CAPABILITY

MANAGEMENT
FRAMEWORK
CAPABILITY MANAGEMENT FRAMEWORK
FOREWORD
The Capability Management Framework (CMF) describes the processes, roles and responsibilities involved in
the management of defence capability. This update was prepared jointly by the New Zealand Defence Force
(NZDF) and the Ministry of Defence (MOD), and reflects the collaborative approach we are taking to ensure that
Defence assets are prudently managed.
We are committed to ensuring that the CMF remains contemporary. It is a living document that embodies the
responsibility our organisations undertake to achieve excellence in capability management through partnership.
The CMF will not only accommodate the lessons our organisations have learned but integrate knowledge from
international best practice in order to develop the framework as a model of Defence capital acquisition.
Building on the direction set by the Defence White Paper (2010), the CMF incorporates all elements of the
Government’s Capital Asset Management (CAM) requirements and the Better Business Case (BBC) model. As
we engage in a new Defence Assessment it is timely that the CMF gets refreshed to signal our increasingly
joined up approach to delivering capability that meets the needs of the Defence Force and secures benefit on
investment. We want our people to have trust and confidence that the capability management system will
deliver for them. Only by providing the most proficient and affordable capability can we best enable them to do
their jobs.
The CMF is designed to be concise and readable but also provides links to templates and supporting
documents for those across the Defence agencies involved in capability management.
The CMF is part of the process of continual improvement in the way Defence manages capital procurement
within a whole-of-life context. It provides a practical construct for both organisations to deliver better outcomes
together. The Capability Management Board approved the revised CMF in June 2014.

HELENE QUILTER T. J. KEATING

SECRETARY OF DEFENCE LIEUTENANT GENERAL

Chief of Defence Force

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CONTENTS
CAPABILITY MANAGEMENT FRAMEWORK INTRODUCTION 4
DEFENCE ACT 4
DEFENCE WHITE PAPER 4
DEFENCE CAPABILITY PLAN 4
DEFENCE CAPITAL PLAN 4

CAPABILITY MANAGEMENT FRAMEWORK OVERVIEW 5

WHAT IS CAPABILITY MANAGEMENT? 5

CAPABILITY MANAGEMENT FRAMEWORK KEY DRIVERS 6

CAPITAL ASSET MANAGEMENT 6
BETTER BUSINESS CASE 6
GATEWAY REVIEW 7
CAPABILITY LIFE CYCLE 8

CAPABILITY MANAGEMENT FRAMEWORK PROCESSES 10

GOVERNANCE ACROSS THE CAPABILITY LIFE CYCLE 10
CAPABILITY BASED PLANNING 11
PORTFOLIO, PROGRAMME AND PROJECT MANAGEMENT 11
CAPABILITY LIFECYCLE MANAGEMENT PRODUCTS 14
CAPABILITY LIFECYCLE MANAGEMENT THEMES 18

ROLES AND RESPONSIBILITIES 20

MINISTRY OF DEFENCE 20
NEW ZEALAND DEFENCE FORCE 21
CENTRAL AGENCIES 22

STRATEGY AND POLICY PHASE 23

CAPABILITY DEFINITION PHASE 25

ACQUISITION PHASE 27

INTRODUCTION INTO SERVICE PHASE 29

IN-SERVICE MANAGEMENT PHASE 31

DISPOSAL PHASE 32

GLOSSARY 33

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 3

CAPABILITY MANAGEMENT FRAMEWORK
INTRODUCTION
This document is a reference guide on how the New Zealand Defence Force (NZDF) and the Ministry of Defence
(MoD) deliver military capability outcomes.
Internal guidance is available through the Capability Branch Information Hub and MoD Acquisition Manual
and throughout this document links have been inserted to the most relevant internal documents and areas.
However, if there are any questions on the material mentioned in this document, please send an email to
capbrpmo@[Link] or executive-branch@[Link]

DEFENCE ACT
The principal piece of legislation governing the roles and responsibilities of the Chief of Defence Force and the
Secretary of Defence is the Defence Act 1990. The Act is being amended to reflect the new arrangements
outlined in the Defence White Paper, including with respect to capability management. These changes are
detailed in this document.1

DEFENCE WHITE PAPER

The Defence White Paper 2010 (DWP) set the overall direction for Defence for the next 25 years, and is a
comprehensive statement of the Government’s defence policy goals, matched to a future strategic environment. It
remains the primary strategic policy document for Defence. Defence White Papers are normally released every
five years, following the completion of a Defence Assessment. A Defence Assessment is currently underway in
2014, and the next Defence White Paper, if commissioned by the Government, is tentatively scheduled for 2015.

DEFENCE CAPABILITY PLAN

The Defence Capability Plan describes the capability sets needed to deliver the Government’s defence policy, as
set out in the Defence White Paper. The current Defence Capability Plan, published in 2014, articulates the key
investment themes that will characterise the next 10 years. It also identifies the capability pathway for NZDF to
realise Joint Operational Excellence. The Capability Plan is a public document, and signals the Government’s
capability intent to industry, security partners and the public.

DEFENCE CAPITAL PLAN

The Defence Capital Plan is the forecast of capital expenditure needed to deliver the Defence Capability Plan,
out to 2034/35. The current Capital Plan was approved by Cabinet in December 2013, and incorporates the
decisions taken on the 2013 Defence Midpoint Rebalancing Review (DMRR). The plan is actively managed and an
annual update will be presented to Cabinet in December 2014.
To find out more about the Defence Capital Plan contact the Directorate of Portfolio Planning at
capbrpmo@[Link]

1
The Defence Amendment Bill has been introduced to the House, and is awaiting its Second Reading at the time this document was
published.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 4

CAPABILITY MANAGEMENT FRAMEWORK
OVERVIEW
WHAT IS CAPABILITY MANAGEMENT?
Capability Management is the process by which Defence is able to deliver the current outcomes
required by Government and anticipated future outcomes.
Capability is:
“the personnel, equipment, platforms, and/or other materiel that affect the capacity to undertake military
operations.”
Defence White Paper 2010, Capability Definition.

Military capability refers to not only equipment, but also the people who operate it, their training, technical systems
and management and support structures. These components make up the PRICIE construct which is used to
determine the fundamental inputs to capability as shown in Figure 1.

Figure 1: PRICIE inputs into capability

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 5

CAPABILITY MANAGEMENT FRAMEWORK KEY
DRIVERS
The Capability Management Framework provides a mechanism by which Defence gives effect to external drivers
by enabling the MoD and the NZDF to collaborate effectively in meeting the requirements of the New Zealand
Government in the delivery of Defence Capability programmes and projects.

CAPITAL ASSET MANAGEMENT

Many Defence capability decisions, because of their scale, sit within the framework of the Government’s overall
management of capital assets. This framework is known as the Capital Asset Management (CAM) regime. This
regime defines Defence as a capital intensive agency.
The Defence Programme and Project Management Frameworks, discussed on page 11, have incorporated the
Capital Asset Management requirements.
Responsibility for overseeing the implementation of Capital Asset Management rests with Treasury’s National
Infrastructure Unit, supported by the State Services Commission and the Department of the Prime Minister and
Cabinet.
The aim is to improve public sector performance by raising the quality of information used in decision-making for
capital asset management.
To find out more about CAM visit [Link]

BETTER BUSINESS CASE

Treasury’s five case Better Business Case (BBC) model is the primary vehicle for achieving a disciplined,
systematic and transparent approach to providing advice to Government on Defence capital proposals.
The Better Business Case model enables Defence staff to:

 consistently apply a proven set of processes and analysis;

 effectively demonstrate the case for a proposed investment; and
 ensure that relevant stakeholders have visibility of large or high risk proposals at key project milestones.
NZDF has also adopted the Better Business Case model for projects that fall below the threshold for inclusion in
the Capital Asset Management regime.

