Full Report - National Audit Office

part three3.35 The prime contract for the first five year programmewas awarded in December 2002. The estimated valueof this first phase of work was £738 million. Only£463 million funding was initially available and this wassubsequently reduced to £433 million. The Departmenthas subsequently re-injected £20 million as part ofits latest planning round. Whilst still a substantialprogramme, the rise in the unit cost of bed spaces hasmeant that the number of bed spaces to be provided by2008 has reduced to some 9,000. Additional fundedprojects injected into the SLAM programme are currentlyanticipated to increase delivery by 800 bed spaces.3.36 Certainty of programme funding allows the contractorto plan and carry out his work efficiently and effectively,optimising the use of resources and minimising the impacton personnel. Apart from Project SLAM, there are twelveother projects worth a total of some £500 million whichwill provide a number of facilities on site including5,200 single bedspaces. These projects, which startedprior to Project SLAM, are funded separately.Defence Estates needs to ensure that it retainsthe flexibility to adapt to changing priorities3.37 The Department provides four year funding toallow Defence Estates to programme its work, althoughDefence Estates will need to respond to changing defencepriorities. In response, Defence Estates has established ajoint programme which enables it to see where funds canbe moved between projects although this does not helpwith long-term programming. Central finance staff in theDepartment have developed a financial planning toolin order to balance spending on major non equipmentprojects across the Department. These projects are mainlyestate and information technology projects. This tool hasbeen used in the current planning round.There is no current mechanism toensure delivery of the benefitsThere is not enough robust baselineperformance data available against which toassess improvements3.38 The Department had sufficient data to enable it toenter into the Regional Prime Contracts. As part of thesecontracts, the Contractors are or will be responsible forgathering data on the condition of the estate and on theirperformance. This data will be owned by Defence Estatesand will be used to establish the baseline condition ofthe estate.3.39 Under the old system there was no consistent wayof gathering performance information. Legacy systemsfor assessing the condition of the estate are neitherobjective in their assessment, nor do they providesufficient granularity of information to identify incrementalimprovement towards the required targets. Currentinformation is therefore geared to the old ways of working,reporting performance using input measures. A particularimpact of this is that there is no baseline data availableagainst which to assess improvements in service delivery,for example, in terms of quality of work and responsetimes. Defence Estates has now agreed a consistent assetcondition measurement which will apply across all theRegional Prime Contracts.Efforts are being made to developperformance measurements across thedefence estate3.40 A new methodology is now in development toprovide an effective and objective means of grading assetcondition, to enable the demonstration of improvementsin asset condition and the targeting of improvements toappropriate assets. This is to be accompanied by IntegratedEstate Management Plans for each site to inform planning.A new performance measurement system – for measuringand managing estate performance under the new waysof working - is under development and will be trialledat six sites from January to March 2005. This value formoney model was developed with the Building ResearchEstablishment and there is scope for it to be applied tomeasuring performance across estate investment projectsacross Government.3.41 Performance management with respect to the defenceestate is reported by Defence Estates to the DefenceManagement Board through the Defence BalancedScorecard but does not include those areas, such as thelegacy Private Finance Initiative projects, that remainoutside of Defence Estates’ functional responsibility.Benefits have not yet been fully realised3.42 Improved oversight of the estate requirement, andgreater clarity of roles, has been achieved through creationof the Customer Estate Organisations and the enhancedrole of Defence Estates in programming and delivery ofestate solutions. This should lead to greater coherence andreduce duplication in the management of the estate acrossthe three Services.MINISTRY OF DEFENCE: MANAGING THE DEFENCE ESTATE25