DEFENCE ESTATE OPTIMISATION

Rating: Compared to financial year 24/25 Q4, the NISTA/SRO Delivery Confidence Assessment (DCA) rating at 25/26 Q4 remained at Amber. This is primarily due to the following factors. 1. The Delivery Confidence Assessment rating at the end of the financial year remains at AMBER, reflecting the complexity and long timeline of the Portfolio. Ongoing engagement with NISTA confirmed satisfaction with the close monitoring of activities, ongoing assessment of external events, and the adoption of previous review recommendations. 2. The governance structure, led by central Military Strategic Headquarters management, is clearly effective, supporting strong relationships and providing a defence-wide perspective. 3. Now in the delivery phase, the Portfolio has successfully implemented the Contract Permissioning Group (CPG), which has reduced standard approval timings to 5 weeks for Category A and 3 weeks for Category D and C projects. 4. Projects enter the strategic alliance framework within 1-2 weeks, cutting procurement timelines by up to 18 months. 5. The CPG delegated timeframe has concluded, and the Portfolio awaits the outcome of the Defence Implementation Plan before continuing the Review Note.

Schedule: Compared to financial year 24/25-Q4, the programme's end-date at 25/26-Q4 remained the same at 31/03/2041.

Cost: Compared to financial year 24/25-Q4, the project's departmentally agreed Whole Life Cost at 25/26-Q4 (measured in £m) increased from £6376.29M to £6385.83M. This is primarily due to the following factors. 1. The Defence Estate Optimisation budget has remained stable throughout FY25/26. The delay to the Defence Investment Plan read out has led to the portfolio to hold within its budget however, an increase in the while life costs is now forecast. 2. Options have been presented to continue to deliver to the current approved Whole Life Cost estimates, including a potential reduction in funding should the Defence Investment Plan conclude as such.

Source: NISTA Major Projects Annual Report 2025-26 (data)

Rating: The Project's Delivery Confidence Assessment rating at 24/25-Q4 is AMBER, compared with the Infrastructure and Projects Authority's assessment last year of AMBER. This is due to the following factors. Compared to financial year 23/24-Q4, the NISTA Delivery Confidence Assessment rating at 24/25-Q4 remained at Amber. This is primarily due to the following factors: The programme's complexity and long timeline. Close monitoring of this suite of activities continues and is subject to a governance structure based around central Finance Military Capability management that is working well and supports strong working relationships while providing a defence wide perspective and is a key driver for the current and future success. The Portfolio is now in the delivery phase, successfully implementing the Contract Permissioning Group, designed to improve the efficiency and pace of approvals, enabling a reduction in standard approvals timing to 5-weeks. This framework will reduce the procurement timelines for projects by up to 18 months.

Schedule: Compared to financial year 23/24-Q4, the project's end-date at 24/25-Q4 remained at 31/03/2041.

Cost: Compared to financial year 23/24-Q4, the project's departmentally agreed Whole Life Cost at 24/25-Q4 (measured in £m) increased from 5208 to 6376. This is primarily due to the following factors. The Defence Estate Optimisation budgets have been realigned to V13 from V12 baseline. This has been endorsed by the Portfolio Board, resulting in increased Whole Life Total costs. This is partly due to additional spend controls, with initial projects and suppliers taking additional time adapting to the complexities of the new design and build contract process leading to further delays. Project costs for some sites have matured and been updated by the project teams as they were initially based on early estimates, leading to new cost models and increased scope due to refined stakeholder needs. Recent economic challenges like rising material, inflation, and labour costs have placed a further strain on the portfolio. Committing to evolving standards like Net Zero and carbon savings has compounded the case further.

Source: NISTA Annual Report 2024-25 (data)

Rating: Compared to financial year 22/23-Q4, the Infrastructure and Projects Authority's Delivery Confidence Assessment rating at 23/24-Q4 remained at Amber. This is primarily due to the following factors. An IPA review in January 2024 confirmed the Review Team were “satisfied with the close monitoring of Portfolio activities underway, continued monitoring of external events affecting the Portfolio and the adoption of previous recommendations.”. It was recognised that the “governance structure based around central management was clearly working well and supports strong working relationships while providing a defence wide perspective and is a key driver for the current and future success”. The Portfolio is now in the delivery phase, successfully implementing the Contract Permissioning Group (CPG), designed to improve the efficiency and pace of approvals, and reduce procurement timeline for projects by up to 18 months.

Schedule: Compared to financial year 22/23-Q4, the programme's end-date at 23/24-Q4 remained scheduled to finish on 2041-03-31. The portfolio has been re-baselined but the overall completion date has not been impacted.

Cost: Compared to financial year 22/23-Q4, the project's departmental-agree Whole Life Cost at 23/24-Q4 decreased from 5438m to 5208m. This is primarily due to the following factors. Last year’s budget was set against Portfolio Baseline Version 11. The Defence Estate Optimisation budgets have been realigned to Version 12, which now includes the adoption of the new Delivery Commercial Procurement Strategy and endorsed by the Portfolio Board. As such programme schedules have been updated to align with this framework. The outcome has been the reprofiling of projects across the portfolio, culminating in reduced costs overall.

Source: IPA Annual Report 2023-24 (data)