Can Come
to Agreement on What Some of Those Standard Processes or Common
Processes Are Across the Bureau So the Answer Is the Cost Cutting
Handbook Isn\'t Going to Change Significantly at All in the next Couple
of Years. Nevada\'s Question about Creative Coding Depends on How
Creative One Wants to Get, I Guess. But I Think in a General Sense, the
Bureau Is Just Fooling Itself If it Doesn\'t Report in its Systems the
Actual Cost of What\'s Going on or Where the Actual Costs Are Occurring.
I Mean, We\'re Just Fooling Ourselves and We\'re Not Taking the Best
Approach to Managing Those Costs. We\'re Deceiving Ourselves in That
Regard. Abc, as a Technique, Does Not Rely on What Was Reported in the
Financial System by Program. As a Matter of Fact, One of the Things
That\'s Been Discovered in The Montana Effort, for Example, Is That in
Order to Do a Process like Adjudication Which Fran Mentioned Very
Specifically, You Have Costs That Are Coded to 1310 but You Have A Lot
of Other Costs That Are Coded Against General Account like 077 or Some
Other Account That Are Very Significant Contributors To Getting That
Work Done. So Abc Looks at the Process and the Work and the Costs from
All Sources. It Doesn\'t Just Focus in on One Code or Another. But it
Looks at That Independently of How People Have Coded in The Reporting
System.

Hatfield: Roger, Wouldn\'t We Get to That Issue Because We\'re Trying to
Cost out the Entire Amount of Money We Have. So If You Don\'t Cost it to
One Work Process, it Will Be Tossed Somewhere Else.

Hildebeidel: That\'s Right. That\'s True.

Hatfield: this Is the Opportunity for Employees to Make Sure That the
Accounting Goes to the Work That They\'re Doing.

Hildebeidel: That\'s Exactly Right.

Brown: We Have a Call from Owen. Let\'s Go to the Phone Line, Owen, Are
You There?

Caller: Yes, I Am.

Brown: What\'s Your Question?

Caller: We\'re Talking a Lot about the Advantages and Benefits Of Cost
Accounting to the Bureau and to Management. Can You Address How You See
Individual Employees at All Levels Of the Organization Benefitting from
Their Involvement in the Process?

Brown: Nina?

Hatfield: I Would like to Take a Crack at That at Least Initially. I
Think this Is an Important Effort for Us Because it Is a Structured
Effort and it Gives the Opportunity for Virtually Every Employee in BLM
to Have Input into What They\'re Doing Day To Day in Terms of Describing
What Their Work Is Day to Day and Then the Outputs and the Benefits to
Customers as a Result of That Work and What It\'s Costing So it Really
Is a Structured Way In Which the Entire Employee Base Can Have Input
into How We Do Work, What\'s Important in That Work, What Has Value in
That Work And How We Can Improve the Work. It Is Probably the Easiest
Way for Us to Have Employees Directly Involved in the Discussion about
How to Simplify Their Work. It Seems to Me, Too, That It\'s Important to
Employees Because it Helps Us in this Issue of Accountability. Not Only
for Our Own Use but in Terms of Accountability to Our Public in Terms of
How We\'re Using Money. I Think as We Look at it down the Road What\'s
Really Going to Help Us Are the Issues That Fan\'s Addressed and That Is
Really Helping Us to Free up Resources in Terms of How We\'re Doing the
Work Right Now to How We Can Do the Work More Efficiently So That You
May Not Be Doing the Same Thing Today but Tomorrow Hopefully You\'ll Be
Doing Things That Are More Productive for You. Again, Employees Have the
Input Because Employees Have to Supply The Data. They\'re the Ones We Go
to in Terms of Getting the Direct Data About the Activities They\'re
Involved In, the Tasks They\'re Working On, How Long it Takes Them to Do
It, How Much it Costs Them to Do It. I Think Employees Are Very Intently
Involved in this. Fran, Is That Your Experience in Montana?

Cherry: Very Much So. Another Reason Folks Need to Be Involved Is Any
Savings We Can Realize, Should Go Back to the Ground and We Have All
Kinds of Backlog Projects and Things We Want to Do to Serve the Health
of The Land Much Better. We Hope to Get the Money Back on the Ground So
the Folks Have More Capability to Do What\'s Right.

