Management of Portfolios in the Norwegian Defence – compliance with strategic guidance

FFI-Report 2024
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Jan Erik Voldhaug Frida Waage Prebensen Ane Ofstad Presterud
Procurement of material plays a crucial role in modernising and further developing the Norwegian Armed Forces. The economic scope of these investments is significant. In 2022 alone, approximately 20 billion Norwegian kroner were spent on new equipment for the Norwegian Armed Forces – ranging from personal clothing for soldiers to fighter jets. Even so, several challenges have been identified within the investment activities. The purpose of this study is to contribute to better investment management, thereby increasing the Norwegian Armed Forces’ operational capability and their utilisation of limited resources. It is crucial that management ensures compliance with the Ministry of Defence’s strategic directives for investments. Therefore, we study their compliance with the strategic directives, identify reasons for any deviations, and provide recommendations for improvements. This is addressed through four research questions: i) Which factors are crucial for how projects are prioritised in the investment plan? ii) To what extent is off-the-shelf and commercially available material procured? iii) Are projects implemented according to estimated time and cost? iv) To what extent is the life cycle perspective, including environmental aspects, emphasised in investment decisions? The analysis is based on data about the projects and portfolio of the Armed Forces, interviews with key personnel in the investment activities, and a survey involving participants from both the Ministry of Defence, the Norwegian Armed Forces, and the Norwegian Defence Material Agency. Investments in property, buildings, and facilities are not included in our analysis. We find that off-the-shelf and commercially available material is procured to a greater extent than before. We also find that it is unclear which factors are crucial in prioritising projects. Operating costs are given little weight in investment decisions, and so are environmental considerations. There are also significant delays in project implementation, and this has been an ongoing challenge for a considerable period. Regarding costs, the picture is more nuanced. There are obvious areas for improvement, but cost control during project implementation is generally good. We have identified potential improvements for all four research questions. Our recommendations focus on processes, data-driven learning and planning, investment management, and knowledge needs.

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