Resource in any organisation is carefully rationed, so a successful business case sign off, can mean that you win and someone else loses, and winning and losing is the body politic of any organisation. Winning is career enhancing, losing is not.
In our MOD case study there are not only ambitious individuals climbing the greasy pole, but there is fierce inter-service rivalry. Cash spent on a new Trident submarine for the Navy, can mean less helicopters in Afghanistan for the RAF, but failing to have adequate scrutiny of any of the projects means that the MOD becomes overstretched and fails to deliver :
This overheating arises from a mixture of incentives within the Ministry of Defence. In particular, the Armed Forces, competing for scarce funding, quite naturally seek to secure the largest share of resources for their own needs, and have a systematic incentive to underestimate the likely cost of equipment.
Unfortunately the current system is not able to flush out at an early stage the real costs of this equipment, nor does it make effective prioritisation or rationalisation decisions. As the MoD almost never cancels an equipment order, the process of over-ordering and under-costing is not constrained by fear on the part of those ordering equipment that the programme will be lost.
Equipment plan construction is dominated by a “bottom up” aggregation process, which makes it hard for “top down” strategic guidance to control the balance of investment. Effective forums do not currently exist to allow top down guidance to control the evolution of the equipment programme.
These forces and incentives create an over-large equipment programme, which contains within it a significant underestimate of the likely out-turn, making the programme even less affordable than it appears at any given moment in time. When this over-large and inflating programme meets the hard cash planning totals that the MoD can spend each year, the Department is left with no choice but to slow down its rate of spend on programmes across the board.
The result is that programmes take significantly longer than originally estimated, because the Department cannot afford to build them at the originally planned rate.
All this would be bad enough in any organisation, but cost cutting in the MOD can cost lives, as the report by Charles Haddon-Cave QC into the death of 14 service personnel who died in 2006, when a Nimrod crashed in Afghanistan, so clearly demonstrates. Unfortunately it does not stop there, as this excellent article from the Independent illustrates.
