If sticking to budgets and timelines on major projects was easy Elders would have made a billion dollars, the company’s former chief executive Malcolm Jackman said yesterday in defence of the air warfare destroyer project.With suggestions the AWD program is $600 million over budget, Mr Jackman said that amount was “a lot of taxpayers’ money” but at 7 per cent of the project’s $8.5 billion costings it would not be an unusual outcome.
Using the blowout to accuse shipbuilder ASC of being incompetent was “a very unfair cop”, said Mr Jackman, now the chief executive of State Government body Defence SA.
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Mr Jackman's comment needs to be viewed in the light of NOSINT's post of 27OCT14 which spoke of a considerably larger cost blowout (AUD800M). That figure and Mr Jackman's assertion here that AUD600M is only 7% cost overrun (estimate/"guess") needs to be assessed against ANAO's statement of MAR14 at para 36 of its audit summary as follows: The Alliance has estimated that the Alliance contract will be completed for $4.776 billion (December 2006 prices), which is $302 million or 6.8 per cent over the Target Cost Estimate.34 However, in September 2013 an Integrated Baseline Review Report35 indicated that major corrective actions were necessary to restore confidence in the AWD build program’s cost and schedule estimates. The report highlighted problems with the EVMS’s Performance Measurement Baseline36 and that corrective action was required for the EVMS to be considered acceptable for accurate performance measurement. As discussed in paragraph 22, the CEO DMO has also noted that there are emerging concerns about cost overruns and associated delays in shipbuilding aspects of the AWD Program.
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