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INSIDE THIS ISSUE

Chairman’s Address ……………………….… 2

SCAF 2018 Calendar of Events .. 3

Next SCAF Event, Ribby Hall, Preston … 4

SCAF Summer Reception & Awards Banquet ……………………………………………. 6

Letter from the Editor ……………… 7

Report on 2018 SCAF Challenge ……….. 8

Making the Business Case – A White Paper by RINA Consulting ..……….…….. 11

Report on February workshop, RUSI, London .......................... 18

SCAF Management Contacts …….…….. 22

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Inspiring! It was that

simple. To walk into

the new Aerospace

Bristol centre that now

houses the last

Concorde to fly was an

amazing sight. It was

also the venue for this year’s SCAF challenge. Aimed

at the younger members of the cost community it

was the ideal venue to bring young engineers and to

challenge them to generate their cost estimates

when many of them had never produced an estimate

before!

In April SCAF

had our

annual

challenge,

this year it

was

provided by Sanathanan Rajagopal, the Deputy

Chairman, and the challenge was to cost the security

arrangements for this year’s world cup football

tournament in Russia. The SCAF committee try to

make the topic neutral, rather than aerospace or

defence related, to give all teams an equal chance

and starting point. Our second criteria is to make the

challenge an open question which enables the teams

to make their own interpretation of the solution;

whether they are a team of one or six, the

boundaries can be adjusted to the resources and

time available.

Again SCAF had more than seven teams who applied

but Wood, Babcock, Atkins, AWE, CAAS, BAE Systems

and QinetiQ were successful when drawn from a hat.

The organisations provided very capable junior

members of their trainee departments to attempt the

cost estimate and present it to a panel of experts.

The MoD Cost Assurance and Analysis Service (CAAS)

organised a mini-competition internally between two

teams, as the interest to participate was significant,

the winning CAAS team had the opportunity to

present at the SCAF event. It was again a very

stimulating and inspiring day.

I was lucky enough to attend and present at the

ICEAA Conference at the Ottawa Shaw Centre on 1

and 2 May. With more than 140 attendees for two

days the Canadian conference continues to be a

success. I presented a paper at the plenary session

on “Considering Cost at the Forefront of Decision

Making” transferring many of our good practices

from the UK to Canada.

As SCAF Chairman I took the opportunity to talk to

many of the attendees about SCAF and invite

speakers to come to the UK and talk to our SCAF

audience.

Our next SCAF event will be our workshop on the

theme of “The use of Cost and Schedule Estimating-

Are We Making the Best Use of It?” at Ribby Hall

Village near Preston on the 5th June. Then our

Summer Reception and Awards event will be back at

the Aerospace Bristol under the wings of Concorde

on the 11th July don’t miss it! I would like to thank

our sponsors TechModal, QinetiQ and MCR also

ICEAA who will be sponsoring the Concorde

simulator.

Come and join us, you may learn something new or

contribute to the learning of the less experienced by

networking!

Dale Shermon SCAF Chairman

CHAIRMAN’S ADDRESS

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08 Feb 2018 Back to the Future – a re-appraisal of cost forecasting

techniques, Royal United Services Institute, Whitehall, London

This workshop will reappraise the classic cost forecasting techniques and ask questions of

them regarding their application and use in the future. It will seek new approaches and

reflect upon the need to conduct data gathering, cost analysis and new modelling

methodologies. Presentations are now available to view on the website

24 Apr 2018 The 2018 SCAF Cost Estimating Challenge and Training Workshop,

Aerospace Museum, Patchway, Bristol

The aim of this workshop is to provide an interactive training session in cost estimating

through the presentation of a case study that has been conducted by professional

teams from Industry, Academia and Consultants with the added benefit of top-level

critique by senior figures in the profession. This year’s theme is to estimate the likely

security costs for the 2018 World Cup in Russia.

05 Jun 2018 The Use of Cost and Schedule Estimating – are we making the best

use of it? Ribby Hall Village, Preston, Lancashire

Registration is now open – please contact the Secretary if you plan to attend this event

11 July 2018 SCAF Summer Reception and Awards Banquet, Aerospace

Museum, Patchway, Bristol

This event will provide members and their partners with a chance to meet up with

friends and colleagues and give us the opportunity to recognise and award members

for their contributions to the Society over the year. Registration now open

11 September 2018 SCAF Annual Conference and Annual General Meeting,

London (venue to be confirmed) Please contact the Secretary if you are interested

in presenting a paper at this event

20 November 2018 – The BAWA Centre, Filton, Bristol (Potential themes

include Cost Risk Adjustments, Risk and Uncertainty) Please contact the

Secretary if you are interested in presenting a paper at this event

2018 SCAF Calendar of Events

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Next SCAF Event

“Are we making the best use of Cost and Schedule Estimating?”

Tuesday 5th June 2018

The Conference Centre, Ribby Hall Village, Preston, Lancs.

This workshop will explore the application of cost and schedule estimating, propose uses and promote how it is possible to take best advantage of an investment to generate accurate predictions. Our workshop speakers and topics are:

• “Fake News or Inconvenient Truth?” - Frank Berry and Steven Hornby , BAE Systems Air

This paper is a reflection on all of the barriers encountered when presenting Cost and Schedule data. Using real life examples, it covers all aspects of what might go wrong in the analysis process, from a question being asked, the data being used, and most importantly the reception of results where there is an engrained set of behaviours and culture. It will also cover some of the “Soft Skills” than can be utilised to overcome these barriers.

• “The 12 Levels of Procrastination” (Part 1) – Andy Nolan, Rolls-Royce

Estimating, like so many other skills like playing a musical instrument, learning a new language or playing a sport, first has to begin with a desire, an intent to be competent at it. Without that, no amount of guides, tools and training will have any effect. This presentation contains the twelve levels of procrastination. The 12 levels are not formal or based on any research but on observation.

