MoD fails to make ends meet

The UK Ministry of Defence (MoD) is set to go £2.8bn over budget on its top 25 procurement projects - pushing total costs up to £38bn, according to a report by the National Audit Office (NAO).

Sir John Bourn, head of the NAO, has informed Parliament that the projects will be completed, on average, three and a half years late. Eight of the twenty-five will be finished more than five years after their original deadlines.

An MoD spokesman blamed the poor results on its current methods of procurement, particularly when it comes to IT. He said projects lasting several years still use IT products that date back to the beginning of the project, rather than drawing on the latest technology.

However, he predicted the Smart Procurement Initiative (SPI), to be fully implemented later this year, will solve this problem and curb spiralling costs. "The basic aim of SPI is to ensure that in future, the equipment is provided faster, cheaper and more efficiently by reducing the number of times each decision has to be approved.

"We will also have an incremental acquisition policy that will allow us to make use of new technology throughout the period of the project, because it won't have to go through a stringent approval process every time it's upgraded," he added.

Under SPI, teams will be formed for each project that will include suppliers. David Hallam, senior business consultant at Cap Gemini, believes this alone will make projects more efficient. "It has always been a problem for suppliers that the spec changes so much before they even get involved. Under SPI, suppliers will be able to give their input at the early stages of the project, which will reduce the time and cost."