Project of Concern – Process Reforms

On 30th Jun2011, the Minister for Defence and Minister for Defence Materiel announced the following reforms to the Project of Concern process.
“The Project of Concern process is working. The objective of these reforms is to make it even more effective,” Mr Smith and Mr Clare said.
Industry leaders contributed their ideas on this important reform to the Projects of Concern process.
The new Project of Concern process will be implemented by the new Independent Project Performance Office in DMO.

Incentive for Industry to focus on fixing problem projects:
Where a company has a project on the list, Government and Defence will weigh their performance in remediating the project when evaluating their tenders for other projects.
When a company is not satisfactorily implementing an agreed remediation plan, this will result in a negative weighting of tenders received from the company, and in extreme circumstances could result in exclusion from further tenders until the project is remediated.

Formal process for adding projects to the list:
The process for determining whether a project should be added to the Projects of Concern list will be as follows:
• When an Early Indicator and Warning is triggered, Defence will advise Ministers, including whether a full diagnostic review (Gate review) of the project is required.
• If a Gate review is to be conducted, Ministers will write to the Chair/CEO of the prime contractor advising them that the project has triggered an early warning, requesting their involvement in the Gate review, and emphasising the potential for the project to be added to the Projects of Concern list.
• Following the Gate review, Defence will provide Government with recommendations on how to fix the problems with the project. If the problem is very serious, it may be listed as a Project of Concern immediately.
• Alternatively, Defence will propose a series of actions that it and the company involved will undertake to fix the problems. This will include timelines, targets and thresholds which if not met will trigger a further Gate review to consider listing the project as a Project of Concern.

The decision to add a project to the list will be made by the Minister for Defence and Minister for Defence Materiel.

Remediation plans:
The Defence Materiel Organisation (DMO) and Industry will develop formal remediation plans for all projects that undergo Gate reviews. In the case of projects confirmed as Projects of Concern, these plans will:
• identify remediation objectives;
• identify key milestones and the timeline for their achievement; and
• detail an end-state for remediation and the agreed basis on which a project will be removed from the Project of Concern list.

Where DMO and Industry cannot agree a satisfactory remediation strategy, DMO will provide formal advice to Government on whether the project should be cancelled.

For all existing Projects of Concern, formal remediation plans will be developed and agreed with Industry. These will include the basis on which these projects will be removed from the current list.

Removal of projects from the list:
There are two events that will enable a project to be removed from the Project of Concern list:
• Government satisfaction that remediation is completed in accordance with the agreed plan; or
• a decision is taken by Government to cancel the project.

Increased Ministerial Involvement:
Ministerial involvement has been a cornerstone in driving improved outcomes for Project of Concern projects.
The Minister for Defence Materiel will hold bi-annual reviews of Projects of Concern with Defence and Industry representatives.
Biannual face-to-face meetings with the Minister will ensure responsible individuals are being held to account for the progress of projects, and will give the Minister a better understanding of the progress of remediation strategies.

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