ASSISTANT DEPUTY MINISTER (FINANCE) SOUS-MINISTRE ADJOINT (FINANCES)
Background
• NGFC Annual Update 2012
– KPMG Independent Review – OAG Audit Report 2011
• Comparison of costing capability to allies • Areas of improvement
Internal Process Perspective Decision Maker Perspective
Learning & Growth Perspective Stakeholder Perspective Decision Repeatable Results Structured Costing Traceable Reporting Value Proposition
CBS & Data Costing Techniques Modeling and Reporting Risk Assessment and Reporting Inform Stakeholders Support CFO Attestation Scenario Management
Costing Process - CCD
Establish
GR&As Cost ModelDevelop
Review, Analyze & Update Present Provide Assurance Plan Approach
Not Necessarily Sequential Many activities are iterative and can be accomplished in varying order or concurrently! Each Component must be
• The cost purpose is defined
– What decision will the estimate support?
• The cost scope is described
– Capability description – Time frame
• The cost estimate development work is planned
– Team
– Approach
– Schedule & Deliverables – Quality Assurance
Purpose & context determine what cost information should be
• Cost Plan Template
• Cost Report Template • Generic CBS Framework
• Capability Investment Database (CID)
– Project documentation
• Establish the cost estimate’s baseline conditions
– Cost boundary: conditions that constrain the scope of the estimate – Ground rules: constraints that have been directed to the cost
analyst to use
– Assumptions: developed by the cost analyst in order to address any information gaps to produce the estimate
• Cost boundaries will depend on the purpose of the cost estimate and requirements of key stakeholders
• Boundaries and assumptions should be well defined, documented, and agreed upon with stakeholders
Boundaries, GR&As - Objectives
• Cost Report Template
– Includes Input Sheet Template
• GAO Chapter 9: Ground Rules and Assumptions • CEBoK Module 3: Parametrics
– Cost drivers
• Build and populate the cost model with the cost estimate and information necessary to support stakeholders in
their decision-making process
• Align the model to the determined purpose, scope, boundaries, ground rules and assumptions
• Document and build the cost model in alignment with best practice spreadsheet modelling standards
Incorporate the characteristics of high
• Cost Model Template & User Guide
• Generic CBS Framework • Cost Report Template
• Best Practice Spreadsheet Modelling Standards
• Focus on those noted within the Cost Model Template User Guide
• DND’s Economic Model, Foreign Exchange Forecasts, etc. • DND’s Cost Factors Manual
• CEBoK
• Baseline estimate has been reviewed for quality assurance and updated as necessary
• Risk and sensitivity analysis supports CFO Attestation Assertion #2
– Significant risks having a bearing on the financial requirements, the sensitivity of the financial requirements to changes in key
assumptions, and the related risk-mitigation strategies have been disclosed.
• The risk-adjusted estimate and determination of contingency is documented
• Cost Risk Framework
• D Cost S Spreadsheet Testing SOP • Cost Report Template
• CEBoK Module 9: Risk
• GAO Chapter 14: Cost Risk & Uncertainty • Capability Investment Database (CID)
– Project documentation pertaining to risk such as the Project Complexity and Risk Assessment (PCRA)
• Third-party independent review of the cost estimate by an organization external to D Cost S, as required by decision-makers
• Potentially more-to-come from TBS Costing Centre of Expertise
Not applicable to all projects
• Example Independent Review Reports:
• Next Generation Fighter Capability: Independent Review of
Life Cycle Cost (27 Nov 2012)
• Independent Review: 2013 Department of National Defence
Annual Update on the Next Generation Fighter Capability Life Cycle Costs (5 Aug 2013)
• Independent Review: 2014 Department of National Defence
Annual Update on the Next Generation Fighter Capability Life Cycle Costs (24 Nov 2014)
• The cost estimate results are communicated to decision makers
• The Cost Report identifies key issues related to the costs in a factual and easy to understand manner that are relevant to the decision(s) being sought
• The Cost Report and Cost Model form the completed cost estimate and contain the characteristics of a
high quality cost estimate
• Cost Report Template
• Guideline on Chief Financial Officer Attestation for Cabinet Submissions
• Corporate Submissions
• TBS Detailed Guidance for [Submission] Writers • Source of Funds Terminology
Conclusion
• Costing has evolved in Canada
• Significant amount of resources available