THE BUSINESS CASE DELIVERABLES

The business case emphasis evolves throughout the Capability Life Cycle.
Programme Business Case (PBC) – supports the decision to invest in a programme of change that optimises
potential value for money. Confirms the case for change and the need for investment, recommends a preferred
programme, and identifies the key projects and tranches to achieve programme outcomes. Seeks approval to
develop subsequent project-based business cases.
Indicative Business Case (IBC) - provides decision makers with an early indication of the preferred way forward.
It confirms the case for change and the need to invest; identifies a wide range of options and recommends a
preferred way forward for further development of the investment proposal, supported by short-listed options for
further analysis.
Detailed Business Case (DBC) - determines the investment option which optimises value for money, prepares
the proposal for procurement and plans for the necessary funding and management arrangements for the
successful delivery of the project. Recommends approaching the market to request proposals.
Project Implementation Business Case (PIBC) – identifies the supplier offer that optimises value for money, sets
out the negotiated commercial and contractual arrangements, confirms affordability and puts in place detailed
management arrangements for the successful delivery of the project.
Single Stage Business Case (SSBC) – combines the Indicative and Detailed business cases into a single,
simpler, fit for purpose, business case to support decision-making. It is intended for lower risk and/or smaller scale
investments where the need for an interim two-stage decision is not required.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 6

THE BBC FIVE CASE MODEL
All key documents in the Better Business Case process consider each of the following cases, to varying degrees.
Strategic Case - whether a project is a strategic fit and meets business needs.
Economic Case- - whether a project optimises public value.
Commercial Case- - whether a project is commercially attractive and feasible in the market.
Financial Case - whether a project is affordable and how it will be funded.
Management Case - whether a project can be successfully delivered.
To find out more about the BBC model visit [Link] or go to the Business Case
section of the Information Hub.

GATEWAY REVIEW
The State Services Commission’s (SSC’s) Gateway Review process is a critical assurance mechanism for the
New Zealand Government and is the primary vehicle for external peer review and challenge to the robustness of
plans and processes, improving the quality of inputs into decisions on Capital Asset Management. The process is
aligned to Treasury’s Better Business Case development and extends beyond the business justification and
investment decisions to introduction into service and realisation of benefits.
Gateway Reviews enable Defence staff to:

 ensure that proposals meet the appropriate quality standard;

 ensure that the best available skills and experience are deployed on programmes and projects; and
 ensure that relevant stakeholders have visibility of large or high risk proposals at key project milestones.

THE FIVE GATEWAY REVIEWS

Gateway Review 0/1 - this is related to Business Justification and is undertaken while preparing the Indicative
Business Case.
Gateway Review 2 - this is related to the Delivery Strategy and is undertaken while preparing the Detailed
Business Case.
Gateway Review 3 - this is related to the Investment Decision and is undertaken while preparing the
Implementation Business Case.
Gateway Review 4 - this is related to Readiness for Service and is undertaken immediately before acceptance
and Introduction into Service.
Gateway Review 5 - this is related to Benefits Realisation and is undertaken while the capability is In Service.
To maintain the robustness of the review process, each Gateway report and accompanying action log for
addressing any recommendations is confidential to the agency. Within Defence, Gateway reports may be referred
to the Capability Management Board and are shared within NZDF and MoD.
The Capability Branch Programme Management Office liaises with Gateway and the Project Monitoring Unit on
behalf of programmes and projects. Timing for the scheduling of Gateway Reviews is approved by the Capability
Steering Group on the recommendation of the Senior Responsible Owner and in discussion with the State
Services Commission. The Capability Steering Group will, in some cases, refer the decision to the Capability
Management Board.
To find out more about Gateway Reviews visit [Link] or go to the Quality section of
the Information Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 7

CAPABILITY LIFE CYCLE
The Capability Life Cycle represents the whole life of a capability from conception through to disposal and is a
key driver for the way in which Defence manages capabilities. The Defence White Paper recognises that the
NZDF and MoD must work together across all phases of the life cycle in order to successfully deliver Defence
Capabilities.
The Capability Life Cycle encompasses the Capital Asset Management, Better Business Case and Gateway
processes as well as other deliverables necessary to the management of capability such that the
Government’s defence and wider policy goals are met within the regulatory environment of the day.
The Capability Life Cycle phases shown in Figure 2 comprise the CMF.
Figure 2: Capability Life Cycle Phases

Defence Capabilities – Lifecycle Phases

Capability
Strategy and
Policy
 Definition  Acquisition  Introduction
Into Service
 In Service  Disposal
and selection

To effectively deliver the Capability Life Cycle, each phase has been broken up into one or many stages that are
aligned, in a tailored manner, to the Better Business Case pathway.2

Strategy and Policy - Policy review and development. Strategic direction is provided through
the Defence Assessment and Defence White Paper. The Defence
Capability Plan, which is approved by the Minister of Defence, outlines the
capability sets to deliver the Government policy in the Defence White
Paper.
- Defence Capability Planning. Determines how discrete capability sets will
be managed, developed and delivered. This is communicated by the
Capability Management Plans and adjusted as required to meet policy.
- Defence Capability Portfolio Planning. The capability portfolio is actively
managed to maintain a balance between capital funding and capability intent
to optimally meet operational requirements.
Capability Definition - Mandate stage. Determine via a Charter the scope, cost, benefits and
resource requirements for a capability development or disposal programme
or project on the Capability Portfolio Plan.
- Pre-project stage. Develop the Strategic Assessment and supporting
products.
- Start-up stage. Develop the Indicative Business Case and supporting
products.
- Initiate stage. Develop the Detailed Business Case and supporting
products.
Acquisition - Procurement stage. Develop the Project Implementation Business Case
and supporting products.
- Delivery stage(s). Finalise contracts, deliver capability and obtain Crown
Acceptance.
Introduction Into - Introduction Into Service stage. Coordinate Operational Testing and
Service Evaluation (OT&E), change management and readiness for service.
- Programme/Project Closure stage. Complete contracts and introduction
into service activities.
In Service - In Service Management. End user - use delivered capability for its intended
purpose and manage benefits to ensure that they are realised.
Disposal - Disposal. Initiate disposal projects in accordance with the Capability
Management Plans.
Each lifecycle phase is outlined individually later in this overview document and the flow from one phase to the
next is shown in Figure 3.

2
All phases must be followed; however, based on the scale and complexity of a project, some stages may be combined.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 8

Figure 3: Capability Life Cycle

CAPABILITY MANAGEMENT FRAMEWORK – MAY 2014

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 9

CAPABILITY MANAGEMENT FRAMEWORK
PROCESSES
The Capability Management Framework is driven internally by key governance, planning and management
processes.

GOVERNANCE ACROSS THE CAPABILITY LIFE CYCLE

A robust capability governance and management structure is critical to the success of capability management
within Defence.

CAPABILITY MANAGEMENT BOARD (CMB)

The Defence White Paper directs that the Secretary of Defence will ordinarily lead and be accountable for the
strategic policy, capability development, and acquisition phases of the Capability Life Cycle; and the Chief of
Defence Force will ordinarily lead and be accountable for the introduction into service, in-service and disposal
phases. These responsibilities are exercised through the Capability Management Board (CMB), which the
Secretary of Defence and the Chief of the Defence Force co-chair.
The Capability Management Board provides strategic governance across the military capability life cycle and
is focused on portfolio-level risk management and decision making.

CAPABILITY STEERING GROUP (CSG)

Capability Steering Groups, like the Capability Management Board, are co-chaired and represent all the key
internal stakeholders. Capability Steering Groups act as the programme or project board and are focused on
active project-level risk management, coordination of resources, achieving delivery of outcomes, monitoring
and reporting.
The composition of Capability Steering Groups varies depending on the nature of the capability concerned and
the particular phase of the Capability Life Cycle the capability is in.

 The CSG Capability Definition endorses major project documents, such as business cases, prior to
submission to CMB and receives governance reports from programmes and projects in this phase,
including rolling refresh programmes, at least quarterly.
 The CSG Acquisition/Introduction Into Service receives governance reports from programmes and
projects in this phase, including rolling refresh programmes, at least quarterly.
 The CSG Concepts and Doctrine meets as directed by the Co-Chairs to endorse or approve joint
doctrine and capstone conceptual documents.
 The CSG Projects WoLC <$15million will meet as required in order to meet the responsibilities of this
governance board.
Capability Steering Groups are also convened to discuss capital management portfolios such as Rotables;
Estate; CIS.

