Second Pass and 30 June 2011 approved budgeted cost

2.12  For the 28 Major Projects covered in the 2010-11 MPR, Figure 4 compares each project's approved budgeted cost at Second Pass Approval (main investment decision by government) and their approved budgeted cost at 30 June 2011. The total approved budgeted costs for the 28 projects at 30 June 2011 was $46.1 billion, a net increase of $7.8 billion compared to their Second Pass approved budgeted cost ($38.3 billion). The $7.8 billion comprises price variation increases of $7.6 billion60, real variation61 increases of $3.6 billion, and foreign exchange rate movement decreases of $3.4 billion.

2.13  Additional quantities of equipment being ordered after Second Pass Approval can result in a real budget increase. For Wedgetail, the real budgeted increase was due to the inclusion of two additional aircraft after Second Pass Approval with a further real budgeted increase of $226 million recorded under the project's budget approval history in June 2004. For MRH90 Helicopters, a real budgeted increase of $2.6 billion (June 2006 price) post Second Pass Approval, was as a result of a government decision to increase the quantity of aircraft from 12 to 46. More recently for Bushmaster Vehicles, a real budgeted increase was due to Government approval of additional production runs.

Figure 4
Projects' second pass and 30 June 2011 approved budgeted cost ($m)

  Second Pass Approved Budget 

  30 June 2011 Approved Budget

 

Source:

2010-11 MPR.

Note:

 indicates that the budgeted cost for the project at 30 June 2011 (Super Hornet, Joint Strike Fighter, C-17 Heavy Airlift, Air to Air Refuel, Next Gen Satellite, Additional Chinook, Collins RCS, UHF SATCOM, ANZAC Anti-Ship Missile Defence (ASMD) 2A, Stand Off Weapon, 155mm Howitzer and Battle Comm. Sys.) is less than the original budgeted cost.

 




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60  In July 2010, DMO moved to financially managing its acquisition budget on an out turned price basis (this is further discussed in paragraph 2.17). This resulted in a price variation increase for each project by way of out turning indexation adjustment.

61  Real variations in a project's budgeted cost are due to government approved changes, transfers within the portfolio and other administrative decisions post Second Pass Approval.