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Activity-based: Costing, management and budgeting

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The City of Indianapolis has held the line on taxes and general efficiencies strengthen its competitive position regionally, nationally and in the global marketplace. Unlike other municipalities, Indianapolis has embarked on an aggressive performance management program. Several components of the program, initiated in a short time frame, are being deployed to all employees through a comprehensive training effort. The combination of all facets of this performance management discipline is commonly referred to as the "strategic tools initiative." These innovative tools, described in more detail below, are as follows:

* Activity-Based Costing Management

* Performance Measures

* Activity-Based/ Performance Budgeting

* Performance Reporting Performance-Based

* Compensation

Also combined with these tools is the effective use of citizen surveys to gauge the public's perception about the amount and quality of service delivery. Opportunities for citizen input are offered several times each year. The results are distributed throughout all departments for use in developing new--or revamping ongoing--projects or processes that address the public needs: The city encourages citizen input about individual projects, which support the overall division. An example would be neighborhood meeting at various stages of road improvement project.

Activity-Based Costing (ABC), which is more common to private industry, has recently crossed over into the government sector, at the federal state and local levels; The city historically knew what direct costs were at the organizational level, but not how much it cost to perform a particular activity, Full cost estimates were determined by the typical hod of including indirect or overhead expenses by using a multiplier on direct labor costs. This method of guessestimating the cost of city programs and services made it difficult to believe in them, The city realized the following needs:

* Accurate information about the cost to provide city services

* Measuring productivity

* Measuring the...