• “Estimating the cost of Cyber Projects – Identifying the key Cost Drivers for Cyber Hygiene” – Sanathanan Rajagopal, QinetiQ

In the world of cyber advancement, a regular intrusion from hostile element is very common. A good cyber Hygiene will help reduce these intrusions and helps to protect our cyber environment both personal cyber space and the work cyber environment. In this presentation Sanath is making an attempt to define what Cyber Hygiene is on defence software projects and identify the key cost drivers.

• “The future of international capital aviation costs” – Kevin O’Grady , Arup

To keep pace with innovation and be more productive, the infrastructure and governments must embrace digitalization (World Economic Forum Report Feb 2018). Integration and collaboration is an important step towards that. Providing a platform that allows Transdisciplinary teams to collaborate including interaction between assets’ sequential schedule modelling, cost, sustainability, ERP, operations and maintenance to ensure information is shared accurately and consistently throughout total assets’ lifecycles.

In this aim we would like to present Arup International Virtual Airport model as the centrepiece of our digital integrated transformation and test bed for all disciplines to research it’s connectivity with the whole system. It powers new technologies such as Blockchains, AI, prefabrication, parametric assemblies, benchmarking, automated equipment and mobile applications for academia, consultants, clients, manufactures, contractors to interact and collaborate.

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• “Macro-Parametrics: it’s unique capability and application” - Darrell Extance, PRICE Systems and George Lyon, QinetiQ

This presentation will provide an oversight into the Family of Advanced Cost Estimating Tools (FACET) and will explore the development of this cost forecasting solution, its applications and benefits.

• “Cost and Schedule Integrated Maturity Assessment” – Alan Jones, Estimata Limited

Building on the original BAE Systems Estimate Maturity Assessment, we can define a similar model for Schedule Maturity Assessment. By comparing the two Maturity Assessments for the same project, we can develop a view of how mature or otherwise we are in terms of an integrated approach to Cost and Schedule planning during the bid proposal stage.

• “The 12 Levels of Procrastination” (Part 2) – Andy Nolan, Rolls-Royce

Part 2 of the presentation builds on our understanding of the twelve levels of procrastination discussed in Part 1. The 12 levels are not formal or based on any research but on observation.

• “Cost and Time Certainty for Small Modular Nuclear Reactors” - Amritpal Agar, Loughborough University

Large nuclear new builds are capital intensive projects with a high dependence on schedule. These builds are often subjected to delays and cost over runs, making them extremely challenging to finance. So, the question is can small modular reactors provide more certainty for the delivery time and cost? In this presentation, Amrit will provide an overview of his findings in terms designing for cost and time certainty when constructing small modular reactors.

• “Closing Remarks” - Dale Shermon, Chairman, SCAF

Registration and Costs

This workshop is free to current SCAF members (which includes anyone who attended a SCAF workshop/conference since September 2017). Non-members are welcome to attend at a cost of £80.00 per delegate, with discounts available for group bookings. These costs include all refreshments, a buffet lunch and free attendance to all future SCAF organised events until August 2018 (subject to availability).

Registration and coffee will be available from 09.15. The workshop will commence at 10.00 am. A 10% discount is available for group bookings of 4 or more delegates and a 15% discount is available for group bookings of 10 or more delegates. Further details can be found on the SCAF website or by contacting the Secretary at ndmorrill@dstl.gov.uk or call 01980 955 548

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SCAF Summer Reception and Awards Banquet Wednesday 11th July 2018

Aerospace Bristol, Patchway, Bristol

Following our successful event last year the management committee has again agreed to combine our traditional summer reception with an awards banquet. The reception provides an opportunity to meet friends and colleagues in a relaxed and friendly atmosphere. Wives, partners and friends are all welcome to attend.

For 2017/18, awards will be presented at the Reception for the following categories:

• Best Newsletter Article

• Best Quality Presentation

• Best Technical Presentation

• The P.G. Pugh Award for Innovation

• Members’ Feedback Award

• Services to SCAF

This evening event will be held at Aerospace Bristol commencing at 7.00pm.

Attendance (including dinner) at the event is FREE for SCAF members, and their spouses/partners. The reception will be held in the Hangar at Aerospace Bristol, and we will dine beneath the wings of the Concorde which is exhibited there. There will be access on board Concorde for an hour on arrival. Spaces are limited therefore early booking is essential. Non-members will be welcome on an allocated basis and a fee of £40 per person.

We hope that as many of you as possible will attend and support this special evening.

We would like to thank the following organisations who have kindly sponsored this event:

Registration and Costs

The Reception will commence at 7pm at Aerospace Bristol. This event is FREE to members and non-members are welcome to attend at a fee of £40.00 per delegate. These costs include dinner at Aerospace Bristol, Hayes Way, Patchway, Bristol, BS34 5BZ

To register, please email: ndmorrill@dstl.gov.uk or

call 01980 955548

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Will we/Won’t we; Deal or No Deal; Good Deal or Bad Deal? I’d like to say that the topic of Brexit is on

everyone’s mind, but I am not convinced. What is clear is the deluge of information being published daily in

the media.

Many economists, forecasters and analysts have been predicting likely negative financial impacts from events

that may or may not happen. In many ways this is unhelpful as the context is subjective and vague and the

commentators do not appear to have considered risk and opportunity as equal measures within their

predictions.

In contrast, the teams that participated in the SCAF challenge this year left no stone unturned. Their approach

and analysis was excellent and, as one of my colleagues said “I have never seen so many youngsters at a SCAF

workshop before”. A comment thoroughly deserved and looking good for the future – congratulations to the

employing companies demonstrating faith and support to the cost estimating/commercial/business analysis

community.

