Quarterly Report - Review Against the Annual Budget

Expenditure by the end of the third quarter of 2011/12 (year-to-date) stands at £20.74m, which is £3.28m (13.7%) under budget. The forecast outturn for the full financial year 2011/12 currently stands at £30.46m, £5.04m (14.2%) below budget.
 
The position against budget for the year-to-date (YTD) and the forecast for the full year (FY) is summarised below.

Unfavourable variances to budget are in brackets.

Operational Expenditure

Operational expenditure is £1.85m under budget year-to-date and £1.35m under budget full year. This is mainly driven by a lower than expected NGC pension deficit repair and employer contribution, as well as savings from headcount reduction and a delay in filling vacant roles.

Demand Led Expenditure

Demand Led expenditure year-to-date was £0.75m under budget and £0.61m under budget full year. This is mainly driven by a reduction in the potential modifications forecast based on change and modification proposals in the pipeline for the remaining three months of the financial year.

Contracted Expenditure

The year-to-date figure shows a £0.49m under spend against budget, driven mainly by a reduced operational audit scope against budget assumptions and partial absorption of Technology refresh costs in the prior financial year. The release of the provision for TAA procurement gives rise to a full year under spend of £0.58m against budget.

SMART

Following the mid-year review we returned £2m of original £3m budget to BSC Parties, this reflects the extended SMIP timescales and greater clarity on our supporting activities. These factors have allowed us to better profile our work whilst maximising the use of internal resources and thereby limiting our external expenditure. As we start the last quarter, our Year-to-date spend has been contained at £121k. In light of this reduced figure and further planning information recently made available by the SMIP,  we have again reviewed the full year estimate and are now confident that spend will not exceed £500k.

Forecast expenditure is focussed on ensuring that the DCC and its associated services are successful, as an inefficient or ineffective arrangement could severely compromise the data quality of the SVA arrangements. To this end, we have secured some specialist support to help us understand the security implications in a smart world and the risks and issues around the DCC and its implementation. Expenditure also covers backfill for experienced operational staff supporting the SMIP and smart related work; and engagement through conferences and membership of Smart Grid and Demand forums. We therefore anticipate a higher rate of expenditure in Q4 reflecting the need for more detailed analysis and specialised support.