Costing Centre of Expertise - fmi*igf Centre for Expertise - Scott Davis... · Chief Human Resources Officer Daniel Watson Governance, Planning and Policy Ross MacLeod ... by Costing

Costing Centre of Expertise

PD Week 2014

Agenda for Results Stream: Session 2

Outline

• Why we exist

• What we do

• How we do it

• Where we are going

Office of the Comptroller General, Financial Management Sector

2

Why?

• July 4, 2013, Prime Minister approved several measures to strengthen the Expenditure Management System– Improvements to new spending– Improvement to existing spending


3

What’s Been Done …

• Costing Centre of Expertise– Built upon capacity within the Office of the

Comptroller-General (3 positions)– Staffing-up since the fall of 2013 (28

positions)– Went-live February 3rd, 2014 (70% staffed)

• Our Niche:– Challenge of new spending initiatives and – Horizontal reviews in conjunction with EMS– External charging & User Fees Act


4

New Spending Reviews …

• More stringent Chief Financial Officer attestations – Guideline effective January 1, 2014

• Costing Centre to conduct ‘enhanced due diligence’ review of Cabinet documents of interest


5

Capacity Building

• Creation of CCE capacity

• Development of training on costing for the community– Introduction to Costing (CSPS F-132 )– Application of Costing Principles (CSPS F-133 )– Advanced Costing - Under development

• Development of Guidelines– Guide: Costing (update in Fall 2014)– Guide: Costing of Capital Assets (Fall 2014)– Guide: IT Enabled Capital Assets (Fall 2014)– Guide: Recording, Reporting of Internal Services


6

How Does it All Fit Together?


7

High Level View of Secretariat


8

Program Sectors Policy Sectors Enabling Functions

Human Resources

Jayne Huntley

Office of the Chief Human Resources Officer

Parliamentary Secretary Dan Albas

President of the Treasury Board

The Honourable Tony Clement

Legal Services

Dora Benbaruk

Secretary of the Treasury Board

Yaprak Baltacıoğlu

Corporate Services

Christine Walker

Chief Information Officer

Corinne Charette

Deputy Chief Information Officer David Adamson

Compensation and Labour Relations

Manon Brassard

Associate Assistant Deputy

Minister Carl Trottier

Strategic Communications and Ministerial Affairs

Monique Lebel-Ducharme

Government Operations

Cécile Cléroux

Pensions and Benefits

Bayla Kolk

Expenditure Management

(Vacant)

A/ Deputy Assistant Secretary Sally Thornton

Priorities and Planning

Roger Scott-Douglas

Social and Cultural

Leslie MacLean

International Affairs, Security and Justice

Iain Stewart

Regulatory Affairs

Michael Vandergrift

Office of the Comptroller General

Comptroller General

Bill Matthews

Acquired Services and Assets

Elisa Mayhew

Financial Management Roger Ermuth

Economic

Taki Sarantakis

Chief Human Resources Officer

Daniel Watson

Governance, Planning and Policy

Ross MacLeod

Associate Secretary

Ron Parker

Internal Audit and Evaluation

Mike Milito

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Financial Management Transformation

Patricia Sauvé-McCuan

Internal Audit

Anthea English

Vision

Decision-makers are provided robust financial information framed by entity-level metrics when asked to consider a funding proposal.


9

Meaning …

Costing approach is suitable to

decision

Data is appropriate for decision point

Cost/Time to close any gaps

Benchmark to like projects

Assess overhead costs: stepped

variable

Funding strategy

Evidence Base Due Diligence Comparisons


10

Evidence Base …

• Approach to costing suitable for decision point– Guide to Cost Estimating of Capital Assets

• Appropriate data for decision-point– CFO Attestation– Working papers supporting the CFO

attestation

• Closing any gaps– Liaison with the CFO through the Program

Sector of TBSOffice of the Comptroller General, Financial Management Sector

11

Enhanced Due Diligence …

• Review of the financial Information presented– Alignment– Assumptions– Comprehensiveness– Methodology– Contingency– Modeling where appropriate

• Chance to exceed budget• Areas of financial risk

• Identify Financial Risks


12

Comparison …

• Benchmark Direct Spending to like-projects– Historical projects – Other jurisdictions

• Review Internal Service Costs– Appropriateness– Capacity assessment– Stepped variable costs


13

How do we get there …

• Five Year Financial Review– Policy instruments

• Professional Standards (OCG & CFO communities)– Designations– Working papers

• Training– Advanced courses– Working paper development/maintenance

• Modeling• Entity level metrics (aka strategic analytics)


14

Five Year Financial Policy Update

• 1 Policy– Concepts relevant to Accounting Officer

• 8 to 10 Directives– User fees and costing principles identified

• Guidelines and Tools– Accessible through web portal– Recommendations, not prescriptive


15

Guidelines on Costing


16

Professional Standards

• Lessons Learned from other jurisdictions– UK Capital Asset Project Management

Course– United States General Accounting Office

(GAO)

• International Cost Estimating & Analysis Association (ICEAA)– Cost Estimators Body of Knowledge (CEBoK)

• Government Specific Standards or Affiliate– Reach out to Provincial/Territorial bodiesOffice of the Comptroller General, Financial Management

Sector17

Professional Designation

Volume of Cost Estimates

Com

plex

ity o

f Cos

t Est

imat

es

Intermediate Costing Training Required

Professional Designation Required

(ICEAA potentially)

Intermediate Costing Training Required

Basic Understanding of Cost Estimating Techniques


18

CFO Attestation Working Papers …

• Support CFO Attestation

• Develop common professional standards for Working Papers to facilitate 3rd party review

• Should be available for the ‘enhanced due diligence’ review of Cabinet documents

• Considering quality assurance of Working Papers by Costing Centre of Expertise outside of Cabinet document process


19

Modelling …

• What happens to the Cost Estimate in the face of uncertainty?– Sensitivity analysis is insufficient

• Possible or Probable– Cost– Scope– Schedule


20

Entity Level Metrics

• What questions do we need to answer– Can direct program funding be benchmarked– What is an appropriate Internal Service (IS)

Rate– Should IS funding be based on a stepped

variable principle


21

No Single Internal Service Rate

HIGHMEDIUMLOW

HIGH

MEDIUM

LOW

Dept’l Operating ReachD

ept’l

Ope

ratin

g Si

ze

and

Com

plex

ity

DND

AANDC,HC, DFO

Comm.of

Lobbying

Policy or Centralized Operational

Entities

Highly Dispersed

Operational Entities

Moderately Dispersed

Operational Entities

PCO, TBS, FIN DFAIT

CRTC,PSC

TC, PWGSC,

ESDC

Small size and relatively low operating

complexity (e.g., most

SDAs)

Relatively large,

complex operating entities

Medium-sized,

reasonably complex entities


22

Internal Service Rate Analysis

Departmental IS MAF Assessment

Results

Departmental IS cost ratios in relation to the median cluster

cost ratios

A reasonable proxy for the department’s IS cost

performance (both blended and for each IS

line)

GC IS cost performance in relation to other

governments (illustration purposes

only)

1

2

3


23

Lessons Learned to Date

• CFO Organizations need to be engaged sooner– CFO organization should endorse drafts

before they are sent to TBS for review

• TBS Analysts need to be engaged sooner as well

• Answer TBS questions quickly and completely

• Reflect the new perspective into subsequent drafts of the document


24

Questions

Documents

Costing Centre of Expertise - fmi*igf Centre for Expertise - Scott Davis... · Chief Human Resources Officer Daniel Watson Governance, Planning and Policy Ross MacLeod ... by Costing