Comment on the ABC model developed by the project team. What
are its particular strengths and weaknesses?
The newly formed project team
focused on a service that was easily understood and important to every citizen,
ABC model was
carried during pothole repair contract. The following strengths and weaknesses
are based on ABC analysis while carrying works on pothole repair contract.
The strengths of ABC analysis in this
project are as follows:
in investment: with ABC analysis, cost drivers which are of high value can be
lowered as much as possible. This will also help in us in reducing the
investment in materials used for specified job.
putting a ton of asphalt in potholes is a cost object for studying cost of
control: tight control can be exercised on the cost drivers that have highest
The cost of Carrying multiple tasks with the same resources, such as patching
crew was waiting for the asphalt to be picked up and delivered to the pothole,
the crew had been used for doing other jobs, like sweeping a bridge or picking
ABC analysis is economic as it gives detailed information on cost required to
do a specific work with low value.
Removing 50% of the supervisors and changing the crew assignments for filling
potholes, from eight down to four or six and improving efficiencies in the use
and assignment of equipments which lead to cost reduction.
The weaknesses of ABC analysis in this project
are as follows:
method can’t be efficient if the cost drivers are not assigned into the groups
appropriately for instance, the team initially faced difficulty in defining
outputs for some activities for example, filling potholes, fixed asset and
indirect support costs to pothole filling.
analysis doesn’t have standard classification for cost driver grouping, which
makes it difficult to assign materials or cost drivers.
in implementing change in larger organizations. The team had to convince union
to incorporate all the actions need to lower cost such as removing supervisors,