PROGRAMME AND PROJECT DIRECTION

The Defence White Paper directs that each phase of the Capability Life Cycle be executed through a clearly
identified programme or project director or manager, operating within a cooperative framework.
Programme/project directors or managers are accountable to the Capability Steering Group and Capability
Management Board through line managers. The make-up of project teams will vary depending on where
programmes or projects are in the capability life cycle, but usually include staff from both the MoD and the
NZDF throughout.
To find out more about Governance click here (internal), refer to the Terms of Reference, or go to the
Governance section of the Information Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 10

CAPABILITY BASED PLANNING
Consistent with international military best practice, Defence subscribes to a Capability Based Planning
approach. Capability Based Planning methodology involves a functional analysis of operational requirements. It
is policy driven, and asks “what do we need to do”, rather than “what equipment are we replacing”. Capabilities
are identified based on the tasks required to meet Government policy. One of the key benefits of Capability
Based Planning is its ability to properly articulate choices in the face of economic constraints.
Capability Portfolio planning is a structured approach to analyse, prioritise, and manage Defence capability
requirements based on strategic drivers and the balance of benefits/risks desired by the organisation. It is the
mechanism by which the portfolio of capability development and disposal programmes and projects is aligned
to Defence policy and strategy.
Capability Management planning is undertaken at a discrete capability level and is the method by which NZDF
analyses the gap between current and future capabilities determines the pathways that will achieve the future
capability sets outlined in the Defence Capability Plan.

PORTFOLIO, PROGRAMME AND PROJECT

MANAGEMENT
The Capability management processes are focused across the Capability Portfolio, Programme and Project levels
as outlined in Table 1
Portfolio – the combined set of programmes and projects that support the Capital Plan.
Programmes – groups of projects can either be delivered as Capability Programmes or Rolling Capability
Refreshes.
Projects – individual projects can either be delivered as Capability Projects or Urgent Operational Requirements.

FRAMEWORKS
Defence has developed Programme and Project Management Frameworks which are aligned with the Better
Business Case programme and project business case pathways. The phased pathway of the Better Business
Case model provides guidance on the best type of business case depending on the scale, complexity,
dependencies and risk of the proposal. The pathway could be by a programme, or for projects, via multiple
stage business cases or a single stage business case. The Better Business Case processes are aligned with
Managing Successful Programmes (MSP) and Projects in a Controlled Environment (PRINCE2)
methodologies.
Interactive Process – While the Programme and Project Management Frameworks depict discrete stages,
there is significant overlap between some of these stages. For example, planning for the initial Introduction to
Service often starts in the Capability Definition Phase, with the plan typically being finalised within the
Acquisition Phase.
Stage Handovers – MoD and Capability Branch teams work in collaboration through each of the stages, with
the lead responsibility evolving as a programme or project moves through the phases of the life cycle. Ideally a
core project team will remain with a project throughout the life cycle; however in some cases Defence staff are
required to handover management between stages. Managing these critical handovers is an essential part of
the internal process.
Scalability –Treasury recommends a tailored approach to governance and assurance based on the risk and
scale of the programme or project; as shown in the Better Business Case Scalability Matrix in Figure 4.
Defence has developed the Tailoring Tool to assist programme and project managers to determine which
business case path, assurance requirements and documentation set to apply. The aim is to ensure that the
appropriate level of effort is applied to every programme or project, including those that are low risk and low
scale. Completing the Scoping Document and engaging with Central Agencies are key steps in the process
for any programme or project that requires Cabinet approval.
To find out more about the Programme Management Framework click here (internal).
To find out more about the Project Management Framework click here (internal).

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 11

 Portfolio Capability Portfolio Defence, through the Capability Management Board, actively manages the capability portfolio, and
Management directs reprioritisation within the Defence Capital Plan when necessary to maintain a balance between
capital funding and capability intent. DMRR is an example of a highly successful, large portfolio
management exercise undertaken at a strategic level, as it used a prioritisation process to achieve a
balance between defence capability, funding and policy. Analysis and advice to the Capability
Management Board on portfolio management of the Capital Plan at the staff level is led by MoD
Development Branch and the Directorate for Capability Portfolio Planning in Capability Branch.

Programme Capability Programme A programme is established to coordinate, direct and oversee the implementation of a set of related
Management projects and activities. It is used when it makes sense to bring together multiple projects under a
single coordinating structure, as the individual projects contribute to an overall programme outcome.
Table 1: Capability Management Framework processes

Rolling Refresh Rolling capability refreshes are used to update capability on a regular basis due to equipment
becoming obsolescent or just wearing out. The core capability or output however does not change.

Project Capability Project A key feature is the scalable nature of the programme and project management and documentation
Management process. This ensures that the appropriate amount of effort is directed at each project or programme.
The amount of effort required diverges between Major projects with a whole life cost greater than
$15M and “Minor” projects with a whole life cost less than $15M.

Urgent Operational There may be exceptional circumstances when it becomes necessary to consider an urgent capability
Requirements proposal, which is not in the Defence Capital Plan or is brought forward to Capability Management
Board due to an operational requirement. These cases are managed through a scalable and
accelerated version of the Project Management Framework on a case by case basis.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 12

Figure 4: Better Business Case Scalability Matrix – Based on the Quick Reference Guide – July 20113

3
Better Business Case – Quick Reference Guide - July 2011 (This earlier version is shown as it depicts more detail about the level of
approach to business case development and it has been adapted to Defence practice).

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 13

CAPABILITY LIFECYCLE MANAGEMENT PRODUCTS
Capability Management is supported by the production and review of key products or activities ranging from
policy direction and capability planning to programme and project management delivery.

CAPABILITY POLICY
Capability policy is incorporated into higher level Defence strategy and policy documents and activities, key
documents are:
Defence White Paper. A comprehensive statement of the Government’s defence policy goals, matched to a
future strategic environment. The primary strategic policy document for Defence; Defence White Papers are
released every five years, should the Government wish to do so.
Defence Assessment. Examines the strategic outlook and its implications for New Zealand; Defence
Assessments inform Defence White Papers. Assessments are undertaken every five years and are led by the
Secretary of Defence, in consultation with the CDF.
Capability Plan – A summary of the capability sets needed to deliver the Government’s defence policy goals,
as outlined in the Defence White Paper. The Capability Plan is a public document that identifies the capability
pathway for NZDF to realise Joint Operational Excellence.

CAPABILITY STRATEGY
Future Joint Operating Concept (FJOC) – Provides conceptual, force and capability modernisation guidance to
the NZDF.

CAPABILITY PLANNING
The planning and management of Defence capability is conducted through two key document sets:
Capability Management Plans – The master documents by which NZDF outlines the approach for managing
specific capabilities advised in the Defence Capability Plan. Capability Management Plans analyse the gap
between current and future capabilities and provide a pathway to achieving the future capability sets. A
Capability Management Plan includes the review and investment cycles for a specific capability; addressing
the enhancement, replacement and removal from service of the capability, including PRICIE requirements.
Capability changes identified in Capability Management Plans are managed through capability Programmes and
Projects.
Defence Capital Plan (Capability) – The Defence Capital Plan includes the portfolio of Programmes and
Projects to be delivered in support of the Defence Capability Plan.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 14

PROGRAMMES
A programme is a temporary, flexible organisation created to coordinate, direct and oversee the implementation of
a set of related projects and activities in order to deliver outcomes and benefits related to the organisation’s
strategic objectives. A programme is likely to have a life that spans several years.4
There are key documents that will be revised over the life of the programme as information is refined. These
documents will vary based on the size and type of programme.
Documentation requirements for a Programme include:
Scoping Document – This document is formed through consultation with Central Agencies and its purpose is to
agree the “pathway” through the Better Business Case process and the required depth of analysis in the business
case to satisfy reviewers and decision makers.
Strategic Assessment + ILM – This considers the case for change, produces an Investment Logic Map, and
emphasises the Strategic Case.
Requirements – A collection of documents that clearly articulate what the user and system requirements are.
Examples include: Operational Concept Documents, Concept of Use Documents, User Requirements, and System
Requirements.
Benefits – A collection of documents that clearly articulate the benefits to be delivered by the programme
outcomes and the action plan required to be followed in order to realise those benefits. Examples include:
Programme Benefits Management Framework, Programme Benefits Realisation Plan and Programme Benefits
Realisation Report.
Programme Business Case – The programme business case should define the scope and rationale of the
programme and the likely overall cost and funding envelope. It will not usually contain detailed cost-benefit
analyses, schedules, financials or specific procurement information which will be provided in the individual project
business cases. Programme Business Cases are not required to be submitted to Cabinet for approval.
Safety Case – The programme safety case should demonstrate that the programme has identified and assessed
all the relevant risks for the Capability being developed by the programme and have taken all the steps necessary
to reduce these risks to a level as low as is reasonably practicable. It will not usually contain detailed equipment
information which will be provided in the individual project safety cases.
Once the Programme Business Case is approved, the projects within it follow the Project processes.

