Table 7-1 sets out the findings of the analysis of outturn performance of projects during Assessment phase in terms of cost and time as compared to the estimates made at Initial Gate.
|
| Average cost of AP (£m) | |
| Estimate at Initial Gate50 | 26 | 39 |
| Straight average increase on a project-by-project basis to Main Gate50 | +95% (25 months) | +25% (£10m) |
| Sample size | 42 | 38 |
Source: CMIS, Review team analysis
Table 7-1: Assessment phase duration and cost
From the data set out in Table 7-1 it is clear that there is significant delay being incurred during the Assessment phase, 25 months on average (+95% of Initial Gate estimate).
Table 7-1 also demonstrates with regard to the cost of Assessment phase that costs appeared to increase by 25% versus the Initial Gate estimate. It should be remembered that the cost of Assessment phase is generally relatively small in comparison with average whole lifecycle costs.
Analysis suggests that average outturn Assessment phase duration has been decreasing over time, with the average AP duration shown to be less than 2 years for projects that passed Initial Gate since April 2004 (Table 7-2). This does however only include projects that have passed Main Gate, and as a result will exclude some long running projects that are still in AP. As a result the samples are likely to be biased with longer running projects appearing in the older segments.
|
| Initial Gate pre FY200067 | IG date FY2000 - 04 | IG date FY2005 - 09 | All IG dates |
| Average outturn duration of Assessment phase - (IG50 - MG50) | 64 months | 40 months | 19 months | 45 months |
| Sample size | 20 | 24 | 10 | 54 |
Note: Sample size is larger than in Table 7-1 as includes projects for which there is no IG forecast data
Source: CMIS, Review team analysis
Table 7-2: Trend in Assessment phase duration over time
The Review also considered Assessment phase spending as a proportion of total forecast spending through Assessment, Demonstration and Manufacture phases. It was recommended as part of the Smart Acquisition framework that as a "rule of thumb" 15% of total spending be spent during the Assessment phase (i.e., prior to Main Gate approval) in order to sufficiently de-risk the project and establish a robust envelope for Performance, Cost and Time prior to commitment of further funds68. This Review conducted an analysis based on 44 projects completing Assessment phase (or equivalent precursor) between 1975 and 2007 and found that spending during Assessment phase was only c.5% of total forecast spending 69.
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67 Non-Smart projects
68 Transforming the UK's Defence Procurement System, February 1998
69 'Exhibits for Final Report of Smart Acquisition Stocktake', McKinsey & Co.(2003) found that 7% of total forecast spending occurred during the Assessment phase