text: Chapter 5
  COST CULTURE
  5-32. Cost Culture is a culture where all leaders and managers factor cost into their decision-making
  and understand both the near and long-term cost implications of their decisions. Cost, as defined by
  the Statement of Federal Financial Accounting Concepts No. 1, 1993, is the monetary value or resources
  used or sacrificed or liabilities incurred to achieve an objective, such as to acquire or produce a product or
  to perform an activity or service. Costs incurred may benefit current or future periods. The cost of running
  the Army is a concern to the public as well as to Army leadership. As opposed to a business entity, Army
  efforts and performance cannot be measured solely in financial terms; however, financial measures such as
  cost are integral in measuring the efficient and effective use of fiscal resources to accomplish Army
  missions and activities.
  5-33. The broad goal of the Cost Management Program is to change the way Army leaders and managers
  have historically thought about money. To achieve this goal, the Army must adopt a “cost culture.”
  “Culture” describes how the people in an organization behave and the underlying principles that drive their
  behavior. Thus, culture helps form the foundation for everything the organization does. For example, the
  military culture places high value on patriotism, service, and valor. Army leaders expect their Soldiers to
  be guided by these principles in all their actions. Inculcation of a cost culture similarly affects the behavior
  of Army leaders and managers. Rather than trying to achieve “readiness at any cost,” decision makers
  strive for “readiness at best value”. Cost considerations do not take precedence over mission
  accomplishment, but these considerations are incorporated into every decision that is made. Resource
  informed decision making must be the norm. The basic principles and requirements of the Cost
  Management Program apply to both the Operating Force and the Generating Force.
  5-34. FM is leading this cultural change, a key element of which is the shift from a focus on budget
  execution – with its emphasis on the expenditure of available funding – to outcome-based decision making,
  where the emphasis is on outcomes and their associated costs. In a cost culture. all leaders and managers
  incorporate cost into their decision-making and day-to-day management. They routinely ask the following
  types of questions:
  * What capabilities is my organization responsible for producing, and what does it cost to produce
  them?
  * What are the key cost drivers in my organization?
  * How can I generate the required capabilities more effectively and efficiently?
  * What are the cost implications of my decisions not only for my organization but also for the
  entire Army, both now and in the future?
  * How can I use cost information to make better decisions?
  5-35. By asking these and similar questions, leaders and managers equip themselves with the information
  needed to make effective trade-off decisions and achieve the best possible use of limited resources. A cost
  culture requires FMIS that provide decision makers with timely, accurate, and reliable cost information.
  With the adoption of a cost culture, the Army’s external stakeholders, Congress, and the American people
  have the assurance that the Army is a good steward of the resources entrusted to its care.
  CRITICAL SUCCESS FACTORS
  5-36. In any organization, from battalion level to Headquarters, Department of the Army (HQDA), there
  are four factors that are critical to the success of the Cost Management Program. These are senior leader
  commitment, use of cost-benefit analysis, availability of cost data, and a formalized process for planning
  and performance assessment.
  SENIOR LEADER COMMITMENT
  5-37. Commanders and other managers recognize that while their subordinates will listen to what they say,
  the subordinates will emulate what the boss actually does. Thus, effective cost management requires
  leadership by example. Commanders and managers should establish policies requiring the use of cost-
  benefit analysis (see below) to support decision making, and must back this up by routinely demanding to