4
Managing Successful Programmes (MSP) manual 2011

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 15

PROJECTS
A project is a temporary organisation which will deliver one or more outputs in accordance with an agreed
business case. A particular project may or may not be part of a programme.5
There are key documents that will be revised over the life of the project as information is refined. These
documents will vary based on the size and type of project.
Documentation requirements for a project include:
Scoping Document – This document is formed through consultation with Central Agencies and its purpose is to
agree the pathway through the Better Business Case process and the required depth of analysis in the business
case to satisfy reviewers and decision makers.
Strategic Assessment + ILM – This considers the case for change, produces an Investment Logic Map, and
emphasises the Strategic Case.
Requirements – A collection of documents that clearly articulate what the user and system requirements are.
Examples include: Operational Concept Documents, Concept of Use Documents, User Requirements, and System
Requirements.
Benefits – A collection of documents that clearly articulate the benefits to be delivered by the project outputs and
the action plan required to be followed in order to realise those benefits. Examples include: Benefits Management
Strategy, Benefits Realisation Plan, Benefit Profile, Benefits Mapping and Benefits Realisation Report.
Business Case – A document that clearly articulates the business justification for the project, considering all five
cases in the Better Business Case model.
 The Indicative Business Case emphasises the Strategic, Economic and Commercial cases.
 The Detailed Business Case emphasises the Economic and Commercial cases, while also strongly
considering the Financial case.
 The Project Implementation Business Case most strongly considers the Management Case, while still
considering the Financial, Economic and Commercial cases.
 The Single Stage Business Case combines the Indicative and Detailed business cases and is intended
for lower risk and/or smaller scale investments.
Safety Case – The project safety case should demonstrate that the project has identified and assessed all the
relevant risks for the Capability being developed by the project and have taken all the steps necessary to reduce
these risks to a level as low as is reasonably practicable. The level of detail will evolve as the project moves
through the Capability Management Life Cycle.

5
Managing Successful Programmes (MSP) manual 2011

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 16

CAPABILITY LIFECYCLE TOOLS
Information Hub – The Information Hub is the NZDF Capability Branch repository for guidance and templates
relating to any aspect of the Capability Management Framework. To go to the Information Hub click here
(internal).
Acquisition Manual – The Acquisition Manual sets out the MoD policy and direction for MoD procurement.
Systems and methodologies – NZDF and MoD adopt tools and methodologies to support consistency and a
common understanding when activities cross multiple disciplines and organisations. Examples include:
Programme and Project management methodologies; Portfolio Management systems; Reporting systems; and
methodologies and systems that support any of the Capability Lifecycle Management themes.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 17

CAPABILITY LIFECYCLE MANAGEMENT THEMES
BENEFITS
Throughout the Capability Life Cycle, Defence personnel work together to develop Benefit Plans that define how
and when a measurement of the achievement of a programme or project’s benefit can be made. Benefits
represent the improvement or advantage gained by implementing change. Their management is important
because they represent the reason for investing. By effectively managing benefits, Defence can not only select the
initiatives that deliver the greatest value for resources utilised, but also demonstrate that the benefits were
delivered as promised.
The management of benefits follows a structured process, where four practices are undertaken throughout the
Capability Life Cycle, to ensure appropriate rigor is applied to deliver a robust outcome. The four practices include;
Identify and Appraise, Analyse and Validate, Plan and Prepare, and Realise and Report. Additionally, for Cabinet
approved projects, Defence is required to report the benefits achieved compared to those in the business case
within 12 months of the In Service date of the capability. Gateway Review 5 is undertaken while the capability is In
Service and looks at Benefits Realisation.
To find out more about Benefits click here (internal), or go to the Benefits section of the Information Hub.

BUSINESS JUSTIFICATION
The Better Business Case model is the primary vehicle for assessing and confirming the continued justification
for programme and project investments. Defence uses Multi-Criteria Decision Analysis (MCDA) and Cost
Benefit Analysis (CBA) to select the best value project options against Defence strategic objectives. Multi-
Criteria Decision Analysis is also used as a portfolio prioritisation tool; particularly for the portfolio of projects
with Whole of Life Costs less than $15M.
To find out more about Business Justification click here (internal), or go to the Business Case section of the
Information Hub

REQUIREMENTS
Throughout the Capability Life Cycle, Defence personnel work together to professionally elicit, analyse, specify,
validate and manage Requirements. Requirements express in detail what is to be delivered by the project, they are
a key element of the contract between the phases of the Life Cycle and are used to ensure that the functionality
built during the acquisition phase enables users to perform essential operational tasks once the capability is
introduced into service. The process of defining user requirements aligns the stakeholders with shared vision,
goals and expectations.
To find out more about Requirements practices click here (internal) or go to the Requirements section of the
Information Hub.

FINANCE
Finance supports capability lifecycle management with whole of life costing expertise, management of the capital
and operating portfolio and financial management of projects.
Finance provides Whole of Life Costing expertise throughout the life cycle of a Capability programme and project
including:

 cost of acquisition
 incremental operating expenditure
 through life operating expenditure
 depreciation
 identifying funding sources for capital and operating expenditure
Finance assists management of the Portfolio by aligning Defence Capital Plan costs with the applicable
operating and personnel costs Resource Plan and monitoring the balance between capital costs and funding
sources.
Finance supports the financial management of projects by providing accounting support that assists project
managers and the Programme Management Office with project financial reporting and control.
To find out more about Finance click here (internal).

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 18

RISK
Risk Management supports the Capability Management Boards’s governance function by ensuring that
significant risk areas associated with policies, plans, programmes and projects are identified and assessed, and
that appropriate measures are in place to address unfavourable impacts and to benefit from opportunities. The
Capability Management Board receives a regular strategic capability risk profile and actively monitors portfolio-
level risk. The Capability Management Board, through the NZDF Directorate of Risk & Assurance, also receives
assessments of the Board’s risk management performance at each meeting. Capability Steering Groups provide
active project-level risk management.
To find out more about Risk click here (internal) or go to the Risk section of the Information Hub

INTEGRATED LOGISTICS SUPPORT (ILS)

Integrated Logistic Support provides the means to design, establish, monitor and optimise all aspects of
capability support throughout the entire Capability Life Cycle. Integrated Logistics Support therefore
encapsulates the management and technical processes through which a significant portion of the PRICIE
construct is delivered. The NZDF has created an incremental Integrated Logistics Support Framework to ensure
the benefits of Integrated Logistics Support are realised for all programmes or projects.
To find out more about ILS click here (internal), go to the ILS section of the Information Hub or contact the ILS
centre of expertise.

