The presentations from the above Seminar and AGM are now on the SCAF web site under Library items.

Defence IQ presents “Through Life Support and Costing,” an event to be held from June 19-20, 2008 at Café Royal, in London, UK. A 10% discount is available to SCAF members. To take advantage of this opportunity, email imaad.ahmed@iqpc.co.uk.

Costs for the logistics, maintenance, upgrades and man power are just some of the factors that need to be incorporated into the headline figure for all future procurement programmes. Join your peers to:

• Assess the drive for Through Life Capability Management (TLCM): Understand what has been achieved so far with presentations from the National Audit Office and Cranfield University
• Gain insights into Through Life Support of defence equipment. Understand the importance of planning for full service life span from OCCAR-EA and Boeing.
• Benefit from lessons learned from international drives to improve the procurement process. Hear the successes of other nations including Canadian, American and NATO perspectives
• Discover the latest methods of upskilling people on TLCM: Hear from DEC (AWE) about the Informal Performance Support System (IPSS)

Confirmed speakers include:

• CDR Neil Stewart, Training Lead DEC AWE, UK MoD
• Dr. Ben Taylor, Central OR Team DRDC CORA, Canadian Department of National Defence
• Arthur Griffiths, Executive Secretary to the Through Life Cost Analysis Working Group, NATO
• Dietmar Fiegas, ILS/ISS Section Leader, OCCAR-EA
• Dr. Brian Flynn, Special Assistant to the Director, Naval Centre for Cost Analysis, US Navy
• Tim Banfield, Director Defence, National Audit Office

Website: www.iqpc.com/UK/tlsc/scea
Email: enquire@defence iq.com

The DE&S Cost Assurance Service (CAS) has celebrated the first cost engineers and forecasters passing the Society of Cost Estimating and Analysis (SCEA) examination. To mark the achievement CAS senior management presented the certificates. SCEA sets the standard for promoting cost estimating and analysis within government and industry, for providing training and for propagating ethics and standards of conduct throughout the profession. The achievement of the qualification meets upskilling requirements while also providing a professional service to customers. The success of the DE&S candidates sets the scene for the establishment of a UK chapter to further the professional recognition of cost estimating, analysis and assurance in the UK. A number of other MoD departments and UK defence contractors have already expressed interest in supporting this initiative and will be forwarding candidates in next year’s programme.

The SCAF Secretary has updated us with the calendar of events for 2008. Among dates of note is the SCEA Training Day which will cover Independent Estimation, Cost Forecasting, Should Cost and more. Also the SCAF/SSCAG/EACE Joint Workshop in the Netherlands in May.

Have a look and pop them in your diary.

On 27 March 2007 the Engineering-Manufacturing Committee (EMC) of the Association of Cost Engineers shall be delivering their 8^th Learning Event Seminar to extend the understanding of key issues and processes that affect working lives in the manufacturing industry. The event provides an opportunity to learn best practices from experienced practitioners from industry and active researchers. An exhibition of latest developments in software and methods will also be available from Vendors as well

The event is on the 27 March 2007 at the National Motor
Cycle Museum, Bickenhill, Solihull, West Midlands

www.nationalmotorcyclemuseum.co.uk

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Costing in Concept and Assessment”, which will consider the practices and pitfalls of producing Cost Estimates and Risk Analysis for Business Cases.

The speakers will be: David Hammond, PFG Keith Alker, S&A Julian Gibbs, BMT Reliability Consultants Jason Hopewell, ATOS Origin UK Prof. Jim Moffat, DSTL Paul Duvall, HVR Consulting Services Ltd The Seminar will also include the society AGM, as well as feedback on September’s 3 day joint conference.

The cost of the full day seminar (10am to 4:30pm) will be the normal £70, and will include membership for the rest of the SCAF year. If you wish to attend, please contact the SCAF Secretary Max Murray Brooks .

The venue is SI Suite Abbey Wood

The theory and advice on EAC was covered in an article by Ray Cherry in the Autumn 1998 SCAF Newsletter, what is still a the major point to tackle is when is the most appropriate time to use the EAC methodology.  In practice, it does appear that the decision to use EAC is almost on a whim rather than a structured approach, or the method is not even known about, causing additional problems in attempting to give impartial advice.

We also have the additional advice that for Financial Appraisal, discounting is not even appropriate at all as this is concerned with short to medium term appraisal. They should include VAT and Capital charges but stop at that.

For an Economic Appraisal, the EAC way is the preferred method as it does at least look at the Whole Life Costs and make an allowance for dissimilar In service life and dates. What is still an emotive point for discussion is the treatment of sunk costs, specifically those of a significant size. The calculation of present value and equivalent annual cost ignores sunk costs, which represents expenditure which has been incurred or irrevocably committed prior to the current year.

The principle of sunk costs and their general treatment in economic appraisal is discussed in HM Treasury guidelines. It does seem illogical not to consider such sums. One advisory method of dealing with this is where significant sunk costs have been incurred, the calculation of equivalent annual cost must differ between the first equipment and its assumed replacements The replacement equipment will incur all project costs, including the “sunk” costs incurred as part of the first equipment project. If that not clear or it does not stand up to scrutiny, lets keep the debate going or make the guidance relevant to the IA. Over to you

David Burgin  MoD

Post any comments here for items lodged in the library accessed via the mainn SCAF website.