DEFENCE ESTATE OPTIMISATION

Military Capability

Record date: 31 March 2026

Whole-life cost: £5.9bn
Published schedule: 30/09/2016 – 31/03/2041
NISTA delivery confidence: Not disclosed
Senior responsible owner: Nigel Ward

What the project is for

Defence Estate Optimisation (DEO) Portfolio is a long-term investment of £5.1Bn to modernise the defence estate. It is an ambitious portfolio of construction activity, unit and personnel moves, and site disposals that will deliver a better structured, modern, and more sustainable estate to support military capability.

Departmental delivery commentary

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.

Benefits

Compared to financial year 24/25-Q4, the project's departmentally agreed Benefits at 25/26-Q4 (measured in £m) remained at 21281.95. This is primarily due to the following factors. The Defence Estate Optimisation benefits remained steady as per V13. Following the Defence Implementation Plan outcome we expect to see some movement dependent on the settlement.

Delivery ratings

NISTA assessment: Not disclosed
SRO assessment: AMBER

These are the published NISTA and senior responsible owner assessments, not UK Pulse scores.

Financial year

Baseline: £480.7m
Forecast: £252m
Variance: 47.6%

The budget variance exceeds 5%. This is primarily due to the following factors. 1. The delay in Defence Investment Plan read out and confirmation of any imposed measures has led to affordability confirmation delays for projects in scope. 2. The introduction of commitment controls for RDEL, CDEL and External Assistance has resulted in delays to placing projects on contract. With projects experiencing delays of several months in decision making. 3. Legal, commercial, financial and security challenges leading to delays. 4. Affordability challenges presented by some projects have necessitated a resubmission and reduction in scope to meet Affordability targets. 5. The new design and build contracting process has taken projects and suppliers longer than envisaged to navigate through the complex process. The above has resulted in project schedules being updated, changing funding profiles into future years.

Expected benefits

£13.1bn

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