SAFETY
All capability programmes and projects are required to develop an appropriate Safety Case. Safety cases will
evolve throughout the development of the capability and be maintained throughout its service life.
To find out more about Safety Cases go to the Safety section of the Information Hub

QUALITY
Quality Assurance enables programmes to achieve their strategic goals and projects to ensure the outputs meet
the acceptance criteria. This is conducted through a controlled and planned environment to assure the quality,
fitness for purpose, and delivery of expected capability requirements are met.
Quantitative Risk Analysis (QRA) – Assesses cost elements in the business case in terms of the risks that might
impact on achievement of estimates. Quantitative Risk Analysis of costs is mandatory as part of the development
of the Detailed Business Case for major programmes and projects monitored by Treasury.
External Independent Quality Assurance (IQA) – High Risk projects are subject to an Independent Quality
Assurance review conducted by an external organisation. In some cases Medium Risk projects will also be subject
to an external Independent Quality Assurance review. Information Communication Technology (ICT) related
projects are required by the Government Chief Information Office (GCIO) to include technical quality assurance
(TQA) as part of the Independent Quality Assurance review.
Internal Independent Quality Assurance – The Capability Branch Programme Management Office may
undertake an internal Independent Quality Assurance review where an external review is not required.
To find out more about Quality Assurance click here (internal) or go to the Quality section of the Information
Hub.

CONTINUOUS IMPROVEMENT
The frameworks, processes and guidance that support the Capability Management Framework are subject to
continual review in order to keep guidance relevant and in line with changing standards. Processes and
documents are refined when necessary and action plans are established to address gaps or opportunities for
improvement. A key driver for continuous improvement is learning and sharing useful lessons throughout the
Capability Life Cycle, embedding relevant lessons into the Capability Management Framework and sharing them
with the wider Defence community.
To find out more about Continuous Improvement go to the Continuous Improvement section of the Information
Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 19

ROLES AND RESPONSIBILITIES
MoD and Capability Branch teams work in collaboration through each of the stages, with the lead responsibility
evolving as a programme or project moves through the phases of the life cycle. Individual roles and
responsibilities are detailed below.

MINISTRY OF DEFENCE
MOD DEFENCE POLICY AND PLANNING DIVISION
MoD Executive Branch supports collaborative decision making across the capability lifecycle, reflecting the formal
accountabilities of the Secretary of Defence and Chief of Defence Force. The Executive Branch works with the
NZDF Capability Branch Programme Management Office to provide technical, administrative and secretariat
support to the Capability Management Board and Capability Steering Groups. It assists the work of the Ministry’s
Development Branch, Acquisitions Division and the NZDF Capability Branch to make sure that capability projects
and programmes are consistent with the Capital Asset Management regime and that advice put to the Capability
Management Board, Capability Steering Groups and Ministers is accurate, complete, robust, accessible and of
high quality. Executive Branch also leads liaison with the Minister’s office, and coordinates, with NZDF, the
scheduling and submission of capability Cabinet Papers.
MoD Development Branch undertakes policy work on capability projects and programmes up to the acquisition of
a capability. Development Branch outputs include: technical analysis of capability requirements (in conjunction with
the NZDF); indicative, detailed, implementation, single stage and programme business case preparation and
analysis; problem definition around capability issues; analysis of the current and future defence capability portfolio
and associated capital expenditure analysis, and contributions to NZDF doctrine and operating concepts. The
Branch also provides advice to the Minister of Defence on capability projects; and prepares Cabinet papers on
capability business cases.
MoD Defence Policy Branch outputs include: the analysis of strategic futures and geopolitical trends; providing
input into the wider security sector; leading Defence Assessments on behalf of the Secretary of Defence; support
and analysis of NZDF organisational reform and savings programmes; and monitoring of post-DMRR work
streams.

MOD ACQUISITION DIVISION

MoD Acquisition Division is responsible for acquiring major capability for the NZDF, generally where the whole of
life value of the project is in excess of NZ$15 million. The Division handles all contractual and project management
issues for major capability acquisitions. Minor capital acquisitions, infrastructure and IT projects are generally
managed within the NZDF, but may be subject to the same governance arrangements as Major capability projects,
if directed by the Capability Management Board.

MOD EVALUATION DIVISION

MoD Evaluation Division undertakes audits, assessments and reviews focused on quantitative, evidence-based
strategic evaluation, as part of a work programme agreed with the Minister of Defence. This includes NZDF and
MoD subject areas.

MOD FINANCE DIVISION

MoD Finance Division provides financial services and advice, manages cash and foreign currency funds,
produces Estimates and reports on all financial aspects of Ministry business. The Division provides financial data
to the Capability Management Board and Capability Steering Groups, and provides financial advice to capability
business cases in relation to MoD procurement.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 20

NEW ZEALAND DEFENCE FORCE
NZDF CAPABILITY BRANCH
The mission of Capability Branch is to ensure the continuity of appropriate and cost effective military
capabilities so that the NZDF remains mission capable and able to contribute meaningfully to the security
interests of New Zealand.
Enterprise Portfolio Office – is responsible to CDF for the management of the Enterprise Activity. Capability
Branch provides support.
Capability Portfolio Planning Directorate – is responsible for Capability Branch planning and
management oversight of the capability portfolio and managing the overall coordination of staff activity and
administrative support throughout the NZDF Capability Branch.
Capability Branch Programme Management Office – is responsible within Capability Branch for
supporting the Capability Management Framework by:
 the definition, accessibility and continual improvement of the standards, processes, reports, templates and
tools for programme and project management;
 monitoring and reporting on the performance of the framework;
 monitoring and reporting on programme and project performance;
 programme and project assurance; and
 project support and mentoring; providing specialist resources for programme or project teams.
Future Force Development Directorate – is responsible for:

 translating current government policy into capability strategy and development in conjunction with the
MoD;
 managing futures analysis such as strategic and green fields thinking, operational analysis and
experimentation;
 joint NZDF Doctrine; and
 supporting the MoD in the strategy and policy phase, by providing military expertise into the analysis of
strategic futures and geopolitical trends, particularly in a Defence Assessment.
Capability Working Group Directorate – is responsible for providing military capability expertise in:
 the development of NZDF Capability Management Plans;
 facilitation of strategic assessments along with MoD;
 identification and development of capability/user requirements along with MoD;
 development of future capability gap analysis along with MoD; and
 identification and development of Single Stage and Indicative Business Cases.
Programme Delivery Directorate – is responsible within Capability Branch for ensuring delivery of
projects from the latter stages of capability definition to the acquisition of capability (in conjunction with MoD and
Defence Logistics Command) through to introduction into service (including support to acceptance, operational
testing and evaluation) and the embedding of change.
To find out more about the roles and responsibilities across the life cycle and how phase handovers are
managed click here (internal) or email capbrpmo@[Link] or executive-branch@[Link].

NZDF FINANCE
The NZDF Finance Capability team works closely with Capability Branch and is responsible for:

 developing NZDF Strategic, medium term and short term capital plans;
 providing a financial perspective to the development and maintenance of Capability Management Plans,
including Life Cycle Costing;
 providing financial expertise and support to capital projects; and
 performance reporting on the capital programme from a financial perspective.
To find out more about the Finance Capability team click here (internal).

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 21

NZDF DEFENCE LOGISTICS COMMAND (DLC) AND DEFENCE COMMERCIAL SERVICES (DCS)
Headquarters Defence Logistics Command provides strategic planning, direction, management and evaluation for
all environments in the Command – Maritime, Land, Air, Shared Services and Commercial Services.
As part of Defence Logistics Command, Defence Commercial Services provides commercial advice and support
for business case development, and manages acquisition projects for the procurement of equipment and services
to support projects with a whole of life cost less than $15M.
As part of Defence Logistics Command, the National Disposal Office manages disposal of equipment in support of
major Capability disposal projects.
To find out more about Defence Logistics Command click here (internal).

SINGLE SERVICES
The Single Service Chiefs will usually be the Capability Sponsor for each major capability acquisition. The
Capability Sponsor will ensure that the requirements of the Defence Chief Executives in each phase of the
Capability Lifecycle are met, including providing necessary personnel. Single Services are represented at
Capability Steering Group meetings by the Deputy Chief and Service Chiefs attend Capability Management Board
meetings for items relevant to their Service. Individual Services contribute to the major part of the Introduction into
Service effort.