On a personal note, congratulations to Team Garmin (Cover photo) and all the other teams taking part in the

Clipper Round the World Yacht Race. They are now all on the penultimate Leg (Seattle – Panama – New York)

having left the UK in August 2017 we look forward to seeing everyone when they complete in Liverpool in July

2018. This is the only event of its type. Anyone, even if they have never stepped on a boat before, can join

the adventure. Immense data, prediction and forecasting is an essential daily routine and must be done with

the utmost accuracy – a lesson for all of us.

And, my prediction for the summer?

Please forward any articles, letters or any other ideas for inclusion in the newsletter to: Arthur Griffiths at

Editor@scaf.org.uk

Letter from the Editor

Arthur Griffiths, SCAF Newsletter Editor

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Once again we were delighted to receive several nominations from organisations wishing to participate at this

year’s event. The aim of this workshop was to provide an interactive training session in cost estimating

through the presentation of case studies that had been conducted by less experienced, but very professional,

teams from the Civil Service, industry and consultants with the added benefit of top-level critique by senior

figures in the profession. This year we had seven teams participating and, as with previous years, we had to

turn down other teams due to lack of space.

The challenge this year was to gather cost and size data, and then generate the cost of providing security the

2018 FIFA World Cup; a quadrennial international football tournament contested by the men's national teams

of the member associations of FIFA. The World Cup is scheduled to take place in Russia from 14 June to 15 July

2018 and this will be the first World Cup ever held in Eastern Europe, and the first held in Europe since 2006. It

is anticipated that Russia will deploy the most advanced technologies and resources to safeguard the

competition.

This workshop was hosted in the spectacular new Aerospace Bristol venue; a venue that is home to the last

flying Concorde. Many of the attendees took the opportunity to visit Concorde and have a tour through the

cabin. The forthcoming SCAF Reception will take place under the wings of Concorde at the same venue.

Members of the Teams from Wood PLC, Babcock, Atkins, AWE, Cost Assurance and Analysis Service (MoD),

BAE Systems and QinetiQ

Report on The SCAF Cost Estimating Challenge April Workshop

24th April 2018

Aerospace, Patchway, Bristol

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The first presentation was delivered by three people from Wood PLC. Wood PLC started by clearly stating their

assumptions and exclusions. They based their estimate on labour costs only and used a scalable solution from

the security required in the first match’s stadium. Next a four person team from Babcock presented their

approach and results. The Babcock team took the requirement for additional security due to the anticipated

politics of the fans in given games into account; for example, Iran v Turkey. They also considered the use of

technology (helicopters and UUVs), as well as the security at the various fan festivals that have been organised

throughout the competition.

A team of five graduates

presented from Atkins.

They used Skype to

overcome the

geographical challenge of

working in different

locations. They presented

a high-level process to

demonstrate their

thinking and how they

used data maturity levels

in their cost assessments.

The Babcock team also

used mind maps to show

their overall threat

assessment, then split

these down to individual

threads; this was a very

effective presentation

technique.

The next presentation was given by six apprentices/graduates from AWE. This team carried out a bottom up

approach and checked their results using a parametric approach. They assumed full capacity at all matches

and considered the relationships between inflation, exchange rates and labour costs when making their

calculations.

The last presentation of the morning was given by a five-person team from DE&S’ CAAS organisation. The

CAAS presentation usually attracts a lot of attention from a SCAF audience, as CAAS are the custodians of best

practice, therefore even the grey beards in the room want to find out CAAS’ latest thinking. However, the

SCAF challenge is not about the right or wrong answer, it is about thinking about a problem and trying to work

out the best way to solve it. In this instance, the CAAS team was made up of people with less than six months

experience each, therefore had been a true learning experience for the whole team. The CAAS team

acknowledged their limited experience early in the presentation and they used bottom up and historical trend

analysis estimating techniques as well as a good mixture of humour in what remained a very professional

presentation.

After an excellent morning session, the two afternoon presentations did not disappoint. The afternoon started

with a presentation from five people from BAE. Each member of the team had less than four year’s work

experience, never mind costing. The BAE team provided an excellent analysis of the perceived threats and the

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size the security team would need to be to address that threat. They considered the perceived Political

tensions currently being felt by Russia and separated their estimate for labour and non-labour costs.

The final presentation of the day was given by a team of four graduates from QinetiQ who had very little cost

engineering experience. The QinetiQ team had the extra pressure of being asked to carry out the SCAF

challenge in a very short timescale, as they were responding to the relatively late withdrawal of another team;

however, given the quality of the analysis and the presentation, this was not obvious. To overcome the short

timescale issue, as well as a geographical issue, the team divided the task into two teams (Farnborough and

Bristol), and each team dealt with a different approach: the Farnborough team looked at case studies; and the

Bristol team carried out a bottom up estimate. As the first all-female team, which consisted of a

mathematician and three engineers, QinetiQ and SCAF have provided evidence that the Government’s STEM

(Science, Technology, Engineering and Mathematics) Initiative, which aims to primarily attract females to work

in STEM related roles, is working.

During a well-deserved tea break, the

Senior Review Team Alan Jones, Dr

Spencer Woodford and Arthur Griffiths

(pictured from L-R) assessed all the

presentations. The Senior Review

Team’s findings were then fed back to all

the attendees. Their conclusions were

that the quality of presentations and

adopted approaches were probably the

highest standard given at a SCAF

Challenge workshop (this is the 7th) and

that all the teams had highlighted the

lessons learned and demonstrated what

was required to establish sound cost

estimating judgement.

It was good to see a variety of approaches to the problem and this, in itself, was educational for all the 70+

attendees. For the Society it showed that the workshop had fully achieved its aims and objectives by providing

a training session in cost estimating conducted by in-experienced professional estimating teams and retained

the enthusiasm with a programme that was instructive, entertaining and enjoyed by experienced costing

practitioners, finance mangers and project staff in addition to all the presenters. Our thanks to all the teams

and their organisations for their support to this excellent lessons learned workshop.

