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Activity Based Costing (ABC)

The Other Side of the Earned Value Coin?

 

SECOND EDITION

Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS

Jakarta, Indonesia

 



Forget CMMI®, http://www.sei.cmu.edu/cmmi/ OPM3® www.pmi.org and other “Capability Maturity Models”. Want to save yourself and your organization time and money? Then apply this very simple test to see how mature your organization is in using project management “Best Practices”. Do you use Earned Value Management and does your accounting system support Activity Based Costing and are you using it?

If you aren’t using Earned Value Management and its alter ego, Activity Based Costing, then you are probably not getting the full benefits project management methodologies offer as effectively as you can or should. Worst case, failure to apply Activity Based Costing may well be causing you to outsource work which in reality is a “core competency” (Those activities you do better than others and make money at) and keep in-house work which you are actually losing money on.

So let’s start out with a quick primer on both Earned Value and Activity Based Management.

For those new to Earned Value Management, (EVM) it is based on the principle of “Quantum Meruit” or the “value deserved”. To select a simple example for illustration, let’s use purchasing bananas at the green grocer as the analogy.

To read entire paper, click here

 

Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English.  Original publication acknowledged; authors retain copyright.  This paper was originally published in PM World Today in May 2007.  It is republished here with the author’s consent.

How to cite this paper: Giammalvo, P.D. (2007). Activity Based Costing (ABC) – The Other Side of the Earned Value Coin? Originally published in PM World Today in May 2007. Republished in PM World Journal, Vol. VIII, Issue II, February 2019.  Available online at https://pmworldjournal.net/wp-content/uploads/2019/02/pmwj79-Feb2019-Giammalvo-Activity-Based-Costing.pdf

 



About the Author


Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS

Jakarta, Indonesia

 

 

 

Dr. Paul D. Giammalvo, CDT, CCE (#1240), MScPM, MRICS, is a Senior Technical Advisor (Project Management) to PT Mitratata Citragraha. (PTMC), Jakarta, Indonesia. www.build-project-management-competency.com. He is noted for the development and delivery of graduate level, blended learning curricula designed for the mid-career path, English as Second Language (ESL) professionals to develop competency in the local practitioner and build capacity for the local organizations. For 25+ years, he has been developing and delivering Project Management training and consulting throughout South and Eastern Asia Pacific, the Middle East, West Africa, and Europe.

He is also active in the Global Project Management Community, by playing a “thought leadership” role for the Association for the Advancement of Cost Engineering International, (AACEI) http://www.aacei.org/ since 1991; He has also been active in two IPMA member organizations: The Green Project Management Association (GPM) http://www.greenprojectmanagement.org/ where he served on the Certification Board of Directors for two years and the American Society for the Advancement of Project Management http://www.asapm.org/ for which he served for four years on the BoD as Director of Marketing. He also sat on the Board of Directors of the Global Alliance for Project Performance Standards (GAPPS), www.globalpmstandards.org, Sydney, Australia and is active as a regional leader. Currently, he is a compensated consultant to the International Guild of Project Controls. http://www.planningplanet.com/guild  as the primary author of their “Compendium and Reference” as well as the chief architect of their competency-based credentialing program. http://www.planningplanet.com/guild/certification

He has spent 35 of the last 50 years working on large, highly technical international projects, including such prestigious projects as the Alyeska Pipeline and the Distant Early Warning Site (DEW Line), upgrades in Alaska and the Negev Airbase Constructors, Ovda, Israel and the Minas Oil Field in Rumbai, Sumatra. His current client list includes Fortune 500 major telecommunications, oil, gas and mining companies plus the UN Projects Office and many other multi-national companies, NGO organizations and Indonesian Government Agencies.

In addition to 45+ years of hands-on field experience, Dr. Giammalvo holds an undergraduate degree in Construction Management, his Master of Science in Project Management through the George Washington University and was awarded his PhD in Project and Program Management through the Institute Superieur De Gestion Industrielle (ISGI) and Ecole Superieure De Commerce De Lille (ESC-Lille) under the supervision of Professor Christophe Bredillet.  “Dr. PDG” can be contacted at [email protected].

To view other original work by Paul Giammalvo, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/dr-paul-d-giammalvo/