Home' Asia Pacific Defence Reporter : APDR_Nov2012 Contents Asia Pacific Defence Reporter NOVEMBER 2012 33
you have done enough to finish a job and you have
Under the previous model of open-ended
arrangements with PSPs – and this applied equally
to permanent employees – there has been a
tendency to keep doing more or to ask someone to
write yet another plan. You have to ask whether this
is contributing to project success: a new plan might
be slightly better, but is it actually necessary? Was
the previous plan sufficient to get the job done?
If the answer is yes, then that probably is a good
place to stop.
In summary: I’m not expecting to see any
fundamental changes in the way that DMO operates.
I believe the Prescribed Agency structure will
continue – which gives the CEO responsibilities
for the management of finances and staffing. What
I would like is workforce flexibility extending beyond
the core staff of DMO.
I believe this approach of managing contractors
could be the way to go – and so we are running
some pilot programs. If they turn out to be successful
then down the track DMO might reduce in numbers
as we make a lot more use of this form of contracted
management coming in – but only in circumstances
where the company performs well and only where
they are also prepared to accept some of the risk.
Do slowdowns in big projects such
as the Air Warfare Destroyer and the
Joint Strike Fighter acquisition have
an impact on DMO, especially for
First of all, big projects have the lowest cost per
head when you look at the numbers of people
relative to the size of the activity. If you look at
figures for the JSF and AWD based on cost being
managed per person, the results are good. Keep in
mind that for the AWD – with a spend of billions of
dollars - our DMO team is only in the order of 60
people. The JSF team likewise is quite small – and
that is another multi-billion dollar activity.
That fact that the AWD is going to take a bit
longer than originally planned does not really have
a big impact on DMO’s workforce – our workload
remains about the same. If you look at the other end
of the scale – remembering that we are managing
about 280 projects at any one time – you see a
different pattern. Also sustainment remains a major
part of what we are responsible for.
Even though some new procurements have been
delayed, last year we had a record number of
project approvals and they are now in the pipeline.
We are in a period of financial restraint and
consistent with guidance from Government, we are
trimming our workforce numbers, but work still has
to take place to prepare new projects so that we
are ready when circumstances change. As well as
wrapping up existing projects and completing them,
Defence also has to continue a feeder stream of
activity to keep the momentum of new approvals
What I would not like to see is a pause or halt in
internal activity, where we have no projects being
developed. I prefer to see circumstances where we
keep industry and ourselves going at a relatively
Also, keep in mind that dollars are not necessarily
an indication of how many people you will need on a
project. Some of the Australian projects have a high
level of electronic system integration work and the
DMO workforce requirements can be significant for
these types of projects.
Slowing down the AWD might help
with some workforce continuity
issues and avoid a gap before the
start of future submarines. What are
Regarding future submarines, we are already
studying our future skills requirements for the
Australian shipbuilding and repair sector – and
some of the results are very illuminating. We are
looking very closely at the problem of workload
continuity – what industry has described as the
looming “valley of death.” I am actually hopeful that
when we put the work we are doing in front of
Government we might get the best outcome that we
have had in the last hundred years.
I think there is a confluence of circumstances in
play – starting with the strategic needs of Australia
looking at our requirements for submarines and
surface ships. You then need to overlay a reduction
in global capacity, with a shrinking number of
shipyards in Europe and the United States – which
in any case are high labor cost areas. In these
circumstances there is no reason why Australia
cannot be cost-competitive with those shipyards.
Bringing all of this together, I believe we will be
able to go to Government later this year with some
Looking at the future submarine,
doesn’t that risk being drowned in
paperwork with $214 million worth of
No, it’s not like that. The situation is more complex,
with some of the funds being used for concept work
and some for design activities. It’s not just studies
for the sake of doing them.
To use an example - between first and second
pass approval for the Air Warfare Destroyer, DMO
received approval for $450 million worth of work.
But we didn’t spend anything like that. There is
a very big difference between what you need the
authority to do – which is what the Government
has given us - and what we will actually end up
spending, depending on what the studies reveal and
the consequential decisions taken by Government.
We now have the momentum started on
submarines and we have to keep going. We did a
similar thing with AWD by making sure there wasn’t
a pause in activity and I believe we will do the same
thing with submarines.
Finally, DMO receives a lot of
criticism from the media. Do you
think that is justified?
We have had some failures as an organization, but I
want to put that in context. DMO has many projects
that run for ten years or more – they are big and
complex. I have had some work done – that I can’t
detail just yet – benchmarking ourselves against
the private sector. The preliminary results are very
Typically, we do not have problems remaining
within our budget. There seems to be an ongoing
myth that Defence projects experience regular
budget blowouts. They do not. Around 98% of our
work is on or under budget – and that is a better
result than industry itself is able to achieve.
Even though some new procurements have been delayed,
last year we had a record number of project approvals and
they are now in the pipeline
To use an example - between first and second pass
approval for the Air Warfare Destroyer, DMO received
approval for $450 million worth of work
25/10/12 12:04 PM
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