The comments and reviews say it all – Make sure you

attend in 2019

Report by Dr Paul Wood

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ABSTRACT

Making a business case for change is one of the most fundamental steps in any project, programme or

portfolio and one not unique to any single sector or industry.

When you then also have a major transformation programme underway within an existing portfolio the

business case magnitude is immediately multiplied ten-fold. So as a result how do you then manage and

progress multiple but bespoke cases in their own right in terms of having the right decision making knowledge

in relation to the whole programme as well as collectively aligned across the overall portfolio?

This paper gives a brief insight in to a real scenario when the UK’s largest Police service in early 2017 was

embarking on a second phase of its transformation programme with circa 90 different projects across 12

programmes.

Based on both volume and complexity of business cases the UK’s largest Police service Finance Headquarters

(HQ) identified the immediate need for business case justification support via modelling, analytics and

accountancy in commissioning RINA Consulting for support.

The paper reveals in the form of summary sections the background and some of the unique problems

encountered, the solutions given and benefits realised. It also where possible draws parallels where solutions

could be used in other sectors.

INTRODUCTION

It is usually a very long, windy and sometimes rocky path that takes you from the very small beginnings of

questioning what to do next faced with the need to realise savings whilst keeping the organisation going as a

business? The endless discussions of the why’s, how’s, where’s, whose and maybes have taken their toll but

finally you are there, the hard mile has been earned and a change programme has been identified as the

solution and way forward and is now defined, agreed and commenced.

This situation is not unusual across many sectors and both small to large corporations alike but then if not

immediately at the onset perhaps a little way in you come to realise both the enormity and extent of what has

been started. This realisation comes in the form of the size, scope and pure number of projects, their

requirement to get their respective business cases though to agreement stage and all against those original

timescales set at commencement. A tsunami of business cases at various stages needed yesterday.

Whilst positive in one respect, they start giving a clear map to the future, where each supports growth with a

request to secure funding, an ability to develop and communicate a clear course of action, a capability for

management of cash flow and last but not least the outline plan for a strategic exit.

However and conversely the problem areas are now three fold, the pure volume of cases across the whole

programme, the need to assess if they are conflicting programme wide and lastly how can you support each of

these cases in building credible background information with full option appraisal to get to the optimum

option. All perhaps with no or little decision making expertise, knowledge and people in house?

Making the business case – Gaining decision making knowledge

A White Paper by RINA Consulting

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This is where the UK’s largest Police service was in early 2017 with circa 90 different projects across 12

programmes all vying to progress their respective business case with a high number needing support in

business case justification via modelling, analytics and accountancy.

With more than 43,000 officers and staff, the UK's largest police service has 25% of the total police budget for

England and Wales. As the geographical area it Police’s changes and crime continues to evolve, it aims to

continually transform further whilst facing financial challenge and greater public expectations of policing and

key objectives. To address these objectives a transformation programme and Portfolio was been put in place.

In the first phase of transformation the UK’s largest Police service delivered a lot, driving out £600m of savings

without negatively impacting operational effectiveness. The second phase is where it commissioned RINA

Consulting for support in gaining decision making knowledge capability that it required.

BACKGROUND

A business case by its very nature will be very unique in terms of how it address’s a business problem, issue or

goal and the document should mature in terms of credible support information as it moves through the stage

gates of strategic outline case, outline and then full business case (and maybe some stages in between).

Depending on the complexity of any case this will take time in getting from start to completion but after all it is

only a single case.

After phase one of the programme, phase two finance and the justification of all cases were deemed critical

therefore accuracy was paramount in maintaining the operational effectiveness. So, how do you even start

when there is a now a high volume of cases each at differing phases across stage gate approvals and how do

you assess that there are no conflicts across the programme for example duplication or even competing areas

collectively across the overall portfolio?

How do you assess the impact of business case initiatives and the impact that they will have collectively on

your current infrastructure for example information technology (IT) and current supplier contracts?

How do you even approach providing robust estimates of net cashable savings, or benefits, arising from

business-wide efficiency gains derived from the replacement of core IT infrastructure with a new integrated

system? Plus to get indicative costs where you do get a user friendly procurement model template bespoke to

the need, for the implementation of a new business-wide IT infrastructure upgrade?

The UK’s largest Police service was probably not unique as a larger organisation in also having to replace no

less than four core policing and three supported systems with a single integrated IT system, a very complex

programme in its own right.

And finally, how can you support all cases in building credible background information and any outputs are

correct to the appropriate level with full option appraisal to get you to the optimum option? These were just a

small selection of the problem areas faced by the UK’s largest Police service Finance HQ and RINA Consulting

team.

SOLUTION

RINA Consulting were commissioned to provide the decision-making expertise, knowledge and people for the

Police service Finance HQ and the overall investment appraisal framework support in whatever area was

required be it part of the change portfolio either directly for a project or pan programme.

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Solutions were developed taking a bottom up approach via individual projects whilst keeping the strategic

emphasis of the portfolio. This therefore ranged across a number of areas which included Strategic outline

plans & cases (SOP’s & SOC’s); Benefit development via templates to detail level; Cost benefit analysis (CBA)

including initial rough order of magnitude (ROM) and Investment appraisals (IA’s). For decision support, it

included Programme finance & capital plans (PFP’s); Tender evaluation; Validation and Verification (V&V) via

bespoke modelling tools; Independent cost estimates (ICE’s); Outline & final business case expertise (OBC &

FBC’s); Benefit analysis; Risk & Optimism Bias (value); And lastly but not leastly included, Baselining budgets

and financial reporting; Portfolio cost benefit analysis tool (bespoke modelling): Business case process and

programme gateway review and rectification.

