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III. Lessons Learned from the Project

The management team learned a number of lessons during the course of planning, contracting for and conducting ABC/ABM studies over the past year. The project demonstrated that the true costs of agency activities can indeed be estimated and that such studies can identify many savings opportunities. The team also learned many lessons relating to the administration of ABC/ABM studies. The following guidelines are offered to any agency undertaking a similar study in the future.
Set the review scope carefully.
The scope of any such undertaking should be matched to the resources available for the study. The burden inherent in mapping business processes and identifying issues and opportunities will increase with the number of activities studied. Defining the scope too narrowly, however, may limit opportunities to correct problems that occur upstream or downstream of the process under examination.
Seek expert assistance.
The expertise of an outside facilitator often is needed because of the initial complexity of ABC studies, until employees gain the necessary experience in the process. On the other hand, outside facilitators are unlikely to be familiar with the processes to be studied, and they will require time to become familiar with the processes under review.

All participants should be trained in user-friendly ABC/ABM software. This will help ensure that participants use uniform data collection techniques.

A positive dynamic tension can occur among participating agencies and consultants in an ABC/ABM project. Consultants are motivated to report significant potential savings; agencies are motivated to ensure that potential savings are not overstated, and that implementation costs and other issues are considered before recommendations are made. Ideas and plans already under way within agencies inevitably will be raised in ABC workshops, and it is not always possible or even necessary to differentiate between old and new ideas. Recognizing the value of previously generated ideas and carefully weighing the feasibility of potential recommendations will contribute to positive outcomes.

Involve front-line employees.
Make sure the employees to be affected by the review are well-informed as to how the project will develop, their role in the analysis and the intended use of the information. Agency employees performing the function under review must be involved in validating the process maps developed in the workshops. If the process maps contain errors, and the agency does not correct them or catch discrepancies, the resulting recommendations may be inappropriate and undermine the study’s value. Validating process maps also increases the agency’s awareness of the complex nature of its operations and can help to generate more ideas for improvement.

A high employee-to-management ratio in workshops and teams will encourage cooperation from the rank and file. Ideally, all employees who perform any of the reviewed activities should participate in the workshops, to ensure that every step of the activity is documented.

Team members should be provided with immediate feedback after their participation and when possible, preliminary recommendations should be shared with them so they may provide comments and suggest modifications.

Provide adequate leadership.
An objective team leader who supports the ABC/ABM initiative and possesses strong project management skills will help decrease fears associated with the review and keep the project on track.

Training sessions on ABC/ABM held before the study will prevent project delays. If upper managers are unable to attend this training, they may find it difficult to manage staff expectations due to their own lack of understanding of the study’s goals and processes.

Devote adequate resources to the project.
ABC/ABM is resource-intensive, requiring personnel time, careful project management and detailed cost information. Everyone associated with activities under review must be available to provide data as needed.

The ABC/ABM process used in the pilot project was a fast-track approach. Such an approach minimizes the amount of time that employees must spend away from their core work functions. Nevertheless, it does take time to map a process and pinpoint opportunities adequately. It is important to ensure that a sufficient amount of time is allowed for the study.

Pay close attention to implementation costs.
While the ABC consultants presented and discussed workshop findings and potential savings with agency managers at the end of this pilot project, their contract did not require them to work with agency decision-makers on the feasibility and costs of implementing their recommendations. Because this was deemed an important aspect of analysis, the management team asked agencies to respond to the pilot’s recommendations and indicate which would or would not be implemented, and to report the estimated costs of implementation. The team learned the importance of uniform guidelines for such reporting, to ensure that one-time implementation costs and ongoing operating costs are accurately reported and differentiated, so that net first-year and subsequent savings can be estimated.