Hatfield: Dave, One of the Things I\'m Excited about Here Is We\'re
Going to Have to Undertake Doing Cost Management to Respond to Some
Specific Statutory Requirements but Most Importantly, it Gives Us the
Opportunity of Not Only Complying With the Statute, but Providing Better
Management for Our Resource and Responding Directly to What Our
Employees Told Us In the Survey That We Need to Simplify the Way We\'re
Doing Work And this Gives Us a Way of Doing That.

Brown: Owen, Was That Responsive to Your Concerns?

Caller: Yeah, Thank You.

Brown: Thanks for Calling. Let\'s Take a Fax Here. And I\'ll Direct this
to You, Fran. How Will the Impact from the Time Invested for Abc and Fy
\'Mesh With the Workload Required of Almrs Implementation. Did Montana
Evaluate the Balance of Both Mandates, That Is Abc And Almrs.

Cherry: Very Excellent Question. I Don\'t Know Whether ‑‑ How Well We
Balance Between the Two but We Got Both of Them Done.

Hatfield: Very Important.

Cherry: Very Important Bottom Line. We\'re on a Cutting Edge in Montana
and Have Team Members Involved in the Almrs Project. It Is an
Interesting Proposition, How Far Do You Start Doing Abc Costing on Almrs
Development Versus Almrs Operation. And Yes, We Did Struggle with That.
That\'s about All the Answer I Can Give You on That.

Brown: Roger. The Question from Colorado\... How Will this Different
Definition of an Activity Tie to the Subactivity Definition We Currently
Use for Tracking Budget Allocations. You\'ve Addressed That Earlier but
You Can Take Another Swipe at It.

Hildebeidel: I Think It\'s a Good Question and it Is an Important One
Because the Terms Are Confusing. And the Traditional Abc Activity
Costing Approach Uses the Word Activity and it Really Uses it to Mean a
Work Process. And You Know, Unfortunately, Similarly in BLM and Our
Budget Process, We Have Budget Activities and Some Activities Which Tend
to Mean Programs. And the Two Certainly Don\'t Overlap, You Know,
Precisely. So, We\'re Going to Have to Kind of in Our Mental Processes,
Be Able to Think about Them as Different Entities When We\'re Doing This
Analysis. As They Showed in the Wild Horse and Burro Program, There Were
Two Activities Within the Budget Program Itself. There Was Managing the
Horse Herds on the Ground Activity and an Adoption Activity. They Fall
Within the Budget Category of the Wild Horse and Burro Program. We\'re
Going to Have to Mentally Deal with That. Unfortunately, We Don\'t Have
the Option of Renaming Either Set Of Processes So We\'re Just Going to
Have to Live with a Little Ambiguity and Try to Keep Them Straight in
Our Minds.

Cherry: Roger, One of the Things I Think Might Be Helpful Is That Abc Is
Not a Budget Exercise. And People Need to Be Constantly Reminded of
That. Everyone Wants to Turn it into That, a Budget Process. That\'s
Only a Small Part of the Abc Effort.

Hildebeidel: Very Good Point, Fran.

Brown: One of the Things, Fran, That You Mentioned in Your Remarks, Was
That Abc Was Viewed as a Threat. Of Course, the New and Different Is
Always a Threat to Us as We Try to Deal with Issues of Change. But What
Can Management Do to Help in That Area and Maybe as Importantly, What
Can Individual Employees Do to Help One Another to Work Through this
Kind of Change? Based upon Your Experience There in Montana?

Cherry: it Certainly Does Have the Implications of Being a Threat to
Folks. Anytime Someone\'s Challenged to Look at Their Work Process and
Find out Someone Somewhere Else Is Doing it for less Money, the
Immediate Conclusion Is That must Be Better Because It\'s Cheaper. I
Don\'t Think Think That\'s the Implication We Want to Leave at All. We
Want to Know Which Produces the Best Results. Think the Customer Survey
and this Coming Together Are Complimentary to Each Other Because the
Employees Are Saying They Want to Have Management Involvement in What
They\'re Doing, Management Understanding and That They Want Their Work
Processes To Be Recognized. I Think These Can Make a Wonderful Tie
Together. I Think We Need to Make Sure the Employees Are Fully Engaged.
The Employees Need to Step up and Ask to Be Engaged.