In summary, any area for the justification of the business case through gaining decision making knowledge. To

address the problem areas posed (within the background section of this document) a number of solutions

were put in place. A selection of these are described as follows.

Portfolio Cost Model

On arrival at the Police service, one of the very first activities undertaken by RINA Consulting was the Portfolio

Cost Model. They identified the need for an overall portfolio tool which could collate the cost and benefit data

from the circa 90 projects, which were spread across 12 separate programmes, into a single solution where

data could be sorted and filtered on various attributes.

The Finance HQ identified very early both the enormity of the task and the need for a dedicated resource with

time and skills put the tool together. RINA Consulting provided the expertise required and the tool building

commenced with one of the primary aims of making it as user friendly as possible for handover and future

usage. This aim was centered on practical things such as ensuring the file size remained workable and setting

up links to enable the user to manipulate the data within other tools. By addressing this aim it ensured that

the tool would integrate well with Police service practices and assist both with their monthly reporting of

figures and the prioritisation of projects across the portfolio.

On completion for the very first time one single tool with over 200 different data sources gave clear visibility

across each of the programmes. The same tool could also give alignment visibility across the overall portfolio,

invaluable in a transformation setting. It also included the ability to compare separate sources of data which

could be utilised to view actuals vs business case vs capital plan, a key building platform for the Police business

environment.

Without this tool, there would have been an ongoing struggle to unite the circa 90 separate projects together

in order to achieve an overall view on the cost of the portfolio. Furthermore, you would not have been able to

complete a prioritisation exercise to determine how best to split the limited budget and which projects could

be delayed for another financial year. Finally, this tool also increased realisation in to how much change was

not only affordable, but also achievable within a single financial year based on the resource constraints of the

change team.

Whilst designed and built for the Police the same model approach could be used in any sector where there is a

similar structure of multiple individual projects building to a portfolio of work. In fact, further modifications

have been identified that would further enhance the usage being (a), including prerequisites to look at

sequencing of the work and (b) the pilot tool required manual updating of data sources, however, if the

sources were all stored in a central place and conventionally named, the model could also have the ability to

read data with minimal manual changes.

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Charging Model

Given the nature of the transformation almost all projects required a technology or information technology (IT)

interface with the current infrastructure and the Police were no different to other industry sectors. The

Portfolio Office as a result needed to fully understand the number of providers for IT support and any potential

impacts on the contracts; be that fixed price implications or variable price implications.

The need was therefore identified for a model which split out the fixed price and variable elements of each of

the IT contracts and then to pinpoint the underlying drivers. The model also included an interface for the user

to be able to increase and decrease these drivers to find out what the price implications were. Such drivers

were found to have been the number of users, number of devices, number of applications etc. This task

required a review of original contracts to identify the fixed/ variable split and then the build of a model with a

pricing catalogue for the variable elements.

As the contracts were across a number of different suppliers, each with their own constraints and clauses

within the pricing structures, unique solutions were developed to ensure the pricing was consistent. There

was also a requirement to ensure the model would still function seamlessly without the data sources needing

to be open; as it wasn’t deemed user-friendly to have multiple workbooks open, when one would suffice.

In developing the model, it gave the Police a central point to analyse the financial impact on their information

technology contracts; which had previously been spread across a number of different sources, in various

challenging formats. This vastly reduced the FTE (full time equivalent) effort required to establish the IT

resource required across the organisation. It also provided complete visibility of the pricing structures within

the contracts, and enabled full understand of future contractual impacts on their decisions, which led to more

robust business cases for change within the portfolio.

This particular model was tailored very much to this specific situation however the logic of the model could be

applied to industry wide. In setting up an original model that has to be bespoke to the sector, client and

contracts future changes could then be instantly calculated across pricing elements.

Net Benefits Model

The initial brief was to develop a tool capable of providing robust estimates of the net cashable savings, or

benefits, arising from business-wide efficiency gains derived from the replacement of core IT infrastructure

with a new integrated system. By reducing the complexity of its existing IT systems (i.e. transitioning from 7

discrete databases to a single unified solution), the Police envisaged significant reductions in the amount of

staff time dedicated to data entry and search requests. With the cumulative time savings converted into full-

time equivalent (FTE) posts and transacted into headcount reductions, as a part of a multi-million pound cost

saving exercise.

Independent assessment of the clients’ preliminary tool revealed a number of methodological inconsistencies,

resulting in an over-inflated figure for the estimated net cashable savings. Consequently, the Police

approached RINA Consulting to provide the necessary skills and expertise to develop a tool capable of

accurately modelling efficiency savings across an organisation spanning 6 business groups and circa >42,000

personnel. With this in mind, tool development focused on a robust methodology, combined with an intuitive

user interface to facilitate ease of use post-handover.

As part of the tool design process, it was necessary to re-examine the underlying assumptions of the original

tool. This highlighted a number of flaws, including the principle that all time saved was deemed cashable,

regardless of the duration of the saving (e.g. 1000s of work hours saved annually through the accumulation of

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sub-minute savings across a large workforce). To resolve this issue, a graduated and customisable cashable

time threshold was built into the new tool, to provide a more realistic estimate of the achievable time savings.

Customisable business group profiles were also added to the model, enabling the client to specify different

cashable time thresholds for staff in different branches of the organisation.

In addition to this, the new tool was also designed to handle a range of other user defined benefits and dis-

benefits, via categories including: GBP (£), FTEs, FTE %, Efficiency (%), Inefficiency (%) and Quantity. Through

an in-built cross-referencing tool, all declared benefits and dis-benefits are referenced back to the tools’ base

unit of GBP (£). The ability to model a range of parameters in a single tool gave the Police greater flexibility,

enabling them to more accurately model complex business-wide transformation processes, and estimate the

net benefits in cash terms. Modelled results are output through a combination of graphs and data tables,

providing yearly breakdowns of the net cashable benefits, as well as the total net cashable benefits versus dis-

benefits costs for each business group.

