Where is the value? Understanding cost-drivers in public sector organisations

ARTICLE SUMMARY

SPP took a strategic cost lens to the management activities of a large government agency, and in so doing delivered lasting impact.

It is clear that for most government agencies, business as usual is no longer an option - those making funding decisions expect more output for less.  A sophisticated cost-base review can reveal an organisation’s underlying cost structure in detail, allowing management to make informed decisions on future direction.

In this brief case, we describe how SPP reviewed a government client’s cost base, mapping specific costs against types of service provision and the asset base in order to to understand fundamental cost drivers.

Through further analysis, SPP identified opportunities to improve the cost base, and a new more sustainable funding model was developed.

Once the agency had a clear understanding of its cost base and the benefits of investing in each activity, the client was able to articulate a more compelling case for funding to government.

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