ANAO’s 2017-2018 Major Projects report has highlighted project slippage as an area of concern for Defence.
As Managing Editor Katherine Ziesing said in this month’s editorial, the ‘golden triangle’ of project management – cost, capability, and schedule – rarely align, and if managers are going to pick one to fail, then it will be scheduling: “One senior Commonwealth leader once remarked to me that he could be held criminally responsible for his performance on capability and cost but not schedule.”
The number-crunchers at ANAO have proved this maxim true. Whilst delays in achieving Final Operating Capability will hardly come as a surprise to readers, the growth in their frequency makes for alarming reading, with 26 selected projects amassing 801 cumulative months of delays as of June last year.
The figure represents a 32 per cent increase since Second Pass approval.
The projects guilty of significant contributions to the total cumulative figure include the Collins R&S and Replacement Combat System projects (112 and 109 months total slippage respectively), MRH-90 Taipan helicopters (89 months), and the Anzac-class anti-missile defence upgrade (67 months).
Of these, the Taipan suffered the greatest in-year setback, delaying FOC by another 29 months. The UHF Satcom program was delayed a further 12 months, and battle communication systems (Project Currawong) set back 13.
ANAO acknowledges that projects with the ‘most developmental content’, including the Taipans and Anzac-class missile defence upgrades, experienced the most delay.
The report then reaches another unsurprising conclusion: “A focus on MOTS (military off-the-shelf) acquisitions has assisted in reducing schedule slippage.”
Another measure of project status is the difference between budget spent and time elapsed. Four projects had a budget spend over 20 per cent less than expected in the time elapsed – the F-35, C-27Js, Project Currawong, and the LHD landing craft. The report, however, did not classify these programs as ‘at risk’ because each discrepancy was attributable to unique payment scheduling and contingency funding arrangements.
The report also notes that underestimation of scope and complexity, “particularly for Australianised MOTS and developmental projects,” is the primary culprit for project slippage.
ADM Comment: Underestimation of complexity is a reflection of the competitive environment surrounding major tenders, but also mirrors a deeper tendency to try and bury bad news (brought to light last year by Thales’ legal actions against the ANAO report into Hawkei).
The Major Projects report may make for difficult reading, yet clearly calls for clarity and honesty in the early stages of major builds.