The redeveloped tool offered the Police a streamlined platform to model and analyse, a range of different

scenarios and outcomes using a clearly defined methodology and set of assumptions. Using a standardised

methodological approach, in conjunction with master and cost data assumption lists, gives greater confidence

in the modelled output, enabling key strategic decision to be made with confidence in the underlying data

which in turn reinforced the decision making knowledge. By using best-practise modelling techniques, the tool

built for this client could be easily and quickly adapted for use in a range of other business sectors for similar

purposes.

Without the reappraisal of the original Police model assumptions, in particular, the concept of all time saved

being cashable, the calculations may have significantly overestimated the amount of cashable time saved,

which was to inform headcount reductions, potentially leaving them significantly understaffed. This would

have negatively affected capabilities, resulting in reduced effectiveness and poorer service provision.

Pricing Template

The Police also requested a new user-friendly procurement model template, for use by shortlisted suppliers to

submit a fully costed procurement solution for the implementation and 10 years support of a new business-

wide IT infrastructure upgrade which dovetailed with the business case stage gates. Also, there was a need for

providing End User training and support to the client and approved bidders, as well as data analysis of the

submitted solutions to facilitate the budget holder decision making process.

Building on previous work by the client a new version of the model was developed with the aim of significantly

improving the End User experience, by streamlining the workflow and simplifying the user interface. As such,

significant emphasis was placed on visual signposting to guide the End User through the model, by highlighting

required data table entries and restricting access to other areas, when, or where, data was not required. To

ensure client satisfaction with the implemented design changes, regular consultations were held to review

development progress and discuss future changes and additional functionality.

To ensure the rapid turnaround of supplier bids, training and Q&A (question & answer) sessions were arranged

for all of the approved suppliers in order to smooth knowledge transfer and gain feedback on the model

design. Where possible, requested changes were made to simplify the End User experience, whilst maintaining

the integrity and key data capture requirements of the client. A key matter raised by both the client and

suppliers was the need to ensure that file size remained workable against increasing requirements for data

capture. By simplifying the workflow and removing extraneous, or redundant, functionality, it was possible to

meet both parties’ needs for sufficient data resolution and document portability.

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In addition to training, supporting documentation detailing the model workflow, as well as user interface and

data capture expectations was also provided in the model. Post-development client support consisted on

comprehensive data analysis of the supplier bids in order to support the clients’ decision making process. To

do this, analysis of previous supplier bids was conducted alongside current bids, to assess cost evolution over

time.

Data analysis consisted of comparative analysis of monthly and yearly spending, timings of key spending, and

breakdowns of spending allocated against labour and materials for implementation and support phases.

Contingency spending was also reviewed as proportion of the total project spend, as a means of assessing

supplier confidence in their proposed solutions.

The solution has enabled the client to identify key differences in the proposed supplier procurement solutions,

allowing them to effectively evaluate project costs against their own requirements within a considerably

shorter timeframe that would have otherwise been possible using internal resources. By opting to rebuild the

supplier pricing template and provide clear training and support, the Police have been able to streamline the

purchasing process, tailoring the model and supplier needs. This has enabled greater transparency between

the selected suppliers during the bidding process, facilitating faster bid turnaround, with fewer queries bid

returns.

Verification & Validation

In order to certify that the outputs of all models created are correct to the appropriate level, verification and

validation (V&V) whereby an independent party who has not been involved in the model build undertakes a

check of both the methodology and assumptions used.

The primary purpose of this process is to ensure that the model and its outputs are fit for purpose; as a result,

the degree to which V&V is required and the level of scrutiny applied are directly linked to the end purpose.

For example, if the output is intended as an early indication/ rough order of magnitude (ROM) then an internal

cursory check by a team member and agreement of assumptions with an SME (subject matter expert) is

sufficient.

If however, the output is intended to drive a significant decision as was the majority of business cases then a

far more in depth V&V was required by a third party entirely unrelated to the model build and assumption

making process which in the case were RINA Consulting personnel not linked directly to the HQ activity.

The two elements of the process; verification and validation ensure methodology and assumptions

independently. Verification is designed to highlight any actual functional errors within the model but can also

highlight potential for error should the model change slightly or be extended. It will also assess the

methodology used and it appropriateness for the purpose i.e. include assessments on the application or lack

thereof of uncertainty.

Validation is designed to assess the readiness of assumptions for their intended purpose. By using Data

readiness level (DRL) against each assumption in order to achieve an overall assessment of the state of the

output, where the lowest scores are applied to estimates with no evidence of source or method and the

highest scores are applied to actual contracted values. The overall score which is deemed acceptable is also

dependent upon the purpose of the output i.e. for a ROM, a lower DRL is acceptable whereas for a final

business case approval, a higher DRL would be required.

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In some cases, it would also be appropriate to ask for a totally independent party to produce an independent

estimate for comparison. This V&V process has potential applications across all sectors against any analytics

service to ensure that the methodology is fit for its intended purpose. However even the best modellers with

the best intentions make mistakes. Without V&V these mistakes are propagated into the final model and

when then used for decision making can provide false expectations and have serious repercussions. By carrying

out appropriate levels of V&V, we are mitigating this risk and providing additional confidence to decision

makers that the evidence in front of them is a true representation.

