Estimates Criticised

Press, Volume CVI, Issue 31086, 15 June 1966, Page 3

Estimates Criticised

(N.Z. Press Association)

WELLINGTON, June 14. A plea for realistic estimates—particularly for major power projects—was made today by the Controller and AuditorGeneral (Mr B. D. A. Greig). Because expenditure on Manapouri and other projects during 1965-66 was higher than anticipated, the electric supply vote was overdrawn by £4,374,221 at March 31, 1966, said the controller’s annual report.

“If financial control is to be effective, estimates must be as realistic as possible, particularly for major projects,” said Mr Greig. The Audit Department recently asked the Ministry of Works to what extent proposals for strengthening estimating procedures had been implemented. It was told that a standard estimating check list had been compiled, additional staff had been appointed, and estimates were being prepared at three different places—by design staff, project staff, and the costing section. In view of. the importance of increases in costs on estimates, a construction cost index had been kept for some years to enable comparisons. “While this cannot provide a completely accurate forecast, the department states that after taking the foregoing into consideration, a probable final cost can be determined if a firm programme for construction is established.” the report said. “The department advises that procedures could still be improved and that action to this effect is continuing,” the controller added. “It also states that a management services team headed by an overseas management consultant has been engaged since October, 1965, on a review of all programming, progress and project control procedures on the Tongariro power development project.” This was done to Improve

effectiveness of planning, estimating and budgeting, to provide project staff with regular measurements of their achievements against forecasts and to identify the main causes of adverse trends as a guide to corrective action.

This also provided early warnings of significant trends likely to Influence future project expenditure and progress.