Cobec University

The public and private sectors have different valuation techniques, motivations, and considerations when evaluating capital budgeting decisions.  Understanding the difference between private and public sector capital investment analysis – discounted cash flow, cost/benefit considerations, nominal/real discounting, stakeholders, and cost of capital – helps decision-makers make better informed decisions.  In 2023, the OMB updated its Circular A-94 with new nominal and real discount rates, significantly reducing the real discount rate for cost-benefit analyses. This could have unintended consequences in project valuation when including private sector stakeholders who traditionally have a higher cost of capital. In this paper and presentation, we explore the major differences in valuation, stakeholder motivations, and discount rates in public and private sector investment decisions and the impact of inflation.   Understanding value drivers in both sectors is important for the cost estimating community and makes us more effective Finance professionals.

The Alternative Cobec Cost Model is not meant to replace the current Cobec Cost Model. This meeting will take a deeper dive into the new Alternative Cost Model, which is also built in Microsoft Excel but does not contain macros. A template of the new Alternative Cost Model will be shared in the Cost CoE Teams Channel ahead of the meeting. This will be the first of multiple Cost CoE-only Lunch & Learns about this topic. Today’s topic will be to show/walk-through a template and simple example of the new model without risk (Point Estimate) to show how the model works. Future meetings will: (1) review/answer questions, and (2) discuss how risk is applied on the new Alternative Cost Model (since risk is applied differently compared to the current Cobec cost model). More to come!   

This course provides an overview and guide to the FAA Economic Factors workbook.

Cost estimators are often presented with incomplete data sets from which they must develop business case solutions. Understanding, interpreting, and improving the data integrity are critical factors for cost estimate accuracy. In this use case, the cost estimators analyze and interpret incomplete and subjective data sets, forecast spares depletion, and estimate obsolescence. Using innovative data mining and text analysis techniques, the estimators demonstrate how improved data can result in better cost estimates and business cases.