| Senate Notice Paper Question No 886 Schedule Number: 300099 |
Publication Date: 10 March 2009 Hansard: Pages 1201-3 |
|
Defence: Program Funding |
Senator: Ronaldson | |
Senator Ronaldson asked the Minister representing the Minister for Defence, upon notice, on 24 November 2008:
For the 2008 calendar year, can lists be provided for: (a) the department’s top 5 program overspends and their costs; and (b) the department’s top 5 program underspends and their costs.
Senator Faulkner - The Minister for Defence has provided the following answer to the honourable senator's question:
(a) and (b) Defence’s project expenditure plans are developed on a financial year basis. The first table below details the top five major capital equipment project overspends and underspends for 2007-08. The second table details the information for 2008-09 to the end of November 2008.
| Project No | Project Name | Plan 2007‑08 $m |
Actual 2007‑08 $m |
Variation $m |
|---|---|---|---|---|
| Underspend | ||||
| AIR 5402 | Air To Air Refuelling | 237 | 61 | -176 |
| AIR 5077 Phase 3 | Airborne Early Warning And Control System | 139 | 43 | -96 |
| AIR 9000 Phase 2 | Multi Role Helicopter | 325 | 262 | -63 |
| AIR 7000 Phase 2 | Maritime Patrol And Response Aircraft System | 48 | 0 | -48 |
| JNT 2077 Phase 2B.2 | ADF Deployable Logistics Systems | 22 | 3 | -19 |
| Overspend | ||||
| SEA 4000 Phase 3 | Air Warfare Destroyer - Build | 299 | 441 | 142 |
| AIR 8000 Phase 3 | Heavy Airlift | 76 | 164 | 88 |
| JNT 2048 Phase 4A/4B | Amphibious Deployment And Sustainment | 151 | 220 | 69 |
| AIR 5349 Phase 1 | Bridging Air Combat Capability Phase 1 | 235 | 285 | 50 |
| AIR 87 Phase 2 | Armed Reconnaissance Helicopter | 50 | 91 | 41 |
| Project | Project Name | YTD Plan $m |
YTD Spend $m |
Variation $m |
Plan 2008‑09 $m |
|---|---|---|---|---|---|
| Underspend | |||||
| SEA 4000 Phase 3 | Air Warfare Destroyer - Build | 230 | 181 | -49 | 694 |
| JNT 2086 Phase 1 | Mulwala Redevelopment Project | 66 | 20 | -46 | 144 |
| AIR 5402 | Air To Air Refuelling | 227 | 180 | -47 | 315 |
| AIR 87 Phase 2 | Armed Reconnaissance Helicopter | 75 | 29 | -46 | 125 |
| JNT 2048 Phase 4A/4B | Amphibious Deployment And Sustainment | 53 | 32 | -21 | 142 |
| Overspend | |||||
| AIR 5349 Phase 1 | Bridging Air Combat Capability Phase 1 | 38 | 84 | 46 | 560 |
| LND 106 | M113 Upgrade | 25 | 44 | 19 | 105 |
| SEA 1428 Phase 4 | Evolved Sea Sparrow Missiles | 9 | 26 | 17 | 23 |
| AIR 5333 | 2CRU/3CRU Control And Reporting Units | 23 | 31 | 8 | 30 |
| SEA 1390 Phase 2.1 | FFG Upgrade - Implementation | 59 | 61 | 2 | 109 |
Note:
Table 1 data is based on the variation between the actual expenditure by projects measured against their endorsed expenditure plans as submitted in the 2007-08 Additional Estimates review.
Table 2 data is based on variation between actual expenditure to 30 November 2008 by projects measured against endorsed expenditure plans as submitted in the 2008-09 Additional Estimates review.
By way of context, of the 242 major capital equipment projects managed in the DMO in 2007-08, 150 recorded underspends totalling $722 million whereas 58 recorded overspends totalling $492 million.
It should be noted that ‘overspend’ does not refer to a breach of project approval, but rather to a greater expenditure for the period than was planned at its start. The overspend most often reflects payments made for work completed earlier than anticipated. Underspend most often reflects completion of work by industry later than, or completion of the work at less than, anticipated in the project’s cash flow plan.
Project financial performance should be measured over the life of a project, which may extend over many years. Of the projects closed during 2007-08, 94 per cent of the projects came in on or under budget.