Enhancing cost implications of Mapping by activity based costing (ABC) -
Case study for National Mapping Agency in Thailand
Case Study: Bureau of Mapping Technology (BMT), Thailand
DOL is a long established department under the Ministry of Interior, responsible for many aspects of land administration within the government, particularly cadastral surveying, mapping and registration of rights in lands. The department has been carrying out its cadastral surveying and mapping functions since 1903. It is decentralised with provincial land offices, provincial land office branches together with district and sub-district land offices in 75 provinces throughout the country. The Department has its headquarters in Bangkok. As of January 2001, there were 12,591 staff (MOI, 2001). This figure does not include a large number of temporary field staff hired as required. The administration of the department is structured into two levels: central and regional administrations. To improve the quality of work, the re-organisation process of DOL has been launched since the year 2000. The purpose of DOL’s re-organisation is to expedite the processes and reduce the cost of the activities.
As part of the re-organisation programme, the Bureau of Mapping Technology (BMT) has been established to support cadastral and land registration including adjudication processes under the Land Titling Project (LTP). BMT is one of the organisations under central administrations, which comprises 3 divisions, namely: Survey and Mapping Division, Photogrammetry Division, and Map Transformation Division. BMT plays a supportive role by providing the geo-information products and services such as the map control network and ground map production, as well as map control using aerial photomaps, aerial photos, map transformations, and map control maintenance.
BMT itself has not clearly defined the new organisation’s structure and relations between divisions. BMT is still adjusting and settling into these 3 divisions. The process of re-organisation is still ongoing, which was one of the key reasons why even the Surveyor General showed key interest in this ABC research. In particular, the activity chosen for this case study, which is mapsheet provision by surveying and mapping division, being one of the key activities of the organisations.
During the financial data collection, data from the fiscal year 2001 (FY2001: October 2000-September 2001) were used, following the suggestions in literature (DoD, 1995) that the best time frame to look for an appropriate and sufficient amount of data is the full fiscal year. Furthermore, references such as O’Guin (1991), Brimson and Antos (1994), Kaplan and Cooper (1997) suggest that implementing of ABC should start by one part of organisation as a pilot project. A pilot project should cover only a segment of the organisation or one business product line. BMT under the department of lands in Thailand has no clear data about the actual cost of their product. Therefore, it was one of the best candidates to zoom in to the activities necessary for mapsheet production, which is their core business product. Moreover, it is considered to be the fundamental product for issuing land title.
Since Thailand encountered the Asian economic crisis, budget allocation has been cut down about 60% for DOL. The financial constraint has put strain on all activities carried out by BMT. The organisation has to make a justifiable decision in distributing limited financial resources efficiently. It needs not only to distribute the funds, but also to monitor the cost of each activity within the organisation. Cost of activities must be managed and controlled to eliminate the inefficient activities, and to improve the processes. Currently, the BMT does not charge for their products and services. Because it is a governmental organisation, it is not concerned with making profit. However, it still has to find an efficient way to distribute funds and other recourses among various offices and activities. To make matters worse, because BMT is not concerned with making profits, it has no good idea what the true costs of their products are. Therefore, the need for techniques and tools for cost management and performance measurement of the activities carried out by BMT have arisen. This is also aggravated by promotion of transparency of financial dealings of governmental organisations in promoting good governance.
The benefit was hoped to be reflected in identify the true cost of activities based in the amount resources they consumed while being realised. The study should, otherwise, provided various systematic ideas to be the frame for selection of cost calculation approach. The product cost information also could be useful for BMT as base information in order to have an idea of product cost for their business improvement for example if it were to launch a pricing policy which is likely in the near future. The World Bank and Prime Minister’s Office recommended DOL to be a model agency in developing the guidelines with respect to the cost recovery and pricing mechanisms for products and services (World Bank, 2000). DOL considered this suggestion and included in their Master Plan Volume 5 (2002-2006) and there are plans to hire an international consultant to assist in developing such guidelines.