Cost systems have been shown to have developed considerably in recent years and
activity-based costing (ABC) has been shown to be a contribution to cost management,
particularly in service businesses. The public sector is composed to a very great extent
of service functions, yet considerably less has been reported of the use of ABC to
support cost management in this sector.
In Spain, cost systems are essential for city councils as they are obliged to calculate the
cost of the services subject to ...
Cost systems have been shown to have developed considerably in recent years and
activity-based costing (ABC) has been shown to be a contribution to cost management,
particularly in service businesses. The public sector is composed to a very great extent
of service functions, yet considerably less has been reported of the use of ABC to
support cost management in this sector.
In Spain, cost systems are essential for city councils as they are obliged to calculate the
cost of the services subject to taxation (eg. waste collection, etc). City councils must
have a cost system in place to calculate the cost of services, as they are legally required
not to profit , from these services.
This paper examines the development of systems to support cost management in the
Spanish Public Sector. Through semi-structured interviews with 28 subjects within one
City Council it contains a case study of cost management. The paper contains extracts
from interviews and a number of factors are identified which contribute to the
successful development of the cost management system.
Following the case study a number of other City Councils were identified where activity-based techniques had either failed or stalled. Based on the factors identified in
the single case study a further enquiry is reported. The paper includes a summary using
statistical analysis which draws attention to change management, funding and political
incentives as factors which had an influence on system success or failure.
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