Press Release - Ministry of Defence: Major Projects Report
2005
25 November 2005
The National Audit Office’s annual report on the top 20 defence
equipment projects shows that, in the last year, the forecast cost
has actually decreased by £700 million but on average each project
has been delayed by two and a half months.
The delays are mainly due to technical problems in three
projects: CIP (which covers a number of software and hardware
systems building on the Bowman communications project), Nimrod, and
ASTOR (Airborne Stand-Off Radar). Timescales on 14 of the projects
have not changed in the last year.
The decrease in the forecast cost is mainly due to changing
requirements or reducing the quantity or capability of the
equipment. The most significant decreases of this kind are for
Future Joint Combat Aircraft where the MOD has removed provisions
for extra capabilities such as for weapons that were due to be
added later. It also found a more cost effective Helmet Mounted
Display System and the combination of these and other measures led
to a reduction of £428 million. The other two projects having
significant decreases in forecast costs are Sting Ray Torpedo Life
Extension and Beyond Visual Range Air-to-Air Missile.
The report examines in detail the assessment phase of projects.
In the past the MOD has not spent enough time or resources to
enable it to predict accurately how much projects will cost or how
long they will take. The MOD’s approach to the assessment phase has
improved but greater clarity is needed about when a project is
ready to move out of this phase. This should include how the MOD
will balance the levels of risk remaining on projects at the end of
the assessment phase with benefits they aim to deliver.
In the assessment phase, the report also finds that there is
further to go in developing robust cost estimates; it finds that
there are signs that the MOD is engaging constructively with
industry; and it highlights the need to identify the minimum and
maximum requirements so that trade-offs can be made.
Sir John Bourn, head of the NAO, said
today:
“The decrease in the forecast costs is a positive sign
that the MOD is starting to bring its equipment programme under
control. However, it is too early to judge whether this is the
start of a sustained improvement in the MOD’s project management.
Important in achieving this improvement will be a greater
understanding of projects at the outset, including an objective
assessment of risk and benefit, and that is why the assessment
phase is so important.”
Notes for Editors:
- Press notices and reports are available from the date of
publication on the NAO website, which is at
www.nao.org.uk. Hard copies can be obtained from The
Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
- The total forecast cost for 19 projects (the costs for one of
the projects is excluded because it is commercially sensitive) is
£29 billion which is 10 per cent higher than the expected cost at
approval.
- The total delay for 19 projects is 375 months later than
expected when approved, an average of some 20 months per
project.
Press Notice 62/05
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Mobile: 07748 181693