Transcript Slide 1

ABOUT THE DMO
•
DMO Purpose: Equip and sustain the Australian Defence
Force (ADF) and provide advice to Government
•
DMO’s two goals:
(i) To deliver projects on time,
on budget and to the required
levels of capability, quality and
safety (effectiveness); and
(ii) Make DMO more business-like,
accountable and outcome-driven
(efficiency)
DMO: SOME HIGHLIGHTS
Conduct nearly $45 million of business each working day
Sign more than 2,500 contracts worth more than $100,000 every year
Significant improvements in schedule performance since Kinnaird
In 2011, nearly 50 projects or phases approved worth more than $6B
Navy: In 2011, HMAS Choules purchased and successful ANZAC ASMD trials
Army: In 2011, new lighter body armour and enhancements to combat
uniform, upgrade to Bushmaster vehicles and Counter IED systems deployed
Air Force: In 2011, 24 Super Hornets, 3 Multi Role Tanker Transport
aircraft and a fifth C-17 heavy lift aircraft
CEO DMO KEY PRIORITIES
• Support and equip ADF by delivering quality
capability with a high focus on safety
• Exercise ‘measured urgency’ in the workplace –
simplifying processes and speeding up outputs
• Improving business acumen of DMO workforce
• Engaging with Industry in a strongly commercial but
not combative way
• Establishing a major projects negotiation cell
• Piloting 'managed contractor' arrangements for
selected projects
• Rebalancing the organisation
SUPPORT TO OPERATIONS
• Continues to be our first priority
• Has involved an enormous amount of effort by many people
right across the DMO (not just in the coordinating ops cells)
including sustainment staff
• Has provided a model for success in terms of level of
responsiveness to our customers, taking user feedback
seriously and focused engagement with Industry
• Our long-term focus must now begin to shift to planning for
DMO’s contribution to the staged withdrawal and refresh of
equipment from the MEAO as directed by Government
1999
$3,600
2011
$27,500
BETTER PROJECT MANAGEMENT
GATE REVIEWS
• An effective tool for exposing issues, directing projects, improving
outcomes and soliciting stakeholder support.
• ‘The forest and the trees’ - external reviewers provide critical input with
fresh eyes
• Applying “Lessons Learned”
• DMO is continuing to develop and expand our Gate Review capacity.
PROJECTS OF CONCERN
• Highly effective way of focusing attention on real issues
• Once a project is listed it only comes off by remediation or cancellation
EARLY INDICATORS & WARNINGS
• A set of internal mandatory triggers that would require projects to be
reported to Ministers if schedule, cost, capability, industry performance or
risk thresholds are breached.
MAJOR PROJECTS REPORT 2010-11
• ANAO assurance of DMO’s performance on 28 major equipment projects
• Project cost performance is good
• Project Schedule – remains a concern. Driven by underestimation by
industry and/or Defence of technical maturity or complexity
Aggregate Cost
Performance
Aggregate
Schedule
Performance
(over project life)
-0.9%
1.28 (or 28%)
SCHEDULE VARIANCE (PROJECT TYPE)
2010-11 MAJOR PROJECTS REPORT
Average Schedule
Variance as at 30
Project Type
June 11 (from FOC) %
Project Type
Average Schedule
Variance as at 30
Jun 10 (against
Developmental
74% FOC) %
Australianised
Military-Off-The
Shelf (AMOTS)
Military-OffThe-Shelf
(MOTS)
Range %
Range %
0%-128%
24%
0% - 74%
0%
0% - 0%
Integration risk is insufficiently understood (MOTS + MOTS ≠ MOTS)
DEFENCE ACQUISITION COMPLEXITY (2)
DEFENCE SUSTAINMENT COMPLEXITY (2)
Complexity Frontier for Maintenance Activity for Most Large Australian Organisations
BACKUP
THE 2011-12 DEFENCE BUDGET
(Figures taken from PAES 2011-12)
Defence:
• $26.4 billion in 2011-12
• Plus DMO’s direct appropriation relating to workforce & operating
expenses (Approx $0.9 billion) TOTAL = $27.3 billion
• Approximately 1.8% of Australia’s GDP
DMO:
• DMO’s 2011-12 budget represents 37% of Defence portfolio budget
• Approximately 0.7% of Australia’s GDP
THE 2011-12 DMO BUDGET (as at PAES 2011-12)
• $10.1 billion of funding to support the ADF
– $4.6 billion on Acquisition ($5.8 billion 2010-11 actual)
– $5.4 billion on Sustainment ($4.8 billion 2010-11 actual)
– $0.1 billion on Policy Advice, Management Services & Industry Programs
BUT: the “sting” is next year – 2012/13
DMO ACQUISITION AND SUSTAINMENT
SPEND
16
Most of 2012/13 reduction taken by imports
AUD Billions - constant
14
12
10
Forecast Activity Offshore = 47%
8
6
4
2
Forecast Activity in Australia = 53%
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21