Annual Report 2003-04

Capital Facilities Projects (-$35.1m)

Defence has implemented a new infrastructure asset development process. The process involves a strategic screen and two stages of approval based on a strategic business case and a detailed business case. The strategic screen tests proposals for alignment with broader Government and Defence planning priorities and requires the preparation of a corporate services infrastructure requirement. The strategic business case is developed from that requirement at a cost certainty of +30 per cent and approved at the first stage. Further development of the proposal leads to the detailed business case at a cost certainty of +10 per cent and approval at the second stage.

Capital facilities projects are categorised by thresholds. Major capital facilities projects have a cost of $6m or greater and are subject to Government approval and review by the Joint Standing Committee on Public Works. Medium capital facilities projects have a cost of between $250,000 and $6m. Medium capital facilities projects between $5m and $6m are subject to Government approval but are not reviewed by the Joint Standing Committee on Public Works. Projects under $5m are approved by departmental delegates. Details of these projects are provided in this chapter.

The capital facilities program is designed to give priority to projects that support the Defence Capability Plan, sustain current capability requirements, support other Government initiatives, meet legislative obligations and assist initiatives that support Defence people. A significant proportion of the program funding is directed towards the provision of basic engineering and infrastructure services, either in support of new projects or upgrades or existing facilities.

Total expenses on Defence's major capital facilities program in 2003-04 were $35.1m below the projected result of $421.1m. This was primarily due to delays in major and medium projects and in project approvals. The underspend was partially offset by the purchase of additional information technology assets ($17.9m) in order to partially reduce a backlog in the information technology replacement program. Expenditure on the operating component of Defence's major capital facilities program was $8.4 m above the projected result of $10m, primarily due to the additional costs resulting from implementing the 'two pass' approval process.

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