Brown: Nina?

Hatfield: I Think Fran Makes a Good Point That We\'re Not Always Looking
for Cheaper Here Because Value Is Very Much a Part of the Analysis. One
of the Things We Need to Be Able to Show as We\'re Look Toward Our
Budgets and Getting Appropriate Level of Funding to Do What We Need to
Do in Managing the Public Lands, We Want to Be Able to Establish That\'s
How Much it Costs Us to Produce Something the Public Needs in Terms of
Adequate Management of The Public Lands. It Is Not Always Cheapest but
We Need to Know the Costs.

Brown: Roger, Do You Have Thoughts on Your Observations of How People
Have Been Reacting to Our Research and Our Implementation up to this
Point?

Hildebeidel: I Think Most People, as with Anything New, Approach it with
a Kind of Skepticism and Sense of Hesitancy. It Is Something New. It Is
Different. And They\'re Saying How Is this Going to Help Us? And It\'s
Going to Require Some Work and What Are We Going to Get Out of It? I
Think That\'s Very Natural Kind of Response. But as We Go Back and Look
and Reflect on the Fact That We Are Accountable for Not Just How We
Manage the Money but What We Actually Get Done on the Ground, or What We
Actually Get Done in Response to What Our Customers Are Asking Us, this
Is a Tool That Helps Us Get There. And a Lot of People Are Saying We
Don\'t Have Enough Money to Do The Job. And Yet We Have to Invest Some
Time and Some Effort in Figuring Out How We Can Get the Best Uses out of
the Dollars We Do Have Available and Put More Towards Getting the Job
Done and Take Those Dollars Going into Things That Don\'t Contribute
Significantly to the Work Output and Use Those Dollars for the Work
Output. This Is a Process With, like I Said, a Fairly Limited Amount of
Investment That Does Do That. Fran Indicated in Montana, They Spent
about 2.5 Fte Which Is Not A Huge Amount of Investment to Get Results.
City of Indianapolis Has Been at this for Five or Six Years and Have
Saved Hundreds of Millions of Dollars in Their Budgets from The Way in
Which They\'ve Changed Their Work Processes in Meeting Their Service
Requirements. So, the Potential Is Certainly There for Relatively Small
Investment to Get a Big Return in Doing Our Job Better. And I Think
That\'s a Key Thing That We Need to Keep in Mind.

Brown: Thanks. Let Me Toss You this One, Nina. The Panel Has Been
\"Selling Us\" on Abc for an Hour and a Half. What Specifically Will Abc
Look like at the Field Office Level. How Will We Budget Our Work or
Track Our Progress Everyone Differently. What System Does Abc Replace or
Is Abc Additional to Existing Systems?

Hatfield: That\'s Got So Many Parts!

Brown: You Can Slice it up However You Would like.

Hatfield: Well, I Don\'t Think That ‑‑ I Go Back to the Thought That
It\'s Really a Structured Process of Analysis. Because it Helps Us Get
Cost Data That We\'ve Never Had in the Bureau. As a Matter of Fact Most
Places Never Had it in Government. And Allows Us to Actually Cost out
the Work That We\'re Doing. That\'s What\'s So Critical to Being Able to
Be Successful, I Think, in Terms of Improving the Dollars We May Have
Available To Do the Resource Work. At the Field Office Level, it Seems
to Me That It\'s Going to Be Very Structured in Terms of Talking to
Employees about What Is It That You Do, How Long Does it Take You, How
Much Does it Cost To Do That Particular Piece of Your Work. Just like
the Adoption of the Horse. How Much Did it Take Us to Tell the Public
about It. How Much Did We Spend on Rent of an Arena. It Gets down to
Basic Cost Items like That. But I Do Believe That in the Long Run, It\'s
Probably a Very Short‑term Investment at the Field Level. That, It\'s
Getting That Information and Then We\'ll Move on into The Analysis.
Ultimately, Once We\'ve Gotten the Baseline Information, Then We\'ll
Have to Go Back Periodically and Check to Make Sure the Data Is Still
Accurate but I Don\'t See That It\'s Really Going to Be a Significant
Investment for Us over the Long Tomorrow. I Think Roger\'s Right.
Montana\'s Proved to Us That Two and a Half People over the Course of a
Year and \$100,000, We\'ve Got a Tremendous Amount of Data We Can Use in
Terms of Resources. On the Field Level, I Think it Will Providing the
Data, Be a Short Term Kind of Assignment There. But the Really Important
Thing Is Using the Data and Going Back And Seeing What it Is That You
Can Do Differently than What You\'re Doing Today and Make the Process
Work Better and less Expensively.