CENTRAL AGENCIES
Defence actively engages with Central Agencies (Treasury, State Services Commission, Government Chief
Information Office and the Department of Prime Minister and Cabinet) on major capability projects.
Central Agencies have a monitoring and quality assurance role, and provide assurance to their Ministers that the
capability portfolio, and the individual projects contained within it, is being managed effectively.
Central Agency consultation is required for all Major Business Cases, and Cabinet submissions. Central Agencies
also participate in capability definition activities, such as Investment Logic Mapping and Multi Criteria Decision
Analysis workshops.

ENGAGEMENT
Initial contact with Central Agencies normally takes place with a submission of a Scoping Document. A Risk Profile
Assessment (RPA) is also submitted, which provides an initial Risk rating for a project, determines whether a
project will be subject to Gateway review (page 7), and the level of Central Agency monitoring that will be required.
Projects assessed as High or Medium Risk are reported through the Treasury Portfolio Performance Management
Team tri-annually to the Cabinet Committee on State Sector Reform and Expenditure Control (SEC).
Defence and Central Agencies meet fortnightly to discuss major capability project matters.
The value of informal engagement with Central Agencies is that it:

 provides a joint environment where formal advice and decisions are shared on the progress of major
projects and programmes including through Capability briefings and demonstrations;
 builds sound relationships through a collaborative environment to strengthen the documentation that is
required for the Minister or Cabinet submission; and
 provides assurance and confidence across the Central Agencies that the right information is presented
and has been thoroughly consulted and agreed prior to Minister or Cabinet submission.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 22

STRATEGY AND POLICY PHASE
PURPOSE
All capability is underpinned by strong linkages to Government defence policy, to ensure that capability decisions
are aligned with agreed assessments of the strategic environment, and wider portfolio planning. To ensure that this
is built into the capability management process, the first phase of the capability life cycle is Strategy and Policy.

ROLES AND RESPONSIBILITIES

The policy responsibility for Defence primarily resides with the Secretary of Defence, in consultation with the Chief
of Defence Force. Key documents are usually produced jointly between MoD and NZDF.

WHEN
The Strategy and Policy phase occurs throughout the lifecycle and triggers the Capability Definition phase when
specific capability needs to be developed, enhanced or disposed of.

PROCESS
POLICY REVIEW AND DEVELOPMENT
The first key Defence input into Strategy and Policy is the Defence Assessment. A Defence Assessment is policy
advice submitted by the Secretary of Defence in consultation with the CDF to Government. It examines the
strategic outlook and its implications for New Zealand. This includes taking account of changes since the previous
Assessment and White Paper, and presenting the implications for defence policy settings in light of any changes in
the strategic environment. Defence Assessments are normally undertaken every five years.
Following a Defence Assessment, Government may choose to commission a Defence White Paper, which is a
public expression of the Government’s Defence policy goals, matched to a future strategic environment. A Defence
Assessment is due to be presented to Cabinet in November 2014 and a Defence White Paper, if commissioned by
the Government, is tentatively scheduled for 2015.
The Defence Capability Plan describes the capability sets needed to deliver the Government’s defence policy, as
set out in the Defence White Paper. The current Defence Capability Plan was published in June 2014.

STRATEGY
The Defence Assessment and White Paper are key documents that inform how the NZDF will operate in order to
adjust to the future environment and maintain the ability to meet Government policy goals. This view is expressed
within the Future Joint Operating Concept (FJOC), the purpose of which is to provide conceptual, force and
capability modernisation guidance to the NZDF. The concepts included in the Future Joint Operating Concept are
subject to a rigorous experimentation and validation process before they are considered as future capability
options.

CAPABILITY MANAGEMENT AND PORTFOLIO PLANNING

From time to time individual pieces of strategic policy work are commissioned. An example of such work is the
Defence Midpoint Rebalancing Review (DMRR), which was undertaken in 2013. The 2010 White Paper identified
that new funding injections would be needed in the future if the capability strategy was to be delivered. The DMRR
presented a series of force structure options, matched to specific funding tracks, to achieve a balance of defence
funding, capability and policy.
As a result of the DMRR, in November 2013 Cabinet committed to a sustainable long term funding approach for
the NZDF out to 2030, which will enable the NZDF to deliver on the capability expectations set out in the White
Paper.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 23

FIND OUT MORE
To find out more about the Strategy and Policy phase click here (internal) or go to the Strategy and Policy
section of the Information Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 24

CAPABILITY DEFINITION PHASE
PURPOSE
The purpose of the Capability Definition phase is to identify in a methodical and rigorous way, the capability
options available to Government by which it can achieve a desired effort or outcome.

ROLES AND RESPONSIBILITIES

The roles and responsibilities described in this section specifically relate to this phase of the Capability Life Cycle.
It is important to take into account the overlap of Capability Life Cycle phases and the expectation of government
that the Ministry and NZDF will work together across all phases of the life cycle in order to successfully deliver
Defence Capabilities.
Secretary of Defence – ordinarily accountable for the successful completion of the Capability Definition Phase.
Chief of Defence Force – is responsible for providing agreed NZDF input to the Capability Definition Phase.
Deputy Secretary Policy and Planning – is ordinarily responsible for leading the Capability Definition Phase,
responsible for providing Policy and Planning subject matter expertise.
Vice Chief of Defence Force – is a co-chair, together with the Deputy Secretary Policy and Planning, of the
Capability Steering Group during this phase of the capability life cycle.
Assistant Chief of Capability – is responsible for providing NZDF user requirements and responsible for
providing military subject matter expertise as well as acting as the ‘Capability Customer’. Is the Senior
Responsible Owner, responsible for representing the interests of the Senior User in delivery of end user
benefits.

WHEN
The process is triggered by the Approval to Initiate.

PROCESS
INPUTS
Gap Analysis – a capability gap may be identified through either an Urgent Operational Requirement, or during
the Strategy and Policy phase in the form of a policy requirement and/or a planned replacement/upgrade as part
of a change to the future operating environment.

PROCESS
Approval to initiate a project is sought from the two Defence Executives via the Capability Management Board.
Approval generates advice to the Minister that work has commenced on the project (this may be done by
reference in the weekly report or by a separate note).
Key points in the capability definition phase are:
A Project Charter is submitted to Capability Management Board for approval. The Charter lists the project
team, governance arrangements for managing the project, a project timeline, and indicative funding.
A Scoping Document is agreed with central agencies. This document provides the basis for obtaining early
agreement and clearly defining expectations on the process and the degree of analytical effort required in
developing and implementing the proposal.
An Investment Logic Mapping exercise is authorised to take place once the Project Charter is approved. It
consists of a minimum of two facilitated workshops aimed at identifying why the Government should invest in a
particular capability. The outcome generates a Strategic Assessment, which in turn informs the strategic case
in the Indicative Business Case. Investment logic mapping exercises are generally attended by Treasury. They
are not required for projects with a whole of life cost less than $15M.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 25

The Indicative Business Case is the first off-ramp for Government. An Indicative Business Case normally
seeks ‘approval to initiate’ development of the business case for a capability and progress a shortlist of
capability options to a Detailed Business Case stage. It may also seek approval to refine costs by formally
engaging with industry (through a request for information). All Indicative Business Cases are consulted with
central agencies prior to submission to the Minister and then Cabinet for decision. Defence uses Multi-Criteria
Decision Analysis for options selection for both Indicative and Detailed Business Cases.
The Detailed Business Case is the second off-ramp for Government. A Detailed Business Case normally seeks
‘approval in principle’ to commence formal engagement with industry (through a request proposal or request for
tender) on a preferred capability option. As with Indicative Business Cases, all Detailed Business Cases are
consulted with central agencies prior to submission to the Minister and then Cabinet for decision.
The Single Stage Business Case is the first off-ramp for lower risk and/or smaller scale investments. As with
Detailed Business Cases, a Single Stage Business Case normally seeks ‘approval in principle’ to commence
formal engagement with industry and for projects with a whole of life cost greater than $15M are consulted with
central agencies prior to submission to the Minister and then Cabinet for decision. The Single Stage Business
Case for projects with a whole of life cost less than $15M is managed internally within NZDF.

