Abstract
The success of a costing system is dependent on its appropriation and assimilation by the organization. The involvement of all stakeholders from the early stages of design and implementation plays a critical role in this process. In this paper, the use of agile project management is investigated to support the design and implementation of more effective costing systems. A Design Science Research approach was followed to apply an agile project management approach—the Scrum methodology—to the design and implementation of an Activity-Based Costing (ABC) system in a hospital imaging service. The proposed methodology identifies the roles, the events, and the most important artifacts in the design and implementation of costing systems. Research results show that applying agile project management principles contributes to a higher degree of acceptance of the costing system by the operating personnel, as well as by top management. It was also found that a simpler model (result of sprint 5), instead of a more detailed one (proposed for sprint 4), may better fit the interests of the decision makers and the organization’s accounting and information systems. Thus, the best costing system is not necessarily the most complete or accurate, but the one that is most useful and adapted to the organization’s needs. The definition of the product backlog, the several sprints, and the iterative process were critical in this process. The adoption of the Scrum methodology allowed the design and implementation of an ABC system more adapted to the organization’s needs and allowed the early identification of problems that, traditionally, are only perceived at the end of the implementation process, therefore increasing the performance and economic sustainability of organizations.
Highlights
The technical aspects of costing systems such as the selection of activities, cost drivers and process analysis have been widely discussed in the literature
At the lower or simpler level is what is designated as the top-down gross costing approach, while intermediate levels include bottom-up gross costing and top-down micro costing, and bottom-up micro costing is at the higher level
This paper proposes the use of an agile project management approach, by developing a Scrum-based methodology for the design and implementation of costing systems
Summary
The technical aspects of costing systems such as the selection of activities, cost drivers and process analysis have been widely discussed in the literature. Anderson and Young [3] proposed three measures for the evaluation of the success of a costing system which are related to its level of accuracy, effective use and overall dimension. The use is related to the fact that the costing system must be used for the computation and analysis of costs, and to support cost reduction and continuous improvement initiatives in the organization. The ‘right’ design of a costing system is fundamental for its success and effective use in the organization. In the bottom-up approach, costs are calculated by identifying the amount of resources used in each process, department, or service provided and accumulated successively to obtain the total costs of all cost objects
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