AAOM Handbook

• one comparison of forecast and actual frequency, and cost for each Activity for each forecasting/measurement period (minimum period typically 1 month).

Quality

The deliverables shall meet the following requirements; • The Resource Types should be those that are significant to the overall cost of the Activities in the EPS, and that are directly involved in those Activities (consider labour, equipment, utilities and materials/spares, etc). • The Resource Type cost estimates should be informed by ERP data records wherever possible. • The options for filtering and presentation of the EPS shall match those specified for the Operating Master Schedule. • Each infrequent (less than 10 occurrence per month) Activity shall have a three point estimate of cost – the worst case, most likely and best case estimates. An average cost may be used for high frequency Activities. • The Activity cost estimates shall be combined in a Monte Carlo simulation with the OMS estimates for the frequency of the Activity to estimate the probability distribution for costs. • A confidence level for the Expenditure Schedule shall be the cumulative probability of the most likely budget value within the probability distribution as defined above. • The value of the expenditure contingency estimate shall be the sum that must be added to the ‘most likely’ value for the Expenditure Schedule in order to reach a budget value equal to the target confidence level. • The EPS shall typically include 3 to 5 years, commencing with the current year. • The EPS shall be extended on a regular basis, typically no more than 3 monthly. • The Expenditure Schedule shall provide monthly forecast expenditure values for the next 12 months, and annual values f subsequently. • The profile of Work Centre resource demand shall be in the form of a histogram of the units of resource required, per week, to deliver the OMS. The histogram should show the weekly total demand for the next 12 months of the OMS, and the monthly demand thereafter.

The detailed activities of Set Expenditure Schedule shall conform to the specifications set out in the Set Budget Flowchart and TAs ES.01 to ES.09.

© McAlear Management Consultants 2006

Operational Planning: Set Expenditure Schedule

Updated: August 2018

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