Activity-based management (ABM) is an approach to management in which process managers are given the responsibility and authority to continuously improve the planning and control of operations by focusing on key operational activities. ABM strategically incorporates activity analysis, activity-based costing (ABC), activity based budgeting, life-cycle and target costing, process value analysis, and value-chain analysis. Enhanced effectiveness and efficiencies are expected for both revenue generation and cost in currences. Since the focus is on activities, improved cost management is achieved through better managing those activities that consume resources and drive costs. The focus for control is shifted away from the financial measurement of resources to activities that cause costs to be incurred.

As an overall framework, ABM relies on ABC information. ABC deals with the analysis and assignment of costs. In order to complete cost analyses, activities need to be identified and classified. An activity dictionary can...