Slippage in time and cost in the EPP tends to receive most attention when associated with major programme problems. The analysis of a broad range of projects across the EPP highlights, however, a fairly continuous growth in completion time and cost across the program, albeit at a relatively slow rate.
The implications of a modest slippage in time, if allowed to continue year on year, could be very significant on the productivity and cost of productive output from the programme. To illustrate, dynamics of cost and time within the EPP can be simulated using simple mathematical modelling:
• the EPP can be represented by a "stock" of future expenditure aggregated from all the component projects within it;
• in-year expenditure (to meet "control total") represents an outflow from stock. This level is virtually fixed; and
• additions to the EPP in any year (less any cancellations) are an inflow to stock. These amounts are lumpy, but in the first instance need to average to around the level of outflows or stock will build.
As noted earlier, the EPP "stock" has been growing, and in general, the levels of planned annual expenditure exceed the amount available to spend. Without cancellation of significant expenditure, this situation implies ongoing delay will be required, and the average time to completion will continue to extend.
Taking account of the observation that delay correlates to cost increase, the stock value of unexpended projects will grow year on year simply from delay, and all this growth will be cost without any increase in productive output. Even more disturbing is that all this extra unproductive spend (i.e., standing costs from waiting) will need to be covered within the yearly expenditure, before funding for the productive output with which it is associated can be accommodated. The mathematical analysis of this model indicates that as long as there is delay in the programme, this problem of unproductive spend is growing exponentially, and as a consequence the productive output per year is declining at an accelerating rate. Appendix E reflects the Review team's further analysis of this issue.