Cost Conscious Guidelines and Measures

(Issued on 24 February 2006)

PART A: Guidelines on Promoting a Cost Conscious Culture

What is Cost Conscious Culture (CCC)?

Cost Conscious Culture exists where cost consciousness is a normal behaviour
and value of the staff in the Bank.

For the purposes of this guideline, “cost consciousness” in the Bank means:-

 Effective and efficient resource allocation, including avoidance of

wastage

 Delivering appropriate quality, fit for purpose and value for money.
o Fit for purpose means proper assessment of the needs, e.g. not
paying more for a product with additional features, which are not
required.
o Appropriate quality and value for money: This means purchasing
products/engaging services of an acceptable quality where it
makes economic sense, not only in the immediate future, but in
the long run.

 Ability to appropriately evaluate quality and relevancy of work produced

(from the stakeholder’s perspective) vis-à-vis time cost and act
accordingly. This would result in effective and efficient allocation of time
at the individual level in producing work, which meets stakeholders’
expectations.

Importance of CCC in the Bank

1. Promotes efficient and effective utilisation of resources by the Bank
2. Consistent with stakeholders’ expectations of a central bank

Objectives of the CCC Project

1. Inculcate cost conscious culture in the Bank, and
2. Provide a framework to facilitate effective and efficient resource
management in the Bank.

“Resources,” generally refers to money and other resources such as materials,

tools, equipment, facilities, training as well as the staff‘s time and expertise.
However, depending on the context/situation in which resources are utilised,
“resources” may refer to either one or a combination of the above.

Role of Management/Supervisors
1. Communicating formally/informally to staff Bank’s expectation on cost
consciousness
2. Supporting and promoting cost consciousness in department/bank
3. Walking the talk

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Cost Conscious Guidelines and Measures
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4. Scrutinising and challenging costs while reviewing budget requests or

prior to approving budget
5. Guiding subordinates to be focused and giving clear direction to
subordinates on job assignments
6. Managing staff’s perception on large expenditure
7. Implementing cost conscious measures at departmental level
8. Giving due recognition to efficient and effective use of resources in
assessing staff performance

Role of staff
1. Concern over quality of work produced, time and resources utilised
2. Networking/collaborate with other staff/departments/projects (e.g. use of
work already done under similar initiatives)
3. Achieve objectives with efficient and effective use of resources (e.g.
multi-tasking, usage of IT in work processes)
4. Ask questions to clarify expectations on job assignments, where
instruction is unclear

PART B: Cost Conscious Measures

Procurement of Goods and Services

To facilitate effective cost management in procurement, it is critical that

adequate assessment is conducted and sufficient information, including
implications on present and future costs to the Bank is presented to the
approving authority.

1. For the procurement of items above RM10,000 and not for replacement,
departments should prepare and submit an assessment to the approving
authority. The assessment should cover the following areas:

 The business needs and benefits including the expected

utilisation. Where product is for the optional use of the Bank staff,
there should be a survey covering a sample representative of the
population to gauge the utilisation rate.
 The estimated cost of the product (including the necessary costs
of getting a product in its place, ready to be used).
 Obsolescence rate of the product, where available. This generally
applies to IT equipment and machines. The procurement of items
should make economic sense, not only in the immediate future,
but in the long run.
 Possible recurring costs which arise from the procurement of the
item eg maintenance, salaries. This applies for items which will
incur recurring costs eg, building and systems require
maintenance.
 Comparison with similar products as well as comparison with
other vendors which offer same/ similar products in terms of costs
and features, where applicable.

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 Evaluate cost of product against cost of alternatives to acquiring

the product eg own building vs. rented, leasing vs. purchasing.
This applies unless there are no alternatives available.

Note: The exemption for procurement of items RM10, 000 and below and for
replacement is to cater for lower value purchases and to avoid delays for
urgent purchases to ensure continued operations of critical facilities and
services (eg electrical parts) as well as items which have already been
evaluated earlier for the Bank’s general needs. However, where significant
changes in business needs or costs of items warrant a re-evaluation, the above
assessment criteria should be applied.

2. Similar assessment should be conducted for projects proposing

acquisition of systems, construction and renovation and presented to the
approving authority.

