Thursday, August 09, 2012

Blowout? What blowout?

Here’s a forecast: there will be more delays in the NBN project – not because the project is impossible, nor due to the incompetence of anyone, but because it’s a very large project, and construction delays are almost inevitable.

Not that this will help Mike Quigley or Senator Conroy in any way: as with the budget, timing is now considered nailed down by a press whose project management skills don’t have to go far beyond the next deadline.

As for the relentless use of the word “blowout” – spotted in the wild at Fairfax, News Limited, the ABC and even TheConversation – what a bunch of dills. The new figures from NBN Co diverge by just 3.9% from the company’s forecasts: in the world of accounting, this would be considered a high accuracy forecast.

In looking at the NBN corporate plan, please keep in mind that there’s a difference between “premises” and “households”. The NBN will pass 12.7 million premises – according to the forecasts in the corporate plan – but that’s not 12.7 million households.

Let’s take a guess that there’ll be 11 million households by the end of the build (there’s about 7.7 million now). The rest of the premises passed are not households – they’re businesses, schools, hospitals, and so on.

This might seem like pointless pedantry, except for this: if some enterprising analyst sits down to try and run their own projection of the NBN’s income based on 12.7 million households, their numbers will be out by around 15 percent. That kind of puts the 3.9 percent everyone’s worried about in the shade.

(Actually, the error will be bigger than that, since the 1.7 million premises getting miscalled households would actually be the kind of premises that spends more than a household. But I’m not about to try and put estimates to that!)

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