Operational Cost

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Operational Cost

Operational cost is the cost of running the business processes of Org. The traditional understanding of operations is that it excludes support services such as human resource management, procurement, finance, etc. In orgamatics we hold a different view. We see all repetitive activity as operational and all non-repetitive activity as strategic. Repetitive activity must produce efficient outputs, whilst non-repetitive activity must drive effective outcomes. Therefore, purpose, systems, processes, rules, and procedures run operational activity. In so, intent, programmes, and projects drive strategic activity. Operational cost is thus the cost of producing the outputs of Org. This includes all the repetitive activity of Org. Derek Hendrikz introduced the Construct-based Costing System in 2016 to turn programmes, projects, systems, and processes into cost centres.

 

Author - Derek Hendrikz Consulting
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