Second Pass and 30 June 2010 approved budgeted cost

2.6  For the 22 Major Projects covered in the 2009-10 MPR, Figure 4 compares each project's Second Pass (main investment decision by the Government) approved budgeted cost and their approved budgeted cost at 30 June 2010.42 The total approved budgeted costs for the 22 projects at 30 June 2010 was $40.8 billion, an increase of $7.8 billion compared to their Second Pass Approval budgeted cost. Real variations in project budgeted costs due to Government approved changes, transfers within the portfolio and other administrative decisions post Second Pass Approval, account for $3.8 billion of this increase. The balance of the increase is due to price variation and foreign exchange rate movements.43

Figure 4

Projects' Second Pass and 30 June 2010 Approved Budgeted Cost ($m)

Source:  2009-10 MPR.

Note:   indicates that the budgeted cost for the project at 30 June 2010 (ANZAC ASMD 2A, C-17 Heavy Airlift and Air to Air Refuel) is less than original budgeted cost.

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42  Second Pass is the point at which the government approves a project proceeding to the acquisition phase. Responsibility, authority and accountability for management of the acquisition phase of the materiel life cycle are vested in the DMO's line management, the focal point of which is the designated Project Manager for an acquisition project (DMO Acquisition and Sustainment Manual, p.65).

43  The MRH90 Helicopter project experienced a real budgeted cost increase of $2.6 billion (June 2006 price) post Second Pass Approval, reflecting a government decision to increase the quantity of aircraft from 12 to 46. In the case of the Wedgetail project, in addition to a real budgeted cost impact due to the inclusion of two additional aircraft after Second Pass Approval, a further real budgeted cost increase of $388 million was recorded under the project's budget approval history in July 2008. The DMO has advised that this real budgeted cost increase is now treated as price indexation.