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23 June 2016
APM Benefits Summit: Delivering
major projects in government
Joanna Lewis & Chris Battersby
Value over delivery
• The National Audit Office (NAO) scrutinises
public spending for Parliament.
• We help to hold government departments
and the bodies we audit to account for how
they use public money.
• Our work helps public service managers to
improve performance and service delivery,
nationally and locally.
About the NAO
£1.15 billion – independently validated financial savings achieved as a direct
result of our work in 2014. Including:
£25m
Northern Rock:
Clawback rights
implemented in
the sale to Virgin
money
£26m
Ministry of
Justice:
introducing better
governance of
electronic
monitoring
contracts
£230m
HMRC:
Improved
transparency
and
accountability for
tax compliance
£136m
Department of
Health:
Prompting DH to
adopt national
good practice for
NHS stroke care
£354m
MOD:
Improved
inventory
management
And we’ve delivered benefits
Government has a history of poor delivery
“This Programme was set up to deliver support to UK farmers. Instead,
it delivered an appalling Whitehall fiasco.
It was frankly embarrassing to learn of senior and highly paid civil
servants arguing to the detriment of hard-pressed farmers.
Explanations such as 'We worked on different floors' and 'We dressed
differently' are a slap in the face to them and a dismal excuse for
failures that could severely hit the public purse.
A fundamental part of setting up this Programme should have been to
establish a clear and robust vision of the final product, focused on the
needs of farmers. For it to end up as a digital testing ground was
wrong-headed.”
Meg Hillier MP, Chair of the Public Accounts Committee, 6 January
2016
This is what the PAC said on the Common Agricultural Policy Delivery
Programme
More recent challenges include CAP-D
“… we are not convinced warnings about the progress of this project
have been treated with sufficient gravity, nor that sufficient action has
been taken to prevent a repeat of past problems.
Some of these are depressingly familiar to this Committee, not least the
damaging effects of disjointed leadership and weaknesses in the
handling of data. We have also seen another poorly-conceived
commercial partnership end in expensive failure.
If the Home Office is to complete this project before the decade is out
then it must get its house in order now—starting by setting out exactly
what it expects to achieve this year, and who will be held to account for
it."
Meg Hillier MP, Chair of the Public Accounts Committee, December
2015
And this is PAC on e-borders
• Major Projects Authority established 2011
• Publication of an annual report & data on major projects 2013
• Capability improvements e.g. Major Projects Leadership Academy
Steps were taken to improve things
Our report looked at the GMPP
2015 Nominal GDP Turkey ($722bn) - IMF
Enough to keep the NHS running for about
4.25 years
£511 billion is a big portfolio
And it’s a really diverse portfolio
55
40
30
24 Transformation and
service delivery (37%)
ICT (27%)
Defence (16%)
Infrastructure and
construction (20%)
Government major projects, June 2015
With wide ranging benefits that are difficult to compare e.g. carbon
reduction, economic growth, reducing poverty, improving health…
The scale of challenge is increasing
GMPP poses challenges and it’s only a part of the picture:
• Timescales: 106 projects (71%) due for completion this Parliament but 4> 30 years
• Size: e.g. EMR, Crossrail is largest infrastructure project in Europe (in construction)
• Ambition & Complexity: MOD with 14 transformation projects at once, DH with10:
• Department Loading: 3 departments account for 78% by value
Is it all deliverable?
Was performance improving?
“Without reliable and consistent measures of project success, it is
difficult to state whether performance is improving”
Delivery Measures Value
Budgeted costs appeared to escalate
436
206
19
306
128
102
74
51
0
100
200
300
400
500
600
700
Whole-life cost ofthe Portfolio in
September 2012
Net increase inreported costs ofthe 59 projects
remaining on theportfolio across all
4 years
New projectsjoining the Portfolio
Net increases tothe whole-life costsof projects whichhave not been in
the Portfolio for thewhole 4-year
period
Reduction in thenon-disclosure of
project costs
Existing projectsleaving the
Portfolio
Existing projectswhere the project
costs are no longerdisclosed
Whole-life cost ofthe Portfolio in
June 2015
Whole
-life c
ost (£
bn)
Due to changes in the composition of the portfolio; more costs
being disclosed and inclusion of previously unknown costs
Aggregate and disclosed costs were higher in 2015 than in 2012
£128bn - Net increase in
cost for projects in the
Portfolio for all four years
• Revised methodology/disclosure
• EMR (£40m in 2012 to £48.2bn in 2015)
• Hinkley Point C (£21m in 2012 to £14.3m in 2015)
• Uncertainty at project outset
• HS 2 (£1bn in 2012 to £43bn in 2015)
• Change in scope/calculation
• Complex Weapons (£4bn in 2012 to £18.5bn in 2015) – more projects included
• Intercity Express (£1.3bn in 2012 to £6.2bn in 2015) – inclusion of infrastructure
Costs increased for different reasons
Milestones varied greatly
• Costs incurred vs budget not published
• Budget increases didn’t reflect cost escalation
• Milestone data collected but not published
• No data on whether projects leaving the portfolio delivered to time/budget
Conclusions on Delivery Measures
Could we say whether projects were delivering value anticipated?
• Data on projects’ progress towards benefits collected not published
• Projects leave the Portfolio before benefits are delivered
• Different accountability for benefits and project delivery
• Departments often don’t report on benefits
• They may not be delivered for many years
Conclusions on Value
If projects don’t deliver their intended benefits then they are
unlikely to have delivered value for money
Deliverability assessment shows more
projects in doubt
17
9 15
7
26
27
23
22
30
32
34
37
12 19
21
26
4 2
4 8 11 12
2
0
10
20
30
40
50
60
70
80
90
100
Sep 2012 - 191projects
Sep 2013 - 199projects
Sep 2014 - 188projects
Jun 2015 - 149projects
Perc
enta
ge (
%)
Green Amber/Green Amber
Amber/Red Red Exempt or not provided
The percentage of red & amber/red
projects increased and the
percentage of green & amber/green
decreased. This is because:
• 21 new R & A/R projects added
• Delivery confidence declined for 16
• 6 remained unchanged
• 66 G or A/G left the portfolio
• 26 projects improved to G or A/G
For projects in the Portfolio for all 4
years:
• G & A/G projects increased
• R & A/R projects also increased
Delivery confidence for 34% of in doubt or unachievable
What are the challenges now?
Three key challenges in this Parliament are to:
• prevent departments making firm commitments on cost and timescales for
delivery before plans have been properly tested;
• develop an effective mechanism whereby all major projects are prioritised
according to strategic importance and that capability is deployed in priority
areas; and
• put in place systems and data which allow proper performance measurement.
“I acknowledge that a number of positive steps have been taken
by the Authority and client departments. At the same time, I am
concerned that a third of projects monitored by the Authority are
red or amber-red and the overall picture of progress on project
performance is opaque. More effort is needed if the success rate
of project delivery is to improve.”
Amyas Morse, head of the National Audit Office, 6 January 2016
Observations to PAC on our report
Web: http://www.nao.org.uk/
Thank you
Contacts
This presentation was delivered
at an APM event
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website www.apm.org.uk/events
