Costing system & KPIs at a School Chain

The Problem

Picture2 CASE8

A large educational group required a costing system for compliance purpose and for better Cost management. Education Industry has a different operating process where in revenues and revenue collections are known in advance and the profitability is dependent on effective cost management. Further, education industry has variety of support services like transportation, accommodation, cafeteria, books, uniforms etc.,. which make it a business of businesses.

Key Challenges

The group is highly decentralized across multiple states and locations with local decision making managers.

  • Cost collection process in not in place and no specific spend policy and approval mechanism.
  • The system runs with both class room education delivery and education support services which have different cost structures.
  • Class room education delivery has different curriculum streams requiring different talent pool.

Multiple – Cost elements, Cost Drivers for different activities

‘Cause and Effect’ study model was adopted for each activity run the group developing a deep understanding on cost elements and cost drivers. Standard Operating Procedures for Cost collection was designed and built into the accounting system itself with standardized accounting operations in the software to pool the costs for reporting and analyzing.

The system design was also aimed at developing Key Performance Indicators (KPI) for monitoring. A dash board system was integrated with the revenue system and activity wise profitability was achieved for improved services pricing to the customers and effective cost management.

Better delegation and defined line of activities

The managers on the ground were able to understand the dynamics of the cost behavior and were able to make better decisions in pricing the services that suits the local market conditions.

Management at the HQ was able to delegate further to the business managers and fix the responsibility as well without loosing the sight over the overall cost structure.

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