Cherry: Nina, Let Me Take That a Little Bit Different Direction.

Hatfield: Good.

Cherry: I\'m Looking at What Are Going to Be the Results. The Analysis
Is Great. What I See Across the Bureau Is New Process Will Be Coming
down. A New Way to Do a Nepa Analysis. A New Way to Do Monitoring of a
Range Project. These Will Be Generated Within a State or as a Result of
Lessons Learned in Other Parts of the Bureau. I Hope We\'re Going to See
a Simplification of Processes.

Hatfield: I Think this Is the Easiest Way for Us to Get to The
Simplification at the Work Force. It Is One in Which Everyone in the
Bureau Will Be Involved in Discussing the Work Across the Bureau. And I
Think We\'ve Seen with the Wild Horse and Burro Pilots, the Oil and Gas
Pilot and in Colorado, it Was Costing and Taking a Number of Steps to
Get to an Oil and Gas Lease N Wyoming it Was Taking a Number of Other
Steps and Then We Can Begin to Talk Across the Bureau about How to
Optimize the Way That We Use Our Resources to Do Oil and Gas Leasing. So
We\'re Really Talking about the Core Work That We Do in a Bureau.

Brown: Roger, Let Me Get You in Here with a Practical Specific Question.
It Says How Do You Envision Actually Tracking Abc? Will Employees Have
to Fill out Two Forms Every Two Weeks? Papers, for Example, That Is, Abc
Form and a Time Sheet.

Hildebeidel: My Answer Is No. Is That an Impractical Generality?

Cherry: It\'s Not a Budget Exercise. It Is Improving the Way We Do
Business.

Brown: Question Here from California. Are We Going to Change the Way We
Ask for Funding to Get Funds In the Programs Where We Do Work. Roger, Do
You Want to Key That One Up?

Hildebeidel: Well, That\'s an Interesting Question. I\'m Not Quite Sure
That There Are Other Programs We Don\'t Do Work In. Let Me Just Say That
the Conditions Are Impacting the Way in Which We\'re Asking for Dollars.
The Fact That the Government Performance and Results Act Was Passed with
a Bipartisan Majority and People Are Teeing up for The Government to Say
What Are the Results of What You\'re Doing Rather than Just What Is the
Amount of Money You Spent Is Changing the Way We\'re Asking for Dollars.
It Is Changing the Way Our Budgets Are Being Looked at Both by The
Public and by Omb and the Congress. And So the Process Itself, the Way
the Government Is Going, Is Changing the Direction of How We Ask for
Budgets. So, the Answer Is the Better We Can Describe and Know What it
Costs Us to Do Something and What That Result Is, the Better Able We Are
to Defend Our Request for That Dollar and for That Budget. If We Can\'t,
If We\'re Stumbling Around and Saying Gee, We Don\'t Know. We Have to Do
These Many. It Doesn\'t Put Us in a Good Position of Competing Against
Other Agencies and Showing That Our Results Are Cost Effective. That\'s
the Way You Get Dollars. You Show You\'re Cost Effective in Using Your
Budget. This Puts Us in a Much Better Position to Be Able to Address
Those and Hopefully Better Position to Defend Our Budget Requests Now
and in the Future. I Think It\'s Got Tremendous Potential to Help the
Bureau in That Regard.

Brown: from the Washington Office, We Have a Question of How Does the
Abc Tool Relate to Accountability and Evaluations.

