tucumseh
5th Jul 2006, 17:22
MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 2005
Source: House of Commons Public Accounts Committee
The Major Projects Report 2005 provides information on the time, cost and performance of the Ministry of Defence's (the Department's) 20 largest projects where the main investment decision has been taken; and the 10 largest projects in the Assessment Phase.
For the approved projects, forecast costs were some £700 million lower compared to the previous year. This change was primarily due to reductions in either capability or platform numbers to balance the overall programme. Total forecast costs for these projects now amount to £29 billion, some 10% over budget. In-year timescale slippage increased by 45 months, giving a total delay of 375 months, or an average of some 20 months per project. The Department does, however, expect to meet the majority of its Key User Requirements.
Conclusions and Recommendations
1. The Department has reduced the forecast costs of its top 19 projects by some £700 million. These reductions in forecast costs were not the result of better project management but were cuts needed to bring the Defence Equipment Plan under control. The Department achieved these reductions by cutting the numbers or capability of equipment, and has yet to demonstrate that it can consistently manage individual projects to deliver the planned operational benefits to the Armed Forces to cost and time.
2. Some of the latest capability cuts are short-term expediencies which may result in an erosion of core defence capability or in higher costs throughout the life of individual projects. When deciding how to live within its overstretched budget, the Department should not make short-term cuts without first spelling out the longer-term negative impacts in terms of core capability or poor value for money.
3. The Department's defined levels of capability do not include the quantity of equipment bought. So they can allow quantities to be cut to offset cost overruns, without affecting measured capacity. In defining threshold levels (minimum acceptable capability) and objective levels (full capability desired) for equipment capability on projects coming forward for approval, the Department should reflect quantities as well as performance characteristics.
4. Despite previous assurances that it had restructured many of its older projects, at considerable cost, to address past failures, the Department still attributes much of its historic poor performance to so called "toxic legacy" projects which continue to accumulate considerable time and cost overruns. The Department cannot indefinitely hide behind past deficiencies, while claiming to be taking a proactive approach to addressing the problems. It is time that these projects were put on a firm footing with realistic performance, time and cost estimates against which the Department and industry can be judged.
5. The Department has improved its practice in setting meaningful in-service dates, but still not all future in-service dates represent the delivery of useable capability to the frontline. In defining these dates it needs to incorporate areas such as logistic support and training to enable the Armed Forces to use the equipment effectively.
6. In co-operating with the United States on defence projects, the United Kingdom is the junior partner, which reduces our influence over the project's direction. Conversely, a lack of focused leadership has stymied progress on many European collaborative projects. The Department should routinely analyse co-operative projects to see how far the expected benefits are delivered, so that it can make better informed decisions before committing to future co-operative acquisitions.
Somewhat scathing. I imagine MoD's internal reaction will be the usual "Ignore it. It refers to previous years and we have moved on/improved". Most here will find item 3 unbelievable. It's true.
Source: House of Commons Public Accounts Committee
The Major Projects Report 2005 provides information on the time, cost and performance of the Ministry of Defence's (the Department's) 20 largest projects where the main investment decision has been taken; and the 10 largest projects in the Assessment Phase.
For the approved projects, forecast costs were some £700 million lower compared to the previous year. This change was primarily due to reductions in either capability or platform numbers to balance the overall programme. Total forecast costs for these projects now amount to £29 billion, some 10% over budget. In-year timescale slippage increased by 45 months, giving a total delay of 375 months, or an average of some 20 months per project. The Department does, however, expect to meet the majority of its Key User Requirements.
Conclusions and Recommendations
1. The Department has reduced the forecast costs of its top 19 projects by some £700 million. These reductions in forecast costs were not the result of better project management but were cuts needed to bring the Defence Equipment Plan under control. The Department achieved these reductions by cutting the numbers or capability of equipment, and has yet to demonstrate that it can consistently manage individual projects to deliver the planned operational benefits to the Armed Forces to cost and time.
2. Some of the latest capability cuts are short-term expediencies which may result in an erosion of core defence capability or in higher costs throughout the life of individual projects. When deciding how to live within its overstretched budget, the Department should not make short-term cuts without first spelling out the longer-term negative impacts in terms of core capability or poor value for money.
3. The Department's defined levels of capability do not include the quantity of equipment bought. So they can allow quantities to be cut to offset cost overruns, without affecting measured capacity. In defining threshold levels (minimum acceptable capability) and objective levels (full capability desired) for equipment capability on projects coming forward for approval, the Department should reflect quantities as well as performance characteristics.
4. Despite previous assurances that it had restructured many of its older projects, at considerable cost, to address past failures, the Department still attributes much of its historic poor performance to so called "toxic legacy" projects which continue to accumulate considerable time and cost overruns. The Department cannot indefinitely hide behind past deficiencies, while claiming to be taking a proactive approach to addressing the problems. It is time that these projects were put on a firm footing with realistic performance, time and cost estimates against which the Department and industry can be judged.
5. The Department has improved its practice in setting meaningful in-service dates, but still not all future in-service dates represent the delivery of useable capability to the frontline. In defining these dates it needs to incorporate areas such as logistic support and training to enable the Armed Forces to use the equipment effectively.
6. In co-operating with the United States on defence projects, the United Kingdom is the junior partner, which reduces our influence over the project's direction. Conversely, a lack of focused leadership has stymied progress on many European collaborative projects. The Department should routinely analyse co-operative projects to see how far the expected benefits are delivered, so that it can make better informed decisions before committing to future co-operative acquisitions.
Somewhat scathing. I imagine MoD's internal reaction will be the usual "Ignore it. It refers to previous years and we have moved on/improved". Most here will find item 3 unbelievable. It's true.