Defence Minister Marise Payne has been telling the press that...

  1. Osi
    15,730 Posts.
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    Defence Minister Marise Payne has been telling the press that Defence cost blow outs are a thing of the past.  In today's AFR she reportedly said:

    " t
    he Defence Department now had a stronger focus on minimising risk with acquisitions by outlining a schedule and indicative funding for projects, greater examination of a project's full life cycle cost and much closer engagement with industry.
    "

    My first comment is that Marise has got the history of defence project costing wrong.  Life cycle costing has been an aspect of most projects since the Eighties.   Government procurement policy has STRONGLY EMPHASISED close engagement with suppliers (to utilise their expertise in design and cost control) since the mid Nineties.  In other words the underpinnings of her statement are both wrong and wrong.

    There are three key cost drivers to government procurement cost blowouts (Defence procurement in particular). The first  driver is pork barrelling from both sides of politics. A  second driver is external political pressure to buy stuff that is not appropriate for Australia's unique defence needs.  The third and most significant cost driver is making changes both at the beginning of a project and then throughout its development and delivery.

    Plain stupidity that follows the employment of flunkies as advisers plays an important role as does  the reality that Federal politicians, State politicians, Defence Central and the relevant service arms are all seeking different outcomes.  

    Building defence assets locally as opposed to buying them off the shelf costs and additional 50-100% as a general rule.

    cheers
 
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