Hatfield: Well, I Do Think It\'s a Part of Accountability in Terms,
Again, of Being Able to Analyze Where We Are Spending Our Dollars and
How We Can Maximize the Benefit from Spending Those Dollars. You Know,
as We Go into this Fiscal Year, We Will Have Gone Through a Process of
Describing to Congress What Our Goals Are, We Have Told Congress That We
Are Expecting with the Dollars That They Give Us, That We Can Accomplish
a Certain Amount of Work and We\'re Going to Have to Report on How We
Did That. So We\'re Now Using Tools like the Abc and Some Other
Information Systems That We\'ll Be Talking about Later to Have the Data
Available So That When it Comes Time to Report at the End of the Fiscal
Year, We Can Demonstrate to the Public How Much We Accomplished and What
it Costs Us to Do It. Really, What We\'re Getting to with the
Activity‑based Costing Is Basically Unit Costs. That Is Costs Us this
Much to Do an Oil and Gas Lease. And So to Our Appropriations Committee,
We Can Say to Them, You Know, If You Want Us to Do this Amount of
Leasing, Here Is How Much Budgetary Resources We Need Order to
Accomplish That Work. So There Certainly Is a Direct Tie into That and
It\'s Also Going To Help Us in Terms of Look at Our Performance and
Making Adjustments as Fran Said and We\'ve Seen in Montana That You Can
See Where One Field Office Has a Lot More Steps Involved That May or May
Not Be Necessary and So We Can Begin to Make Those Adjustments and Shift
Resources into Other Work. That\'s Critical. That\'s Really the Only Way
We\'re Going to Really, I Think, Obtain More Resources Is Being Able to
Find Areas in Which We\'re Doing Work Now That We Don\'t Really Need to
Do and Shift the Resources into Other Work.

Hildebeidel: I Think Part of the Question Related to Evaluation. Abc
Also Is a Tool That Can Be Very Useful in Evaluations Because it
Provides a Great Deal More Objective, Empirical Information for the
Evaluation and Makes it less Based on Subjectivity or Perception and
More Based on Actual Data and Information So You Begin to Say Well, We
Promise to Do X and We Delivered X plus or X minus and it Helps Validate
the Fact That We\'re Either Doing the Job the Best or We Have Reasons to
Shore Up. So I Think It\'s Got Some Great Value Also in the Area of
Evaluation and Validating That We\'re Actually Doing What We Say We\'re
Doing Which Again Is an Important Feedback to the Public. If We Say
We\'re Doing Something but We Really Aren\'t, Then We\'re Setting
Ourselves up for Failure in Terms of the Public Eye.

Cherry: the New Evaluation Process That the Bure Roar\'s Working Towards
Reflects Greatly Benchmarking and Best Practices. This Will Fit That
Tool Very Well in Terms of How Well Can We Make Sure They\'re
Benchmarking. We\'re Hoping That this Information That We Get from the
Abc Process Will Be Available and the Teams Can Start Looking at
Information Before They Go to the Field.

Brown: a Question from Idaho. Why Specifically Do We Need to Duplicate
the Process Abc by State? How Many Times Do We Need to Gather the Same
or Similar Data for Analysis.

Hatfield: Very Simply, the ‑‑ Our Legal Requirement Is to Be Able to
Describe the Costs Across Our Entire Budget and So That Means We Have to
Know How Much It\'s Costing Us to Do Process in California Just like We
Need to Know How Much It\'s Costing Us to Do it in Colorado. So the
Simple Answer Is the Law\'s Requiring Us to Look at the Costs Across the
Entire Agency. I Think More Importantly to Us Is the Management Benefit
of Look At Those Costs and as Roger and Fran Have Both Said, Gives Us
The Opportunity to Look for the Best Practices Across the Bureau And Use
Our Resources Because We\'ve Maximized the Way That We\'ve Looked at It.
Again, I Can\'t Emphasize How Important it Is Now That We Have a
Structured Way of Doing That.

Brown: Fran?

Cherry: Let Me Add into That. That Assumes That Montana Is Right and
Doing it the Best Way Right Up‑front. I Don\'t Think Montana Wants to Be
in That Posture Although That\'s Nice to Have.

Hatfield: That\'s What You Told Me, Fran.

Cherry: Many States Have Unique Situations That They Deal With. Even If
They\'re Dealing with the Same Subject. State Laws They Have to Deal
With, Certain Constituencies That They Work with or Processes That Make
Their Process Somewhat Different and of Course Everyone Has Something
Different and Unique. I Don\'t Think Montana\'s Really Spent a Lot of
Time Worrying About Reindeer Permits. I Think It\'s Something That Has
to Be Done out of Alaska.

