The Real Estate Operating (REO) Cost System resulted from an effort to develop a reliable method to manage the administrative costs required to execute the annual Department of Defense (DoD) Recruiting Facilities Program. The U.S. Army Corps of Engineers (USACE) had tried unsuccessfully over the years to identify a means of realistically estimating such costs and allocating appropriate funding among the 18 Corps districts responsible for the mission. Use of historical cost data was the most prevalent method used for allocating funds, but was found to be seriously lacking in credibility due to variations in the number and complexity of programmed actions in a given district from year to year.
The REO Cost System provides a supportable framework for reliably determining the appropriate level of funding required to execute the program based on actual programmed actions. The key component of the system is a “time and cost” matrix for each of the defined types of actions that make up the program. Action types include new leases, renewals, relocations, and minor upgrades. The time and cost sheet for each action type is a matrix comprised of a list of all activities required to accomplish that action along with the time allocated for each such activity. The steps and time required vary by action type, but are held constant for any given action type.
USACE districts input the applicable hourly rates for their district based on the grade of the individual in their office who will undertake each respective activity. Once the matrix is summed up, USACE knows the average administrative cost to accomplish any given type action in a particular district. The “approved” Annual DoD Recruiting Program shows the number of each action type to be accomplished by each district. This information coupled with the average estimated cost per action type makes it a simple arithmetic task to calculate an estimated administrative cost based on the actual programmed actions for each district. This summation is shown on a district administrative cost “Recap Sheet” matrix. Once all the costs set forth on the Recap Sheet are totaled USACE has a realistic estimate of the administrative costs to execute the program in a given district, region or nationwide. The data provides a number of ways to analyze the program, which serves as a powerful management tool.
The REO Cost System will result in increased consistency in business processes throughout USACE in its execution of the DoD Recruiting Facilities Program. The initiative has spun off several successful streamlining initiatives, which significantly reduced the delivery time and cost to accomplish certain actions. The System accords the Division as a regional business center a tool for workload leveling. The System also addressed another critical shortfall by providing management a quality control and quality assurance tool for evaluating program execution. It allows program managers to determine whether costs that are not as predicted are merely aberrations or whether there is a problem that needs to be addressed. Most importantly it enjoys the enthusiastic support by the customer as a means of justifying budget requests to DoD.
For more information, contact Mr. William P. Thompson at (404) 562-5144 or via e-mail at william.p.thompson@usace.army.mil
