Allocating Available Funding Within the MCFP
A deliberative, transparent process for developing and prioritising activities and funding within each estate investment program is required. The Review focused only on a methodology for prioritising demands on baseline MCFP funding.
The current approach to baseline MCFP programming lacks a clear programming rationale, a robust investment prioritisation methodology and the ability to demonstrate the impact of funding cuts in other than general terms. To address these and other programming weaknesses the review recommends that baseline MCFP programming be based upon the following principles:
- Deliberate planning. A deliberative, transparent and repeatable prioritisation methodology should be used to fully populate a 20 year rolling MCFP that is aligned with estate planning and funding guidance.
- Condition driven, capability informed. Baseline MCFP programming and prioritisation should be driven by asset condition, informed by capability and risk considerations.
- Whole-of-estate perspective. Baseline MCFP programming should consider sustainment of all the bases and sites that constitute the Defence estate. Programming should reflect a whole-of-estate focus rather than solely an individual project focus.
- Risk-based. Baseline MCFP programming and prioritisation should be based on asset condition, informed by capability considerations, and addressing the resultant risks arising from ongoing asset operation. The same risk-based prioritisation methodology should apply to populating, managing and changing the baseline 20 year MCFP. The proposed prioritisation methodology is based on the existing DSRG estate risk management methodology (discussed in agendum 03/2013).
The proposed approach to baseline MCFP programming and prioritisation involves:
- According programming priority to funding for government and Secretary/CDF-directed facilities initiatives with no dedicated funding and estate consolidation in accordance with the consolidation roadmap.
- Programming, for each base/site:
- A base/site redevelopment every 20 years. The redevelopment frequency recognises MCFP funding forecasts, the fact that larger projects are more cost and staffing efficient than smaller projects, and the number of projects realistically likely to gain approval each year.
- By exception, stand-alone capital projects to address major risks to the operation of key assets that cannot wait until the next base/site redevelopment.
- A modest mid-term refresh (~ $20m-$30m) midway between redevelopments to address significant compliance, functionality, amenity or cost of ownership risks.
- Allocating indicative funding to reinvestment proposals when they enter the MCFP, the aim being to address the same levels of risk at each base/site. This will require a clear statement of the estate risk appetite for MCFP programming purposes.
- Including all Defence bases and sites in the 20 year rolling MCFP, using the same prioritisation approach regardless of size or importance.
- Using the risk-based prioritisation methodology to determine project priorities when adjusting the baseline MCFP in response to unforeseen estate reinvestment demand or major changes to program funding.