Headlines: May 15th, 1998

Major projects of the Ministry of Defence are three years late and in total £3b over budget. In its Annual Report the National Audit Office details where the slippage and cost escalation has taken place and analyses the causes.The Report shows a decline in the effectiveness of project management. The cost variance over the last five years shows an average increase from 2.6 to 7.5 per cent of approved costs. The time variance has moved from an average delay of 32 months to 37 months. The are two main causes of cost increases on projects. Changes to the programme resulting mainly from events which occur between project approval and main contract letting and from the operation of inflation clauses in fixed price contracts. The most common causes of delay are technical difficulties and budgetary constraints.

The Report has an encouraging note pointing out that there has been a reduction in the total delay due to technical difficulties.