OUTPUTS
 Approved problem statement – justification.
 Approved user/system requirements.
 Approved business case(s) – viability (costs/benefits).
 Project management documents.

FIND OUT MORE

To find out more about the Capability Definition phase click here (internal) or go to the Capability Definition
section of the Information Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 26

ACQUISITION PHASE
PURPOSE
The purpose of the Acquisition Phase is to acquire equipment and deliverables (such as training, spares and
support) that meet the requirements of Government policy and deliver on benefits. The acquisitions must be
within budget, to specification and on schedule, achieving the best value for money and ensuring appropriate
standards of safety.

ROLES AND RESPONSIBILITIES

The roles and responsibilities described in this section specifically relate to this phase of the Capability Life Cycle.
It is important to take into account the overlap of Capability Life Cycle phases and the expectation of government
that the Ministry and NZDF will work together across all phases of the life cycle in order to successfully deliver
Defence Capabilities.
Secretary of Defence – ordinarily accountable for the successful completion of the Acquisition Phase.
Chief of Defence Force – ordinarily responsible for providing agreed NZDF input to the Acquisition Phase.
Deputy Secretary Acquisition – is responsible to the Secretary of Defence for the overall operation of the
Acquisition Division and the accountability for delivering the equipment to the NZDF, to specification, including
appropriate standards of safety, within the budget and on time.
Vice Chief of Defence Force – is a co-chair, together with the Deputy Secretary Acquisition, of the Capability
Steering Group during this phase of the capability life cycle.
Assistant Chief of Capability – and his or her team is responsible to the Chief of Defence Force (through the
Vice Chief of Defence) for delivery of capabilities to enable NZDF joint effects. AC Cap will utilse DCS procurement
agents during the Acquisition Phase.

WHEN
For projects to be delivered by the MoD, the Acquisition phase is triggered by Cabinet approval of the Detailed or
Single Stage Business Case.
NZDF Acquisitions are triggered by the granting of an NZDF Approval In Princple (AIP). This allocates a budget to a
capital (internal) project, following approval of the project’s Business Case.
Formal consultation with the relevant MoD or NZDF Acquisition personnel is required during the Initiation and
Planning Stages. The Business Case development requires decisions relating to an Acquisition Strategy which
requires approval by either the Deputy Secretary - Acquisition or NZDF equivalent.

PROCESS
The MoD Acquisition Division acquires equipment to be operated by the three Services of the NZDF, generally
where the whole of life cost exceeds NZ$15 million. Acquisitions with a whole of life cost less the NZ$15M are
generally managed within NZDF. The respective processes used by the MoD and NZDF are outlined below.
Projects with a whole of life cost greater than $15M or that are high risk, are delivered by MoD Acquisitions, all
other Capability projects are delivered within NZDF by Defence Commercial Services.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 27

MOD ACQUISITION PROCESS
There are four sub-phases within the MoD Acquisition Phase.
The policies and procedures used throughout the four Acquisition Phases are outlined in the Acquisition Manual
and meet the requirements of Government Procurement in New Zealand Policy Guide for Purchases (Ministry of
Business, Innovation and Employment) and the Procurement Guidance for Public Entities (Office of Auditor
General).
Planning – the planning phase takes the Acquisition Strategy from the Detailed Business Case and further
refines it to include additional items such as; the required project approvals, project schedule and the
appointment of the project director/manager. The detailed Acquisition Strategy is then approved by the Deputy
Secretary – Acquisition.
Source Selection – the prime objectives of the phase are the development and application of a structured and
politically robust source selection model, which results in the timely selection of the most cost effective solution
to satisfy the user requirement. This phase is then approved by the Acquisition Review Board. The Acquisition
Review Board is chaired by the Deputy Secretary – Acquisition. Membership is made up of regular and invited
persons the MoD, NZDF and other Government agencies.
A Project Implementation Business Case is produced. This seeks ‘approval to commit funds’ by contracting with a
preferred supplier. This stage may occur in different ways: Cabinet may approve the selected supplier and agree
the negotiated contract details; or Cabinet may use a two step approach of approving the recommended supplier
and authorising contract negotiations, and then subsequently considering and approving the negotiated contract
details.
Management – the key elements of this phase are the day-to-day project management (provided by the project
director/project manager and project teams), payment of the contractor and/or other suppliers and contract
administration to deliver the required outcomes. This phase also encompasses the critical transition from the
MoD led Acquisition Phase to the NZDF led Introduction into Service Phase.
Completion – the Completion Phase runs in parallel with the Introduction into Service Phase (explained on page
29) and requires careful coordination. The Completion Phase focuses primarily on the management of the
warranty and latent in defect period.
NZDF ACQUISITION PROCESS
There are four sub-phases within the NZDF Acquisition Phase. These include:
Planning and requirement definition – the planning phase covers final requirement definition (and generation of
more comprehensive user requirements/specifications for tendering where required). The planning phase also
covers identification of the Acquisition Strategy, or validation or modification of an acquisition strategy if it was
detailed in the project business case. This phase of the acquisition process is managed collaboratively between
Capability Branch, Defence Logistics Command and Defence Property Group.
Source Selection – the prime objectives of the phase are the development and application of a structured and
robust capability source selection model. The application of this process results in the timely selection of the
most cost effective solution to satisfy the required capability. This phase of the acquisition process is managed
by Defence Commercial Services. All purchases over $0.1m require source selection to be endorsed by the
Tenders Board before a purchase can be made.
Management – the key elements of this phase are day-to-day project management (provided by the project
manager) and contract administration (provided by Defence Commercial Services). Projects are managed in
accordance with the principles of PRINCE2, but must also comply with other specific Service policies/guidelines
regarding the introduction of capability change. Governance is provided by the Directorate of Programme
Delivery in Capability Branch.
Completion – this phase commences with the delivery to the NZDF of the final deliverables and completes after
the capability has been appropriately trialed/tested and introduced into service (including the provision of all ILS
aspects) and accepted by the end user. This phase also incorporates the final payment to the contractor and/or
other suppliers.

FIND OUT MORE

To find out more about MoD and NZDF Acquisitions click here (internal) or go to the Acquisition section of the
Information hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 28

INTRODUCTION INTO SERVICE PHASE
PURPOSE
Regardless of the size of a project, an Introduction Into Service phase is necessary to prepare for the capability
renewal or change its introduction represents. Introduction Into Service is fundamentally about change
management and setting up for successful benefits realisation. For most major projects, Introduction Into Service
is complex and the relationship between the Acquisition and Introduction Into Service environments is critical.
Therefore, Introduction Into Service and Acquisition will share many of the same data and systems (e.g. Risks and
Issues Registers) to avoid duplication and support as the volume of activity shifts from Acquisition to Introduction
Into Service, as shown in Figure 5. Introduction Into Service also allows for the setting of the criteria for the
Output Owner (Services) to prepare their organisations for the new/renewed capability.
Figure 5: Shift in volume of activity between the Acquisition and Introduction Into Service phases

ROLES AND RESPONSIBILITIES

The roles and responsibilities described in this section specifically relate to this phase of the Capability Life Cycle.
It is important to take into account the overlap of Capability Life Cycle phases and the expectation of government
that the Ministry and NZDF will work together across all phases of the life cycle in order to successfully deliver
Defence Capabilities.
Chief of Defence Force – ordinarily responsible for providing agreed NZDF input to the Introduction into Service
Phase.
Vice Chief of Defence Force – is a co-chair, together with the Deputy Secretary Acquisition, of the Capability
Steering Group during this phase of the capability life cycle.
The project owner is the individual identified in the initial project documentation, usually a principal (Service Chief
or Commander of Joint Forces New Zealand).
Assistant Chief of Capability – is responsible for the management and delivery of the Introduction into Service
process.
Service Chief/Senior User – individual services contribute to the major part of the Introduction into Service effort
throughout the process.
Stakeholders contribute to the process individually and collectively. These stakeholders range from the Service
Chiefs (Maritime, Land and Air) who are responsible for OT&E, through to business areas such as: Defence
Logistics Command, Training and Education Directorate, Defence Personnel Executive, Services and other
Government agencies. Each is responsible for delivering their part of the plan. The plan should determine
accountability and ensure that principal stakeholders are aware of their obligations.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 29

WHEN
Initial Introduction Into Service planning can start as early as the development of the Indicative Business Case.

