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Audit office calls for clearer checks on major projects

19 Oct 18 More needs to be done to increase transparency about the UK’s biggest and riskiest projects to ensure taxpayers get maximum value, according to a new report by the National Audit Office (NAO).

Hinkley Point C is no longer included in the major projects list, yet the government has risks to manage
Hinkley Point C is no longer included in the major projects list, yet the government has risks to manage

Monitoring of the biggest projects has improved, the study found, but the Infrastructure & Projects Authority (IPA) and government departments must to do more to increase transparency about what benefits are delivered to secure maximum value.

The NAO recommends that all major projects have a business case that is kept up to date to reflect any changes in scope. HM Treasury and the Infrastructure & Projects Authority (IPA) should work together to deliver the intended benefits, keep costs within budget and select the right projects for future funding. “Government departments should also manage the delivery of major projects until it is clear what benefits they have achieved and publish evaluations on projects when they complete to help departments learn lessons,” says the report.

More transparency is needed. “For example, while the Household Energy Efficiency programme improved energy efficiency in one million homes, it did not have measurable targets for wider objectives such as saving energy,” says the report. “It is not possible, therefore, to say overall what these projects have achieved.”

Some projects delivered by a third party have been removed from the government’s portfolio of major projects before they have completed. Now that a construction contract has been signed the Hinkley Point C nuclear power station is no longer included in the list – yet the government remains the project sponsor, responsible for continuing oversight of the developer, and has risks to manage.

Moving targets add to the difficulty. Some projects considered to have met their objectives were not in fact measured against their original objectives, potentially providing an inaccurate picture of their success. For example, the Mobile Infrastructure Project initially committed to build 575 mobile telephone masts to expand coverage to 60,000 premises, but it built 75 masts, reaching 7,199 premises, against a revised target of 40 masts because the initial targets were not achievable. The project was awarded the highest confidence rating when it left the Portfolio and was subsequently evaluated against the revised target, but was not measured against the original target. 

Amyas Morse, the head of the NAO, said: “The Infrastructure and Projects Authority is clearly contributing much-needed project management and evaluation techniques to the mammoth programme of major projects run by government. We believe it could drive greater improvement if it adopted a clearer method of measuring the benefits of these projects, and tougher discipline over the terms on which projects are included, or more to the point, excluded from its oversight.”

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The Government Major Projects Portfolio was created by the Authority in 20111 to improve government’s delivery of major projects. As at September 2017, the portfolio consisted of 133 projects with a total budgeted cost of £420bn and over £650bn of planned benefits. 

In 2016 the Committee of Public Accounts expressed concern that data on project benefits was poor and that projects often left the portfolio without a review to ensure they were on track to deliver. Poor measurement of what projects achieve reduces accountability and transparency for government and Parliament, and makes it difficult to assess whether the costs of projects are justified, says the report.

Between April 2011 and September 2017, 302 projects left the portfolio. The NAO found that the IPA lacks complete information about why they left and what they had delivered by the time of their departure.

Of the 48 projects that the NAO has closely reviewed, 12 achieved their intended outcomes. However, for 22 projects it was not possible to determine if this was the case. For some projects this was because they were still being rolled out and it was too early to tell, but in other cases projects did not have a business case with intended outcomes to measure against.

In 2016 the IPA introduced a process for deciding when projects should leave the portfolio, addressing concerns raised by the NAO and the Committee of Public Accounts in 20163. Although it has increased transparency about whether projects have delivered their objectives, this is not happening consistently.

In total, 430 schemes joined the Government Major Projects Portfolio between April 2011 and September 2017 and 302 left. As delivery outcomes are not reported after projects have left the portfolio, the NAO followed up on a selection of 48 projects from across 17 departments to examine what happened to them and whether they delivered the intended benefits. The research found that 35 of the 48 projects that were examined left because they were implemented or had reached a significant milestone. The rest left for other reasons such as cancellation. There were 176 that left the portfolio without an exit review to confirm that the project is in operation and achieving benefits.

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