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What’s the Cost?.......What’s the Question?. The Importance of Building and Sustaining Operational Cost Models in Support of Capability. Mr David Robinson Business Manager RAN Fleet Air Arm 27-28 Jun 2011. Presentation Topics. The Importance of Quality Data Theory and Practise

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What s the cost what s the question

What’s the Cost?.......What’s the Question?

The Importance of Building and Sustaining Operational Cost Models in Support of Capability

Mr David Robinson

Business Manager

RAN Fleet Air Arm

27-28 Jun 2011

Presentation topics
Presentation Topics

  • The Importance of Quality Data

  • Theory and Practise

  • Defence/Navy Management - Lessons Learnt

  • Costing in Defence

  • My Boss Doesn’t Think This is Important

  • The Current Costing Environment

  • What’s the Cost?……What’s the Question?

  • Costing Scenarios and Potential Issues

  • The Future

    Costing Pools and Costing Tools

  • Sustaining Knowledge

  • Integrated Solutions to Support Continuous Improvement

The importance of consistent quality cost data
The Importance of Consistent Quality Cost Data

  • Pyzdek – Repeatable, Reproducible, ….

  • Remove over complicated accountancy based rules, regulations and reporting

  • Constant validation

  • Cost and analysis resources

  • Is cost all you need?

  • Examples from Industry, Defence and CAM-I Survey

  • The basis/core of next tier process

  • Walk before you run – transitioning data in support of CI methodology


Cost and Performance


Defence costing operators accountants users
Defence Costing – Operators, Accountants & Users

  • How do you engage staff to highlight the importance of cost data?

  • -In the case of Defence its all about capability/effect

  • How do you link cost data to capability?

  • - Timely application of current working knowledge/operations to costing scenarios

  • - ABM best practice – Link/mirror your cost data to performance indicators

  • - Create data packages and cost management processes at the level you need

  • Build it and they will come

  • - Engaging external providers? You hold the knowledge….

  • - Automation: Beware the ‘push button solution’. Provide manageable ‘data pools’ not ‘solutions’.

  • - Navy Capability Costing Systems support

Faa bm pi 8 governance compliance
FAA BM PI 8 Governance & Compliance

What’s the Cost?.......What’s the Question?

  • Do you understand what you’re asking?

  • Abe Lincoln once highlighted his distrust for economists stating “I could ask of 300 economists their assessment of the state our finances, and receive a different response from each ”…

  • $ Lets look at the example of costing people – Actual, CEI Ready Reckoner – Direct, Total Variable, SOC, CFTS, Reserves, Trainees, Filled Vs Vacant

  • $To support Net Personnel Operating Costs (NPOC), Schedule of Rates and Charges (SORC), Directed Level of Capability (DLOC)?

  • Information gathering - start at square one

  • $ What is the purpose of the costing? Highlight the scenario

  • $ Is there existing guidance on how this is to be done?

  • $ Don’t recreate the wheel, look to align with current endorsed process

  • $ Ask the specialists

Danger will robinson
Danger Will Robinson

  • Get it right the first time

  • - Validate and document your assumptions

  • - Ask the specialists

  • - Peer review - Operator and Cost Analysis

  • Potential examples

  • - Acquisition NPOC offset issues

  • - Budget or equipment removal

  • - Capability decision errors

Application in the defence environment
Application in the Defence Environment

  • Costing pool solutions (PMKEYS, ROMAN, Assets, EO, MILIS etc)

  • RAN COGNOS models

  • - Total Cost of Capability

  • - NPOC

  • - DLOC

  • - Log Consumption

  • - CEI SORC

  • Sustaining your efforts

    - Resource and train to sustain

    - Embedded methodology

    - The importance of integrated methodology as it pertains to improvement


“There is always a better way of doing business”