Case Study 3
Integrated Cost Modelling
(Federal Government)

Brief

In 2012 Department of Defence established the Centralised Processing Project to market test Defence’s Mainframe, Midrange, Storage, Databases, Applications and management of Data Centres. BRG assisted Defence at this time to establish a fully integrated cost model which was dynamic and responsive to instantaneous modelling and change scenarios.

Solution

Design and blueprint a fully integrated model which comprised of independant files all linked rather than build one large file. This approach ensured file integrity and stability and isolated different views of costs. All files were designed and created to a common template in order to reduce the likelihood of data paste link errors. See Figure 1 below.

What BRG did …

Build five independant Excel files as follows:

Financial Basecase: This file discloses all the different categories of cost for the existing system. For instance, it captures any hardware replacement or refreshes over the life of the system as well as the sustainment (BAU support cost) to support the system over its life.

Project Cost Model: This file discloses all the projected costs to establish the system (acquisition capital costs) as well as the ongoing costs to support and sustain the new system up to Life of Type. The file will also include any other Defence GFx costs to support the new system. This gives a Total Cost for the new system projected to Life of Type.

Benefits Realisation Model: This file discloses each benefit arising from the project. These benefits are classified into ‘cash’ benefits and ‘non-cash’ benefits. Cash benefits represent real savings, ie: FTE, while non-cash benefits represent efficiencies to process (productivity benefits).

Evaluation Model: The evaluation model brings together summary data from the ‘Financial Basecase’, ‘Project Cost Model’ and ‘Benefits Realisation Model’. This information will form the basis of a cost / benefit analysis.

CABSUB Financial Tables: The CABSUB financial tables file is the basis for auto generating the required tables in their correct format for inclusion within the Cabinet Submission supporting the approval for the project. This file is linked to the ‘Evaluation Model’.