Brown: Just a Head\'s Up. We\'re Going to Run over a Few Minutes to Try
to Get to as Many Of Your Questions as We Possibly Can. Stay with Us.
From the Nevada State Office. This One Is for Roger. How Do You Cost out
Support/overhead for State Office in Washington Office in Regard to
Activity Output. For Example, Wild Horse Gathers and Mine Plan Reviews.

Hildebeidel: I Guess in the Time Available, We Just Want to Assure You
That Yes, We Can Do It. There Is a Process as Part of the Abc That Looks
at and Directly Tries to Link Those Support Costs That Directly Benefit
or Directly Tie to a Work Process That\'s Occurring at a Different
Level. There Are Other Costs That Obviously Are Just Very General and Do
Not Directly Tie to the Work That\'s Being Done on the Ground. And Those
Costs Are Allocated Against Everything in the Budget Pool According to
an Acceptable Algorithm. Some Acceptable Allocation Method. Either by
Relationship to Labor Hours or Relationship to Total Dollars or
Relationship to Some Other Indicator That One Can Use And Defend as a
Way of Distributing Those Very General Costs. But the Point I Want to
Make Is That in Abc, and in These Other Cost Management Techniques, the
Goal Is to Tie as Many Costs as Possible to Direct Work Activity.
That\'s the Goal. We Want to See All the Costs That Really Defend or
Support That Particular Work Activity and That Particular Output.
That\'s What Full Cost Management Is about. It\'s Tying the Costs to the
Process. The Ones That Are So General You Can\'t Do That Then Get
Allocated on Some Basis.

Hatfield: it Is a Level That Makes Sense in Terms of Management. We\'re
Not Doing Exact Cost Coding Because It\'s Not the Level of Information
We Need to Order to Look at and Analyze to Get Management Benefit out of
the Information.

Hildebeidel: it Is Better to Be Approximately Right than Approximately
Wrong.

Brown: We\'ll Try to Get to Another Question Here. This Is Directed to
Nina. How Do You Envision the Employees at the National Training Center
Taking this Week\'s Abc/abm Training Functioning in this Effort When
Back at Their Offices.

Hatfield: We Are Counting on the Group That\'s Here to Help Us Work with
the Experience That Montana, the Oil and Gas Group and The Wild Horse
and Burro Group Have Had and Take the Lessons Learned out of the
Experiences and Translate Those into Setting Up a Structured Analysis
Within Their Own State. And as Roger Mentioned Before, We Certainly Have
Some Contract Support. We Have Expert Support to Help Them. But Those
Are Going to Be the Folks That We\'re Depending upon to Help Us Go
Throughout the Bureau and Do the Structured Analysis. That\'s Really Our
Point People.

Brown: Roger?

Hildebeidel: Filtering Mechanism Isn\'t Working Well.

Brown: How Will Costs of Activities Without Apparent Outputs Such as
Foia Requests Be Tracked?

Hildebeidel: I Would Assume That the Foia ‑‑ There\'s a Customer There.
There\'s Somebody on the Other End Who Wants That Information. So That
Is ‑‑ Something That Can Be Analyzed Definitively with a Beginning and
End. I Say That That\'s Something That Has an Output That You Can Look
At. There Are Other ‑‑ in Answer to the Question Generally, You Know, My
Comment Would Be That If There\'s a Process That Has No Output, it Ought
to Be Questioned Immediately as to Why We\'re Doing It. Because Then One
Is to Say Why, What Does this Provide. Because There Has to Be Some
Output. Either Handing off to Another Part of the Work Process.

Brown: Nina, Question about Audits since You Opened the Subject up for
Us. Question Is Will BLM in Your Opinion Be Audited on the Full
Implementation of Abc and Will We, the BLM, Perform Internal Reviews to
Ensure Abc, Abm Implementation.

Hatfield: it Will Be a Part of the Overall Audit for Our Financial
Review Beginning next Year. Because it Is a Requirement under the Cfo
Statute and Yes, We\'ll Be Doing Some Checks and We\'ll Be Working with
the States along The Line to Make Sure That the Information That We Get
Covers The Entire Budget and Meets Some Criteria of Validity and Value
To Us.

