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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

Process

Cost and Performance

People

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

questions
QUESTIONS

“There is always a better way of doing business”

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