IPS (Integrated Policing Solution)

In having to move from the four core policing and three supported systems to a single integrated IT system the

Police had previously undertaken a tendering exercise for the application, which resulted in the down-selection

to three remaining bidders. RINA Consulting provided SME’s for the VfM (value for money) decision making,

both in support of the down selection of the preferred bidder, framing the VfM decision in the FBC and

financial control of programme costs during the assessment phase. The solution and main focus of these SMEs

was carrying out ‘Treasury Green Book’ compliant investment appraisals. The solution also required expert

financial modelers who were adept in mapping costs and benefits into a compliant model that was V&V and

could in turn inform the VfM decision.

To progress this a robust Budgeting & Forecasting tool that was able to analyse and pinpoint those areas that

caused budgetary pressure. However the key to the solution was the ability to communicate the financial

position to the senior stakeholders where the ability to present those VfM concerns were key to the

Programme progressing to the next stage of the life cycle.

In making the Treasury Green Book Compliant financial models the main focus there was a need for complete

transparency around costs and that all financial models need to stand up to scrutiny through the V&V process

and ultimately VfM decisions were informed through by robust decision making outputs. Other activity areas

included Risk Analysis, Monte Carlo Simulation, Optimism Bias and Sensitivity Analysis which all provided a

new layer around governance and providence of data.

The VfM decision at OBC stage was predicated on the basis that the programme delivered a number of

financial benefits that could be harvested through Police Officer efficiency savings. By delivering the robust

benefits delivery tool, it more accurately reflected those financial benefits that should be captured in the

Investment Appraisal and Affordability models and inform the VfM decision.

This took into consideration inputs and concerns from Senior Police Commanders and the result of this analysis

meant that very early on, decision makers understood the importance of the non-financial benefits that could

be further articulated in the FBC and by default getting key stakeholder buy in sooner than later.

CONCLUSION

It is noted that this paper has given but a very brief insight in to this real scenario but expectantly giving the

reader a feel of business cases and their need for answers to the questions posed. The summary sections

aimed to give the background and some of the unique problems encountered, the solutions given and benefits

realised and also where possible drew parallels where solutions could be used cross sector.

In reality the teams faced an ever expanding workload with RINA Consulting providing a wide ranging and

variety of skill sets that covered both financial accounting, modelling, analysis and the wider project,

programme & portfolio management, benefits, risk and overall support. As a result the suite of business case

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process documents were able to transition through the programme gateways quicker or areas for rectification

clearly recognised with the necessary support available. This all contributed working in partnership to develop

the Police’s internal capability further and giving a lasting legacy.

FOR MORE INFORMATION

© 2017 RINA Consulting - All Rights Reserved

For more information, please contact Peter.Dodd@RINA.org or Alf.Ferguson@RINA.org

SCAF’s first workshop of 2018 was held, for the first time, in the splendid setting of RUSI’s library within their

Whitehall Building in Central London. The workshop was opened by the SCAF Chairman, who welcomed

attendees both new to SCAF and established members before introducing the workshop.

Our first presentation was from Paul Marston and David Baggley from MCR Global. They took us through

some work their organisation had been conducting to try and identify potential cost savings in aircraft flight

paths. Paul demonstrated the visualisation tool that MCR had used to analyse the real data that they had

obtained covering the three main New York airports. The analysis had helped MCR identify the root causes of

traffic problems and the areas that these experienced a resultant significant impact. This was a visually

impressive presentation that showed a real practical example of how Cost Forecasting techniques can be

beneficial in other areas.

The second presentation was provided by Antony March and Gary Collier from Cost Assurance and Analysis

Services (CAAS) within Defence Equipment and Support (DE&S). They introduced us to the interaction

between the Forecasted cost, the Budget available to deliver the capability and latterly the Approval,

explaining how the potential budget influences the requirement, impacting the forecast in the early years. As

the capability definition improves any gap between the Forecast and Budget should be closed through

capability trade / additional funding ahead of Approval which is at the 50% confidence level. The CAAS team

then explained how project delivery was managed to the deterministic cost and the Forecast was maintained

through the delivery phase to ensure that as risks etc. matured the delivery cost was contained within the

Approval.

The final presentation of the morning was from another double team - Peter Tart and Colin Sandall from

QinetiQ who took us through “A Novel Emergent System Dynamics Approach to through Life Cost Estimation”

i.e. how they had addressed the issues of applying classic cost estimating techniques in a System Dynamics

environment. Their new approach allows a fully tailorable taxonomy, financial data (such as applicability of

taxation / VAT etc) and output data (such as FY) to be easily entered and configured. The QinetiQ team

Report on SCAF Workshop

Back to the Future – A Reappraisal of Cost Forecasting Techniques

February 2018, RUSI, London

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demonstrated the new tool that they had developed, that allowed dynamic modelling for aircraft support

costs. The team believes the new tool will provide increased robustness of maintenance costs due to the

intrinsic linkage to the schedule, particularly the ability to update flight data for specific aircraft.

After lunch the workshop continued with a lively presentation from Quinton von Eeden from Palisade entitled

“Optimising the cost of a portfolio of projects within a P3M investment environment”. The presentation was an

interesting introduction to using Quantitative Risk Analysis to understand the impact of the uncertainty

inherent within estimates. Quinton demonstrated how, using the Palisade @Risk tool, it was possible to move

from a qualitative understanding of risk to being able to quantify uncertainty.

“Big Data – Before you can Analyse, you have to Standardise” was our next presentation supplied by Tim

Brogan and Martina Sabova from Jaguar Land Rover. They took us through how their organisation had tackled

Data-Mining and the issues / pit-falls (pun intended) of the approach. Tim explained how his organisation had

tackled the difficulty of extracting useful and pertinent data from the vast swathes of data that a large

organisation with differing priorities can generate. The presentation covered the thorny subjects of data

ownership and the investment required for good data collation. It is also talked through one of the more

recent issues as the international trade in data grows and the need to be compliant with the different laws of

different countries. The talk finished with an introduction to the JLR Product Creation and Delivery System

with a case study on Data Management.

