Delivering major projects in government presentation, Joanna Lewis & Chris Battersby, London 23...

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

Joanna.lewis@nao.gsi.gov.uk

Chris.battersby@nao.gsi.gov.uk

Web: http://www.nao.org.uk/

Thank you

Contacts

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