Recommendation 27

While pointing out that this was also a problem encountered by other countries, the Department acknowledged that it did not have a good understanding of the unique factors that drive inflation on defence projects, and that there was work to be done to better understand whether there are better ways of managing or predicting it.77 Defence projects are often long-term, complex and involve new cutting-edge technologies. For example, it is likely to be buying Lightning II jets for another 20 years and will need to constantly 68 Qq 4, 74 69 Q 10 70 C&AG’s report, para 19 71 Qq 10, 13 72 C&AG’s report, para 16 73 C&AG’s report, para 1.35 74 Q 35 75 Q 38 76 Q 95 77 Qq 35, 37 16 Defence Equipment Plan 2020–2030 update the software in response to technological advances.78 The Department accepted it needed to understand and anticipate the factors that affect the cost of projects in order to retain flexibility to manage the delivery of capabilities on the scale of defence projects.79 78 Qq 34, 35 79 Q 35 Defence Equipment Plan 2020–2030 17