Brown: Ok. Roger, You Seem to Continue to Be a Favorite. If Abc Is Not a
Budget Process, How Do You Use it for Audit Purposes Related to Cost
Efficiencies and Current Statutory Requirements.

Hildebeidel: That\'s an Interesting Question. Abc Is Not a Budget
Process. I Think Fran Makes That Point Very Well Is That it Is a Tool to
Help Us Get Certain Results from the Budget Process That We Want. But it
Is Not a Budget Process Itself. It Is a Costing Process and as I Said
Earlier, I Think We Need To Keep in Mind a Budget Is a Pool of Dollars
That Is Available To Do Something. The Cost Is What You Do with Those
Dollars. And What You Produce from Them. We\'re All Good at Spending Our
Budgets. You Can Spend it Quickly and Produce Nothing but the Cost Is
That You Understand How Those Budget Dollars Got Used and What They
Resulted in and You Know, What Benefits We Had from Doing That and Where
We Could Do Things Differently. That\'s the Cost Aspect of this Phase.
And it Is Part Having the Abc Process in Place as Part of Our Cost
Management Standard Does Directly Link to Our Audit Opinions Because We
Have to Implement the Standard Just like We Have to Implement the Other
Standards, Deferred Maintenance and Several Other Standards That We\'re
Required to Implement. If We\'re Not Doing That, Then the Auditors Can
Very Well Qualify Our Audit Opinion on the Basis That We Are Not
Reflecting Proper Information and Properly Stating Our Financial
Position to the Public. That Is Where it Comes Together.

Brown: I\'ve Saved the Final Word for Fran. I Have a Question from
Klamath Falls. We\'re Trying to Understand the Process Montana Went
Through Arrive at Work Process and Derive Budget Information. Did You
Establish Project Codes Within Subactivities and Have Employees Inputs
on Time Sheets and Purchase Documents?

Cherry: No, I Don\'t Think We Went to That Level of Detail. Only Cost
Code Was for Direct Work on That Process Itself. Not on the Actual
Accomplishment of Work. What We\'re Trying to Do Again Is Describe the
Work That We\'re Doing. I Think That Needs to Be Emphasized Time and
Time Again. And the Ways in Which We\'re Doing it and the Amount of Time
it Takes to Do the Work. Later On, We Can Start Worrying about How to
Get That into the Budget Process to Make Sure We\'re Most Effective. I
Want to Emphasize It\'s Not a Budget Exercise.

Brown: Well That about Wraps it up for this Overview of Activity‑based
Cost Management. Thanks for Tuning In. We Hope You\'ll Find the
Information We Presented Stimulating and Helpful as You Begin
Implementing Abc in Your Offices next Fiscal Year. I Would like to Thank
Our Panelists, Nina, Roger and Fran for Their Time and Effort in
Preparing this Program. Remember, We\'re All Doing this Together and the
Process of Implementation Begins October 1. It Will Take Some Time, it
Will Take Some Money but Most Importantly, it Will Take Some Effort on
Your Part to Make it a Success. Right Now, We\'re on the Front End of
this Initiative. It\'s a Learning Process as We Discover New Ways of
Working Smarter and Focusing on Performance and Results. If We Succeed,
it Will Help Us Better Compete for Scarce Program Dollars and Accomplish
the Bureau\'s Mission in Light of Skyrocketing Demands and Expectations.
I Would like to Remind All of the BLM Downlink Coordinators to Fax Us
the Total Number of Viewers from Your Office Who Watched Our Program
Today. Please Fax this Information to Ntc Immediately after Our
Telecast. From All of Us Here at the BLM National Training Center,
Thanks For Joining Us and So Long for Now.

Announcer: to Help Your Office Participate in Future Telecasts, See the
BLM Satellite Downlink Guide and Visit the Ntc Home Page on the World
White Web. Ntc\'s Internet Address Is www.ntc.blm.gov. Transcripts of
this Program and Other NTC Broadcasts Are Available on the Home Page.
For More Information on Upcoming Distance Learning Events, as Well as
Traditional Courses, Call the Training Center at 602‑906‑5500 or Visit
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