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rowid	image	timestamp	memento	first_capture	last_capture	current_status	text	mime	status	url	urlkey	digest	length	file_path
84		20090519181444	https://web.archive.org/web/20090519181444/http://www.defence.gov.au/dmo/ceo/speeches/GMP_presentation_v5.ppt	2009-05-19	2009-06-27	500	professionalise | re-prioritise | standardise | benchmark | improve industry relationships and industry performance | lead reform Delivering projects on time and on budget – A national imperative Presentation to ADM Congress Canberra 17 February 2009 Warren King General Manager Programs Defence Materiel Organisation TODAY’S ENVIRONMENT • Global Financial Crisis – IS REAL – Unprecedented economic challenges – Likely to impact other countries’ budgets – Likely to impact other countries’ supply base • Ongoing international instability • Australia has its own unique challenges • More than ever, Australian taxpayers demand that we maintain a capable, effective military at an affordable cost Budget and schedule obligations: no longer rhetoric THE NATION IS BEING CHALLENGED • Presentation based on three sources of information: – International data – DMO experience – Experience working cooperatively on major projects with close allies • Improvements have been made in Australia, but we have a long way to go • ‘Conspiracy of optimism’ among all parties including Defence, DMO and industry – US experience indicates lowest credible bid, earliest possible deliverable – Australia is seeing a range of responses from industry Requires commitment, action and cultural change BEHAVIOUR AND REWARD MECHANISMS ARE WRONG • Defence industry is unlike commercial companies where customer satisfaction is measured through sales • In the absence of a broad commercial market these incentives are not supportive of the national interest How is the national interest served? INTERNATIONAL BENCHMARKING AND A VIEW OF THE FUTURE OF DEFENCE PROGRAMS • A recent study by Deloitte’s examines – Program management challenges – Technical complexities – Talent shortages – Supply chain challenges – Politics • The study spans commercial aircraft, defence and space sectors in USA and Europe • Data shows that over the past 15 years the problem has progressively deteriorated • The analysis forecasts that in 10 years the average cost overrun may exceed 46%. This is up from 26% today Source: Deloitte’s A&D “Can we afford our own future?” INTERNATIONAL DATA ON COST OVERRUNS AND PROGRAM SCHEDULE DELAYS • Analysis of the Major Programs cost data show that cost overruns are increasing by an average of 1.86% points per year • Average schedule delay is 21 months with 29% more than 2 years behind. DMO note: clear correlation between schedule delay and external cost overrun. Source: Deloitte’s A&D “Can we afford our own future?” - Schedule is King! AUSTRALIAN EXPERIENCE IN DELIVERY ON TIME AND ON BUDGET IS BETTER • The Kinnaird two-pass approval process is working • The relationship between Defence and industry is strengthening • Increased ‘professionalisation’ and skilling within DMO and industry are all helping BUT . . . COST ANALYSIS OF CLOSED PROJECTS • After Second Pass Approval (or the previous equivalent) • After correcting for inflation, foreign exchange and Government agreed changes of scope or quantities. • Of the 239 projects that have been closed over the last 10 years worth $27 billion, the total expenditure has been 98% of the total budget for that period. • Of the 239 Projects: – 60% were Under Budget – 23% were On Budget – 17% were Over Budget SCHEDULE IS THE CHALLENGE! WHAT THE DMO IS DOING . . . • Developing understanding of the impacts of the following root causes – Different stakeholders’ agendas across the project life-span – Human Resources constraints i.e. turnover, skills – Undefined scope (lack of definition), immature work breakdown structure, poor risk management practices, insufficient governance, lack of understanding of technical risk, lack of program management techniques • Placing greater scrutiny on tender proposals by not taking them at face value • Using international benchmarking comparisons • Developing lead indicators for schedule slip – EVM – Manning – Work package completion • Prepared to discount or risk rate tenders, if companies under-performing • Applying high-level management view on companies’ performance across projects (Gate Reviews) and industry monitoring (Company Scorecards) Irrespective of constraints, there’s a technological schedule imperative WHAT WE EXPECT FROM INDUSTRY . . . • Establish and provide a realistic and achievable project master schedule from the outset – Schedule must match reality, not design • Use the time and opportunity provided by the Kinnaird process to make sure schedule estimates are realistic • Develop and implement more sophisticated scheduling analysis tools We MUST do better for the national interest	application/vnd.ms-powerpoint	200	http://www.defence.gov.au/dmo/ceo/speeches/GMP_presentation_v5.ppt	au,gov,defence)/dmo/ceo/speeches/gmp_presentation_v5.ppt	BIQJ6XSGGYI7K32XP7XDMBED3XANZYUR	857311	domains/defence-gov-au/powerpoints/original/au-gov-defence-dmo-ceo-speeches-gmp-presentation-v5-ppt-20090519181444.ppt