The penultimate talk of the day, “Caveat Praebitor (Supplier Beware)”, was a fascinating introduction to

Benford’s Law from Alan Jones (Estimata limited). More information on Benford’s Law is available here:

(https://en.wikipedia.org/wiki/Benford%27s_law), however, simplistically the first significant figure of a

naturally occurring set of data is statistically more likely to be a 1 than any other number. This provides a

means of testing a data set to identify if the data has been adjusted and has been used in Forensic Accounting

to identify potential Fraud. Alan explained the law and explored if it was possible to apply the law to identify

estimates that lacked robustness or had been adjusted. Another interesting and challenging presentation

which redefines the boundaries of Estimating best practice.

Speaking of Best Practise the final presentation of the day was from a man who has consistently sought to

improve his own estimates and install best practise wherever he has worked; Brian Tanner. Brian has now

retired for the third (and he says) final time, but treated the conference to a whistle-stop tour of highlights

from his Cost Forecasting career. Covering his time at MoD, BAES and TANFORD Consulting, the presentation

covered a range of naval vessels, and Cost Forecasting techniques as well as some of the “difficult”

conversations he had had through his career. Brian finished with some sage advice for new Cost Forecasters –

“Put your estimate into context” and “Be explicit”.

Report by Antony March

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SCAF Management Committee Meetings 2017/18

Date

Venue Focus

3rd Oct 2017 ATKINS, Aldershot 2017/18 Programme and November workshop

7th Nov 2017 QinetiQ, Bristol Ideas for SCAF Challenge

5th Dec 2017 ATKINS, Aldershot February workshop

9th Jan 2018 QinetiQ, Bristol Finalise SCAF Challenge and Annual Conference Themes

6th Mar 2018 ATKINS, Aldershot Discuss Award Dinner nominations and annual SCAF budget

15th May 2018 ATKINS, Aldershot Annual Conference, final details for Awards Dinner and Committee nominations, confirm subscription amounts

10th Jul 2018 QinetiQ, Bristol Annual Conference final details

2nd Oct 2018 ATKINS, Aldershot Programme and November workshop

6th Nov 2018 QinetiQ, Bristol Ideas for SCAF Challenge

4th Dec 2018 ATKINS, Aldershot

The committee would welcome any suggestions on particular topics that can be developed for debating at

future workshops or for round table/panel discussion. We would also welcome any comments on changes or

otherwise you might like to see to the workshop structure and content.

Please forward all comments to our Secretary Neil Morrill who can be contact at ndmorrill@dstl.gov.uk or call

01980 955 548.

Please also remember that the committee works for the members and will do their utmost to address any

issues raised to the benefit of the Society.

Many thanks for your support

Tell Us What You Would Like

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21 www.scaf.org.uk

Are you a company that sends 5 or more staff to any of our workshops? There are discounts available for block bookings with further flexibility offered for Corporate Membership. Further details can be obtained from the SCAF Treasurer, Dave Hedley email: SCAF.Treasurer@gmail.com or call 01252 738 562

12-15 Jun 2018 ICEAA Professional Development & Training Workshop, Phoenix, Arizona

17-20 Jul 2018 35th International Symposium on Military Operational Research (35 ISMOR), Royal

Holloway, University of London

13-14 Nov 2018 Project Controls Expo 2018, Emirates Arsenal Stadium, London,

SCAF Corporate Membership

Other Related

Events SCAF is not responsible for the content of any

external websites published in this Newsletter

Networking for the Cost Forecasting and Analysis Community

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For over 20 years the Society has sought to illuminate key issues in the analysis and forecasting of project costs—and to promote best practice within the cost forecasting community.

The Society provides a single point of contact for advice to those wishing to address key issues in the analysis and forecasting of costs and timescales of complex programmes.

Workshops and seminars are held at regular intervals throughout the year. A newsletter is published electronically 4 times a year.

Collaborative links with other societies has always been maintained and a library of relevant papers are available. A single annual payment at the Annual Conference entitles members to attend all the years’ programme of SCAF events at no further cost. The Summer Reception is also provided free to SCAF members and their guests.

SCAF is committed to providing Continuing Professional Development (CPD) through the provision of its skills workshops and its support to Professional Development courses.

The Society is self-funded and a Not-for-Profit organisation that continues to provide its members with exceptional value for money.

SCAF 2017/18 Committee Members and Contact Details

Join us at our

Linkedin Group

Society for Cost

Analysis and

Forecasting - SCAF

Chairman: Dale Shermon Chair@scaf.org.uk T: +44 (0) 1179 528 455 M: +44 (0) 7785 522 847

Newsletter Editor: Arthur Griffiths Editor@scaf.org.uk M: +44 (0) 7792 911 279

Treasurer: Dave Hedley Atkins SCAF.Treasurer@gmail.com T: +44 (0) 1252 738562

Secretary: Neil Morrill Dstl ndmorrill@dstl.gov.uk T: +44 (0) 1980 955 548

Committee: Sanathanan Rajagopal QinetiQ srajagopal@qinetiq.com T: +44 (0) 306 798 2339

Dr Paul Baguley Cranfield University p.baguley@cranfield.ac.uk T: +44 (0) 1234 750 111 x 5658

Dave Baggley MCR Global UK david.baggley@mcri.com M: +44 (0) 7960 961 191

Dr Paul Wood BMT HiQ-Sigma Paul.wood@hiqsigma.com T: +44 (0) 1225 820 980

Prof. Linda Newnes Bath University L.B.Newnes@bath.ac.uk T: +44 (0) 1225 386291

Antony March MoD, CAAS Antony.march636@mod.gov.uk

Paul Salmon MoD, DE&S Paul.salmon777@mod.gov.uk