The National Audit Office, the Parliamentary watchdog, has criticised the Ministry of Defence for its project management in 1997/98. The top 25 MOD equipment projects are expected to cost Â£2.8 billion more than originally forecast and, on average, will enter service just over three and a half years later than originally estimated.
Average cost overruns on the projects rose from 2.6 per cent in the 1993 Report to a peak of 8.7 per cent in the 1996 Report, and has since fallen to 5.9 per cent in the 1998 Report. Average in-Service delay has increased from 32 months in 1993 to 43 months in 1998. Ten projects have missed their in-Service dates, and 13 are forecast to do so. Eight projects are expected to miss their in-Service dates by more than 5 years. Two of the projects were started over fifteen years ago.
The main causes of cost escalation and in-Service date delay have been largely unaltered since 1993. The Department’s Smart Procurement Initiative is intended to address the causes of cost overruns and time delays. A number of measures offer the prospect of reducing problems caused by specification changes, technical difficulties, programme changes and project re-definition.