1.79 When considering and approving agency budgets as a whole or individual proposals such as projects, Government takes account of the estimated impact of inflation over a defined period or over the life of a project. This forecasting of future inflation impacts in a budgetary construct is known as out-turning. All DMO capital projects have their total project budget managed in an out-turned budget construct.
1.80 Presenting PDSS cost information in actual values and comparing that to current, approved, out-turned budget data has a number of significant advantages over base date comparisons. These advantages include:
• an immediate and transparent view of the cost to complete a project against the available funding envelope enables potential cost pressures to become immediately visible;
• out-turning is consistent with the way that the DMO is currently managing project budgets;
• historical project expenditure life to date values do not need to be manipulated or de-escalated (i.e. into base date dollars), and are reported in the same way as in other published documents (i.e. Defence Annual Report, Portfolio Budget Statements and Portfolio Additional Estimates Statements) and as reported in DMO's financial information systems;
• project expenditure is referenced and verified by the DMO's existing financial information management system (ROMAN) and is subject to financial statement audit;
• project budgets reflect the current project approval; and
• project budgets are easily verified by reference to the DMO's record of project budget approvals - Capital Equipment Program Planning (CEPPlan) system.
1.81 The DMO is working in consultation with the ANAO to provide a paper to the JCPAA that will provide recommendations regarding the financial performance reporting for the 2011-12 MPR program.