Model the process, capture the truth.
The methodology for building a Time-Driven Activity-Based Costing model that captures real complexity and stays maintainable.
What is TDABC Process Design?
TDABC Process Design is the methodology for building a Time-Driven Activity-Based Costing model. It involves mapping your processes into resource groups (cost pools), defining time equations that capture how long each activity takes under different conditions, and connecting this to financial data to produce cost rates.
Good design beats raw detail.
The quality of your TDABC model depends on the quality of its process design. A well-designed model captures real complexity - different customer types, service variants, order characteristics - while remaining maintainable. A poorly designed model is either too simple to be actionable or too complex to sustain.
Where does your organisation stand?
No formal cost model. Costs allocated by simple rules or not at all.
Activity-based model with fixed cost drivers. Doesn't capture process complexity.
Time equations defined for main processes. Model covers major cost pools.
Complete TDABC model with capacity costing, scenario analysis, and regular refresh cycle.
Three moves toward a working model.
Identify all major processes and the resource groups that perform them. Define the scope - which products, customers, and activities are in scope for the first model.
For each process, write a time equation: T = a + b·X1 + c·X2… that captures how time varies with order characteristics, customer type, or service complexity.
Divide the cost of each resource group by its practical capacity. Apply rates to time equations to produce cost-per-transaction for each scenario.
Overhead, ABC, or TDABC?
| Method | Process Complexity Captured | Scalable Updates | Capacity Visibility |
|---|---|---|---|
| Simple Overhead Allocation | ✕ | ✕ | ✕ |
| Traditional ABC | ✓ | ✕ | ✕ |
| TDABC with Time Equations | ✓ | ✓ | ✓ |
Frequently asked questions.
What is a time equation in TDABC?
How many cost pools should a TDABC model have?
How long does it take to build a TDABC model?
Can TDABC work in service businesses?
What is practical capacity in TDABC?
How do I calculate the capacity cost rate?
What buyers are writing down this quarter
Evidence reviewed 6 August 2026. Each item below is quoted from the company’s own published statement and links to it. None of these companies is a client of Cost and Profitability Consulting, and nothing here is a comment on how any of them is run.
- Balanças Marques (Portugal, 25 July 2026): posted a Controller Financeiro vacancy in Braga whose first listed task is to design and implement a product costing system with clear identification of margins and cost drivers. Source
- Oliveiras, S.A. (Portugal, 24 July 2026): posted a controller vacancy in Leiria requiring the organisation of general and analytical accounting, cost centre management and profitability analysis. Source
- DST Group (Portugal, 26 July 2026): posted a site cost controller vacancy in Lisbon covering the recording and control of contract costs and inventories. Source
- Costa Food Group (Spain, 13 July 2026): posted a Controller de Costes Logísticos vacancy in Sollana, Valencia, covering logistics cost budgeting, variance analysis, route and centre profitability and ERP input. Source
These are job adverts, which makes them the most honest design brief available: they are written by the person holding the budget, before anyone has had to defend a decision. Read together they describe the same first ninety days. Not a report pack, and not a system. A costing structure with named drivers, and enough process design behind it that the second month can be compared with the first.
