Deputy City Manager
SAS® Activity-Based Management: Helping Quebec City run better
With nearly 500,000 residents, Quebec City is the tenth-largest city in Canada and the second most populated city in Quebec. Its finance department has overall responsibility for the budgets of all municipal operations – including resident services, equipment, payroll and the management of public spaces – and for rationalizing the costs of those operations.
The results we’ve obtained by implementing the activity-based management solution have exceeded our expectations. The solution has quickly proven to be an indispensable daily management tool.
Decentralized management: A structural challenge for Quebec
In the wake of the 2002 municipal mergers, the province of Quebec’s major municipalities faced the challenge of managing many distinct administrative entities. For Quebec City, this means six boroughs and more than 30 administrative units.
“The concept of activity-based management (ABM) might seem a given for a company, but the realities of public administration are quite different,” says FCMA Deputy City Manager Gilles Noël. “Quebec City is comparable to a consortium of 35 businesses: police services, recreation, public works, etc. Each administrative unit in each borough is responsible for its budgets.”
Realizing the importance of adopting an effective financial management tool and giving boroughs comparable performance indicators, Noël’s team decided to develop a pilot project in activity-based costing. “Since we had no expertise in the deployment of a system like this one, we issued a call for tenders, which was won by Raymond Chabot Grant Thornton. Their help was essential at every step of the project, especially implementation,” adds Annie Guay, CMA , Director of Management Accounting for the city.
SAS® Activity-Based Management: A quick and powerful tool that saves money
Since Raymond Chabot Grant Thornton was retained solely as project manager, a software solution – and software expertise – needed to be brought on board. "For logistical reasons, we initially opted for a service that competes with SAS, but we quickly realized that the solution didn't offer the performance we need to handle the complexity and volume of data generated by an organization like ours. Therefore, Raymond Chabot Grant Thornton recommended the ABM solution from SAS, which had been chosen and used successfully by organizations similar to ours," adds Noël.
It took little time for the SAS solution to be implemented successfully in Quebec City: "The ABM software solution is easy to use. It's designed to produce customized activity-based cost data. The solution was implemented quickly and required minimal adaptation to our specificities," emphasizes Yves Courchesne, CGA , the city's Treasurer and Finance Director. "The speed at which ABM operates and its ease of implementation have delivered both operational and budgetary gains."
Since Quebec City launched the pilot project, the adoption of SAS Activity-Based Management has already generated savings equal to the costs of investing in the project.
According to Guay, one of the major benefits of implementing the solution is timely execution. “SAS Activity-Based Management has opened up access to ongoing management information. We no longer have to wait for someone to ask us a question in order to grab data and analyze it on the spot. Thanks to the solution’s automation, we automatically analyze a data package, allowing us to respond quickly and more proactively.”
An essential indicator in achieving budget targets
Concretely, SAS Activity-Based Management lets managers compare costs between boroughs and administrative units, and make management decisions, such as opting for private-sector sourcing where more cost-effective. For example, the solution can tell you that in municipal borough X, the cost of planting a flower is $2.18. If a private-sector supplier is offering a cost of $1.18 per flower, the manager can select that supplier and stay within budget.
For the 2013–2016 budget period, Quebec City faces a major challenge: reducing budgets by 3-4 percent per year in all administrative units. To achieve these savings, the finance department is making each unit’s manager more accountable for his or her financial decisions.
“Thanks to activity-based cost management, each manager has access to a complete costing of their operations, including indirect costs,” notes Courchesne. “And while each manager is responsible for achieving his or her budget objectives, managers will also be rewarded for good management, since savings exceeding budget reduction targets could be reinvested in their respective administrative units.”
Noël proclaims the operation a complete success. "The results we've obtained by implementing the ABM solution have exceeded our expectations. The solution has quickly proven to be an indispensable daily management tool. It not only reduces costs, it also increases performance. ABM lets us identify the sectors we can manage better."
It's worth noting that Quebec City is one of the seven finalists in the 2012 Intelligent Community of the Year competition. According to Noël, activity-based cost management, made possible by acquiring SAS Activity-Based Management, played a part in this achievement. "Quebec City has a lot of momentum. We host several leading technology companies and several cutting-edge research centrers. Process modernization is just a logical step in making us a truly intelligent city."
Know the cost of each activity associated with 35 different budgets across six boroughs.
SAS® Activity-Based Management
Improved decision support, reduced costs and increased performance through proactive management.