Engagement of External consultants/service providers

For the engagement of external consultants/service providers,

departments/project teams should prepare and submit an assessment to the
approving authority. The assessment should cover the following areas:

 The business needs and benefits as well as costs, including impact

to the Bank
 Capacity of internal resources to perform the work, i.e. staff skills
and experience. Provide explanation if the staff are unable to
perform the work.
 Comparison with other consultants/service providers in terms of
capacity and cost. This applies when there are others offering the
same services.
 Evaluate cost and benefit of engaging services against cost and
benefit of doing project/work with internal resources, including long
term implications. This only applies if internal resources are able to
perform the work.
 Capacity of the external consultants/service providers to complete
project/carry out the work as indicated by:

o Sound financials
o Good reputation and track record
o Required staff skills and experience including succession
planning, in particular, availability of replacement for key persons

The capacity of the external consultants/service providers should

commensurate with the job which is to be assigned by the Bank.
There should be more rigorous assessment as there are higher
expectations on the financials, reputation and track record of the
company which is undertaking a large size project compared to a
company doing low value job.

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In making comparisons for procurement of goods as well as engagement of

external services, all relevant costs of any particular option should be taken
into account so as to ensure that that a correct perspective is presented to
the approving authority.

Other Cost Conscious Measures

The following are some measures to promote cost conscious in the Bank.
Departments are to use their discretion in the implementing these measures
and are also encouraged to develop their own measures.

Areas Measures Responsible dept

1. Resource and  Formulate longer term plans All departments,

business SMD to coordinate
planning
 Resource planning should be in line All departments,
with business plans and prioritised JHP, JIT, JSM,
according to strategy PPSM

2. Enhance  Performance management should All departments

Internal take into account efficient and effective
Capability and use of resources
Capacity
 Leverage on IT to enhance efficiency
of work processes

3. Monitoring/  Conduct post-implementation review SMD/all

review/follow of projects/activities departments
up on
projects/activiti
es and plan

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Cost Conscious Guidelines and Measures
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Areas Measures Responsible dept

4. Independent Conduct a management audit on resource JAD
Review management, where scope of review (For departments’
include : Information)
 Procurement of high cost items (eg
renovation, property, and systems)
and engagement of services,
including adequate disclosure of
information to approving authority
 Review of usage of any implemented
system/equipment

Collaborate with other departments to JAD (For

provide expertise for audits where required departments’
Information)

Assess controls at the inception of projects RMU

involving large expenditure eg major works, Departments
system development (A specific guideline concerned are to
will be issued by RMU on this). inform RMU

5. Continuous Review functions and work processes to All departments

improvement improve performance, effectiveness and
efficiency in the utilisation of resources,
including:
 Cost management
 Reducing/eliminating duplication of
functions
 Reducing bureaucracy and
unnecessary passing through various
levels of hierarchy, where appropriate
6. Administrative  Switch off lights and other electrical All departments
measures appliances when no longer in use (eg
after office hours, during long lunch
break)
 Print/photocopy on both sides of the
paper (some printers have this function)
 Encourage submission of work and
amendments on soft copy
 Encourage recycling of used papers
classified restricted/general
 Conduct paperless meetings where
possible
 Review the need for refreshments,
especially kuih for short internal
meetings or meetings held shortly after
meal times

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Cost Conscious Guidelines and Measures
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Areas Measures Responsible dept

7. Event and  Use Bank’s premises, where Departments

Functions appropriate involved in
 Use a powerpoint slide as a organising
backdrop or a complimentary backdrop, functions, event,
where the event is held in the hotel and training should
the hotel provides a complimentary consult Jabatan
backdrop Perkhdmatan
 Plan the elaborateness of the Korporat to ensure
ceremonies and attendees, (including Bank’s standards
the number and level) according to the are met
type of event and the level of
participants. For example, requiring
only people who are directly related to
the event to be present, minimise the
need for management’s time
 Share costs with other
organisations eg training and events,
where appropriate
 Advertise electronically rather
than printing of elaborate handouts/
leaflets/ pamphlets/ invitations for
internal events
 Minimise the giving of incentives to
boost attendance at internal events
other than annual dinner

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