Mr Bacon said: “Last year, the delays facing the Ministry of Defence’s 20 biggest equipment projects increased by an extra eight years and by £205 million, the biggest in-year slippage since 2003.  The MoD’s perennial problem is its notoriously poor project management and its tendency to set delusional deadlines for major equipment based on fanciful ideas of what can reasonably be achieved, by when and for how much money.”  

“Even when the MoD manages a small success in improving this situation, it seems to come with a sting in the tail.  For example, the MoD’s use of fixed-price contracts has made sure that cost overruns are borne by the defence industry, but these contracts have also made it harder for the MoD to tackle the cause of these overruns.  This is a long-standing issue for the MoD but any improvement seems to be further away than ever.  It seems a vain hope, but the MoD needs to work much, much harder to get a grip on this, especially as its budget is likely to come under severe pressure in the years to come.” 

Mr Bacon, a member of the Commons public accounts committee, was speaking as the committee published its report into the time, cost and performance of the Ministry of Defence’s 20 largest equipment projects.  In the last year, the MoD’s 20 biggest projects suffered a further £205 million of cost increases and 96 months additional slippage, the worst in-year slippage since 2003. Total forecast costs for these projects have now risen to nearly £28 billion, some 12 per cent over budget and total slippage stands at over 40 years, a 36 per cent increase on approved timescales.

The report finds that problems identified in the report are being caused by previously identified failures such as poor project management, a lack of realism, not identifying key dependencies and underestimating of costs and timescales. The reoccurrence of these problems suggests that the Department’s latest acquisition reforms, introduced in 2001, are not yet resulting in the Department making better investment decisions or improving the execution of its defence projects.  The report also finds that recent fixed-price contracts with industry have ensured cost overruns are borne by industry, yet the MoD’s influence over these projects has correspondingly been reduced, eroding its ability to tackle project delays.

 15 May 2009
 

See also::
PAC REPORT: Major Projects Report 2008