PROCESS
The Introduction Into Service process works through planning across the PRICIE components to synchronise
the preparedness of the host system for operational release. Key inputs are from Acquisition and from the
stakeholders responsible for delivering PRICIE components and the Output Owners. In some cases this is
tangible (equipment/IT/Training), in others it is a planning or forecast component (Personnel/Finance). The plan
should determine accountability and ensure that principal stakeholders are aware of their obligations.
Fundamental to the successful completion of the Introduction Into Service Phase is management of Operational
Release or interim Operational Release. The Operational Release process is set out, tailored and agreed early in
the capability life cycle, usually once solutions are known with a reasonable degree of certainty. During
Operational Release, specifications and user/ system requirements are tested, evaluated and reported upon by
the vendors and project team. As systems or sub-systems successfully pass the agreed Operational Test &
Evaluation standards, the project team will recommend to the Capability Steering Group that Operational
Release be sought from the end user. Once the end user agrees that the system or sub-system has met the
contractual specification and user requirements, Operational Release of that system or sub-system is granted
and in-service management commences.

FIND OUT MORE

To find out more about the Introduction into Service phase click here (internal) or go to the Introduction Into
Service section of the Information Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 30

IN-SERVICE MANAGEMENT PHASE
PURPOSE
The In-Service phase of the Capability Life Cycle is the period of time where a capability is used for its intended
purpose by the end user. It is the phase where the original user requirements are fulfilled and the promised
benefits are realised. A capability needs to be managed effectively, taking into account the PRICIE components
of capability, in order to maximise its utility and longevity; to achieve this, careful coordination amongst
stakeholder groups is required. Capability Management Plans are a key enabler to in-service capability
management.

ROLES AND RESPONSIBILITIES

The roles and responsibilities described in this section specifically relate to this phase of the Capability Life Cycle.
It is important to take into account the overlap of Capability Life Cycle phases.
Assistant Chief of Capability – owns and maintains Capability Management Plans.
Service Chief/Senior User – Report benefits realised and manages the In Service safety case.
Responsibility for In Service management of Capability is defined by the PRICIE construct:
Personnel – owned and maintained by Assistant Chief Personnel
Research and Development – owned and maintained by Director Defence Technology Agency
Infrastructure and Organisation – owned and maintained by Chief Operating Officer/Commander Logistics
Concepts, Doctrine & Collective Training – owned and maintained by Assistant Chief Capability
Information Technology – owned and maintained by Chief Information Officer
Equipment and Logistics – owned and maintained by Commander Logistics

WHEN
In-service begins at the point Assistant Chief of Capability and the Senior User agree that Introduction into
Service is complete, usually at Operational Release, which is at the point that all agreed user requirements have
been successfully demonstrated. It is then up to the end user to further develop the project outcome to a
Directed Level of Capability at which point full Operational Capability is usually declared.

PROCESS
Capabilities are maintained in-service through a variety of methods, coordinated by a master Capability
Management Plan (CMP). The CMP directs and guides the way the PRICIE components are collectively brought
together in order to ensure that the desired outcomes and benefits are realised. Other plans and activities exist at
a tier below CMPs, for example; Maintenance Plans, Workforce Planning, and Capability Upgrade Plans.
Reporting on the progress of benefits realisation is a key governance requirement of the In-Service Phase.
Whether or not the benefits are achieved information is fed back into CMPs, for example; identifying a capability
exceeded or a gap that needs to be rectified.

FIND OUT MORE

To find out more about the In-Service Management phase go to the responsible Service or Branch sites, click
here (internal) or go to the In Service section of the Information Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 31

DISPOSAL PHASE
PURPOSE
In upgrading existing capabilities, disposal of existing PRICIE elements and especially equipment is a key
activity. In addition, disposal can be a stand alone activity where a capability, not just a piece of equipment, is no
longer required. The disposal stage is the management of the elements of PRICIE and ILS but with a focus on
assets that make up the capability including updates through the Capability Life Cycle.

ROLES AND RESPONSIBILITIES

The roles and responsibilities described in this section specifically relate to this phase of the Capability Life Cycle
phase. It is important to take into account the overlap of Capability Life Cycle phases.
Chief of Defence Force – ordinarily responsible for the Disposal Phase.
Vice Chief of Defence Force – is a co-chair, together with the Deputy Secretary Policy and Planning, of the
Capability Steering Group during this phase of the capability life cycle.
Commander Logistics – responsible for disposal of equipment through the National Disposals Office.
Capability Stakeholders – all stakeholders contribute to the process individually and collectively.
Key external stakeholders include the Ministry of Foreign Affairs and Trade, brokers and sales agents.
Internal stakeholders include output owners e.g. Service Chiefs and Component Commanders, Service policy
directorates and business owners e.g. Capability Branch; Defence Logistics Command; Training and Education
Directorate; Defence Shared Services; Defence Personnel Executive; and MoD Policy and Planning and
Acquisition Divisions.

WHEN
The process is trigged by a CMB decision based on either Cabinet direction or the introduction of a new
capability.

PROCESS
The disposal process requires the appropriate approval to remove a capability from service. This may be at a
Government level for major assets, Chief of Defence Force or Service Chiefs for less significant capabilities. In
addition to any national security and environmental regulations that may need to be satisfied, approval from the
country of origin and/or manufacturer may also be required prior to disposal. The output of this stage is a system,
function or capability (including the assets) that has been completely removed from service, in compliance with
the purchase agreement, any applicable laws and regulations and is no longer owned or held by the Service.
The disposal of a capability is a complex and often expensive process which should be given as much
consideration as the acquisition of new capability. Disposal planning is undertaken throughout the life of a
capability in accordance with the Capability Management Plan(s); however a project should be established to
oversee the disposal once disposal is pending. A disposal project follows the same process used for the
development of a new capability, with acquisition activities being replaced by disposal activities.

FIND OUT MORE

To find out more about the Disposal phase click here (internal) or go to the Disposal section of the Information
Hub.

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 32

GLOSSARY
AESS Analysis, Experimentation, Science and Simulation
BBC Better Business Case for Capital Proposals
CAM Capital Asset Management
CBA Cost Benefit Analysis
CGA Capability Gap Analysis
CMB Capability Management Board
CMP Capability Management Plan
CSG Capability Steering Group
DA Defence Assessment
DBC Detailed Business Case
Defence MoD and NZDF
DWP Defence White Paper
ES Environmental Scan
FJOC Future Joint Operating Concept
IBC Indicative Business Case
ILS Integrated Logistics Support
MCDA Multi-Criteria Decision Analysis
MoD Ministry of Defence
NZDF New Zealand Defence Force
OCD Operational Concept Document
OGAs Other Government Agencies
PMO Programme Management Office
PRICIE Personnel, Research and Development, Infrastructure, Concepts and Doctrine,
Information and Equipment
SA Strategic Assessment
SSC State Services Commission
UOR Urgent Operational Requirement
WoLC Whole of Life Cost

For a more detailed Capability Glossary go to the PMO’s Glossary or email capbrpmo@[Link] or executive-
branch@[Link]

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 33

 Version History

Version Date Description

1.0 November 2011 First version

2.0 July 2014 Update to incorporate changes since 2011

Capability Management Framework Support

The MoD policies and procedures used throughout the Acquisition Phase are outlined in the Acquisition Manual.
The Capability Branch policies and procedures used throughout the Capability Life Cycle are outlined in the
Information Hub.
If there are any questions on the material mentioned in this document; the Acquisition Manual; or the Information
Hub, please send an email to capbrpmo@[Link] or executive-branch@[Link]

CAPABILITY MANAGEMENT FRAMEWORK – JULY 2014 34