Original and 30 June 2009 Approved Budgets

1.3  For the 15 projects covered in the 2008-09 MPR, Figure 3 compares each project's original approved budget with its approved budget at 30 June 2009. Total value of the approved budgets for the 15 projects at 30 June 2009 was $37.8 billion, an increase of $14.9 billion compared to their first approved budget. Real variations in project budgets account for $8.3 billion of this increase, with the balance due to price variation and foreign exchange rate movements.11 12

Figure 3

Projects' Original and 30 June 2009 Approved Budgets ($m)

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11  Two projects, MRH90 and LHD Ships, used an acquisition strategy involving only a small initial budget approval ($3.3 million and $3.1 million respectively), and together accounted for $6.3 billion of the $8.3 billion real variations to project budgets as at 30 June 2009. In the case of the Wedgetail project, a real variation was recorded under the project's budget approval history in July 2008 to fund price and exchange variations.

12  Further, DMO have advised that of the $14.9 billion budget increase, $5.1 billion relates to budget variations between First and Second Pass approvals. However, after discounting for price variation, foreign exchange and Government approved quantity changes, the net variation from original approved pre Second Pass budget is nil. After subtracting the $5.1 billion from the $14.9 billion, the balance of $9.8 billion (increase) from Second Pass to 30 June 2009 comprises: price and exchange of $6.1 billion; Government approved scope changes of $4.3 billion; and net transfers of $-0.6 billion to Defence Groups and other projects. The majority of the scope change relates to the Government approved increase in MRH90 aircraft numbers from 12 to 46.