Press Release - Ministry of Defence: Major Projects Report
2001
23 November 2001
Sir John Bourn, head of the National Audit Office, reporting
today on the top 20 defence equipment projects in demonstration and
manufacture, told Parliament that the Ministry of Defence is
meeting the technical requirements of the majority of its
customers, whilst continuing to improve cost control and beginning
to bring delays under control. On the top 10 projects in the
assessment phase, where the objective is to prioritise solutions
and reduce risk to an acceptable level, he told Parliament that the
MoD has yet to develop a comprehensive set of measures to assess
the success of the phase and whether it is spending the right
amount of time and money reducing risk.
Since 1998, the Ministry of Defence has been working under new
processes known as Smart Acquisition, which are intended to enable
the Department to buy military equipment "cheaper, faster and
better". The Major Projects Report 2001 this year examines how
performance under Smart Acquisition is being measured. Sir John
reports that the Department needs to better assess the impacts of
Smart Acquisition and is working to develop more comprehensive
indicators to demonstrate whether its acquisition performance under
Smart Acquisition is improving.
Key findings in the Report are:
From examination of the top 20 projects in demonstration
and manufacture:
- performance against 80 per cent of cost, time and technical
parameters is the same, or better than it was a year ago;
- the Department is continuing to control project costs better –
costs have decreased for the second year running (by some £100
million), and overall forecast costs are £42.7 billion, or 6.6 per
cent (£2.6 billion ) above approval;
- some projects continue to slip but there is evidence that the
Department is beginning to slow the rate of slippage – four of the
20 projects (Swiftsure and Trafalgar Class Submarine Update,
Seawolf Mid-Life Update, the Advanced Short Range Air-to-Air
Missile, and Attack Helicopter) have slipped in the last year by a
total of 29 months, less than half the slippage reported in the
Major Projects Report 2000; and
- the Department is continuing to meet the majority of the
military customer's requirements (93 per cent) but, in the last
year, technical factors have led to performance falling short of
requirements on two projects, Spearfish and the Advanced Short
Range Air-to-Air Missile.
From examination of the top 10 projects in the assessment
phase:
- the Department needs to be able to reliably assess and quantify
the extent to which risks are being reduced in the assessment phase
but does not currently do this in a comprehensive and suitably
quantified way; and
- the Department is rightly looking to develop better, more
quantified risk reduction measures and to use them in conjunction
with cost and time measures to inform successful assessment phase
performance.
On measuring the progress of Smart
Acquisition:
- information on whether Smart Acquisition is delivering the
expected benefits is available but does not capture all of the
continuing benefits anticipated across the Department and through
the life of the equipment. The Department's £2 billion Smart
Acquisition target provides information on the initial cost
reductions made only in the procurement phase; and
- the Department is working to improve the link between the
different sources of information to provide a comprehensive and
coherent assessment of the progress of Smart Acquisition across the
Department through evolving the current metrics and developing new
ones.
Sir John said today:
"I welcome the signs that the Ministry of Defence is
beginning to bring delays on major projects under control, and is
continuing to control costs on major projects and to meet the vast
majority of the technical requirements of the Armed Services. This
is an encouraging indication that Smart Acquisition may be
delivering its expected benefits and I expect this progress will
continue in future years.
"I am concerned, however, that comprehensive indicators are not yet
in place to measure the success of the assessment phase in reducing
project risk, which is key to future successful acquisition. Nor
are there measures to fully assess whether all of the benefits of
Smart Acquisition are being achieved. MoD should give priority to
establishing such indicators."
Notes for Editors
Press notices and reports are available from the date of
publication on the NAO website at http://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 employing some 750 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.
Press Notice 55/01
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