Audits examining project management
Report No.3 2006–07 Management of Army Minor Capital Equipment Procurement Projects. The Army Minors Program is an important means of delivering enhanced, replacement, and new capability to Army. The allocation to the Program for 2005–06 was $64 million and the total cost of projects included in the Program as at 1 July 2005 was $505 million. Projects included in the Program range from low value procurement to complex developmental projects. The audit examined the effectiveness of the management of Army Minor capital equipment procurement projects by Defence and the DMO and observed variability in the management of projects included in the Program. Delays in progressing projects and in delivering projects to schedule have occurred in the top 20 projects by value in the Program. DMO and Army have put in place a number of initiatives to improve the management and governance of the Program.
Report No.9 2006–07 Management of the Acquisition of the Australian Light Armoured Vehicle Capability. The audit examined the management of the acquisition of the Australian Light Armoured Vehicle (ASLAV) capability for the Australian Defence Force. The main focus of the audit was on the project and contract management of Phase 3 of the project which included the delivery of 144 ASLAVs, associated supplies and 113 retrofit kits for the Phase 2 ASLAVs. The report found that while a number of problems existed in the management of both the project and the contract, the ASLAV vehicles have generally been delivered in accordance with the contracted schedule. It was considered that initial planning time horizons for the delivery of the vehicles were overly optimistic. This meant that additional capabilities to be acquired for the vehicles (including commander’s weapon stations, surveillance suites and simulators) which were to be delivered under Phase 2 of the Project, have not been provided to schedule.
Report No.10 2006–07 Performance Audit: Management of the Standard Defence Supply System Remediation Programme. The audit reviewed the outcomes of the Get Well Programme, and assessed how effectively a segment of the Defence supply chain (of which SDSS is one key component) was meeting selected maritime end user capability and reporting requirements. In order to achieve this, the audit reviewed three key maritime combatant forces: COLLINS Class submarines; Adelaide Class Guided Missile Frigates; and ANZAC Class Frigates. The report noted that this sample comprises some 50 per cent of the Navy’s forecast budget.
The audit concluded that notwithstanding increased operational deployments and subsequent increased equipment use rates, there were material deficiencies in the ability of the Defence supply chain to provide consumable and replacement parts to end users in Navy. We also noted, amongst other things, that for the key roles associated with purchasing; inventory management; asset management; and information and security; there was a high degree of non compliance with required controls.
Audit Report No.20 2006–07 Purchase, Chartering and Modification of the New Fleet Oiler. The audit examined the purchase of a commercial off-the-shelf oil product tanker, the chartering of the tanker and its subsequent modification to fulfil the role as the Navy’s new fleet oiler. The audit found that the modified vessel was delivered by the prime contractor and contractually accepted by DMO five weeks ahead of schedule on 7 August 2006, following which the vessel was commissioned as HMAS SIRIUS on 16 September 2006. At the time of delivery of the vessel, contractual deficiencies identified by the prime contractor included incomplete and untested modification work. The audit identified weaknesses in the administrative processes associated with the financial arrangements implemented by Defence and DMO, which included requirements under both the financial management framework and the Good and Services Tax (GST) legislation. Administrative weaknesses included adherence to the provisions for: public funds to be deposited into and held in Official Bank accounts; the prompt banking of public funds; and the requirement for authority to be given for the receipt and custody of public funds by non-public servants. Also, improvements were required in the processes to ensure there is a valid authorisation to approve payments from public funds and to debit amounts against an appropriation.
Audit Report No.28 2006–07 Project Management in Centrelink. This audit considered aspects of governance and procurement and contract management in Centrelink’s management of Budget and internally-funded projects. During the 2005–06 financial year Centrelink managed 134 projects at a cost of $144.7 million, about six per cent of Centrelink’s departmental funding. Centrelink implemented a project management approach, the Centrelink Project Management Framework (CPMF) in 2000, which provides project management policies, procedures and tools to support project management. The agency also introduced the Centrelink Projects Office (CPO), an organisational unit with responsibility for supporting the proper control and governance of projects. Many aspects of the CPMF and CPO arrangements are structured in accordance with good governance principles for projects and Centrelink is continually improving its approach to project management. There are aspects which Centrelink may improve, and these are broadly around developing a ‘portfolio of projects’ perspective, that is, focussing on the benefits sought by the Government as well as on the achievement of individual projects in terms of producing the required results within budget and on time.
Audit Report No.34 2006–07 High Frequency Communication System Modernisation Project. This audit examined the procurement of the modernised High Frequency communication capability for the Australian Defence Force. The objective of the audit was to assess the effectiveness of Defence and the Defence Materiel Organisation’s management of this procurement. The report found that at the execution of the prime contract, the requirements of the communication system were not clearly identified and that risks associated with software development and system engineering were acknowledged as being significant to the project. Risk mitigation measures at the formation or the prime contract were less successful in addressing these risks than the contractor and Defence had expected. As a consequence of these issues, and the overall project complexity, the schedule has been extended three times. The report noted that significant risk remains in the delivery of ongoing aspects of the project including: the final fixed communication system by late 2007; and the upgrade of communications equipment fitted in selected Australian Defence Mobile Platforms such as ships and aircraft. Key areas where the report identified that project outcomes may have been improved include: the identification and resolution of risk in the pre-contract phase; the transition of risk into the contract; and the management of risks in the post contract phase.