25/11/2005

MoD faces overspends on projects

The Ministry of Defence is still facing overspends and delays on projects, a new report has revealed.

A report on the top 20 defence equipments projects, by the National Audit Office, found that the forecast cost had actually decreased by £700 million, but that each project was delayed by an average of two and a half months.

The NAO said that the total forecast cost for 19 projects – not including the cost of the Eurofighter project, now called Typhoon, which is “commercially sensitive” – is £29 billion – 10% higher then the expected cost of approval.

The total delay for the projects was 375 months later than expected when approved, averaging at around 20 months per project.

The report said that the delays were 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).

The NAO reported that timescales on 14 of the projects had not changed in the last year.

The report said that the decrease in the forecast cost was mainly due to changing requirements or reducing the quantity or capability of the equipment.

The most significant decreases of this kind were for Future Joint Combat Aircraft, the NAO said, where the MoD had removed provisions for extra capabilities, such as for weapons that were due to be added later. A more cost effective Helmet Mounted Display System was also found and the combination of these and other measures led to a reduction of £428 million, the NAO said.

The Sting Ray Torpedo Life Extension and Beyond Visual Range Air-to-Air Missile also had significant decreases in forecast costs.

The NAO said that the MoD had not spent enough time or resources in the past to predict how much projects would cost and how long they would take. However, the report found that this had improved, although greater clarity was needed

Sir John Bourn, head of the NAO, said:” 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.”

(KMcA/SP)

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