Billions of pounds of taxpayers’ money is spent annually on major projects in government. These projects span a variety of fields including technology, construction and defence. However, Whitehall has a history of poor performance in successfully managing to complete major projects on time, on budget and to deliver their intended benefits.
As such, it’s been a focus of many a parliamentary select committee to analyse either individual projects, or the overall capability of how the civil service and government work to deliver on them. This week the Public Administration and Constitutional Affairs Committee has released an interesting report on the latter point - the government’s management of major projects.
The Committee’s report is an interim one, as its work has been cut short by the announcement of a general election. However, there are still some interesting points that are worth highlighting, particularly with regard to how major projects - of which the cost of the portfolio is currently running at £423 billion - need to be better planned, approved, assured and evaluated.
Chair of the Committee, Sir Bernard Jenkin MP said:
The purpose of major infrastructure projects should be to deliver benefits to the public, and our Civil Service is rightly charged with ensuring these are delivered as originally advertised. However, our inquiry to date has raised familiar concerns: capability, churn, conflicts of interest, and perhaps most concerningly, individual political imperatives overriding proper scrutiny of business cases.
With Government’s Major Projects Portfolio currently overseeing 133 projects with a value of £423 billion, addressing these issues to the benefit of all taxpayers should be high on the list of priorities for any future Government.
The Committee’s report notes that given the amount of work that goes into the assurance and appraisal process for greenlighting a major project, and yet so many still run overtime and over budget, there perhaps needs to be a rethink on these management measures.
The report rightly states that there is an inherent risk in a major project, due to it often being unique, ambitious and complex. Not all eventualities can be predicted.
However, the Committee heard that instead of projects being given a set budget and timeframe - often which are overly optimistic, in order to get them approved - there should be a range that reflects the inherent uncertainty. This would better help manage expectations.
More worryingly, but perhaps unsurprisingly, the Committee’s evidence found that political pressure can result in projects being announced, sometimes accompanied by a budget or a completion data, before proper appraisal has taken place.
The report notes:
Robust pre-approval scrutiny of project business cases is essential. The Government has acknowledged that and there is a comprehensive system of pre-commencement scrutiny now in place. It seems, however, that political imperatives can subvert this scrutiny.
It is entirely appropriate for Ministers to initiate projects. But if political pressure is sufficient to override this early scrutiny process, this will significantly impact on the successful delivery of major projects.
A new relationship?
The Committee also sought to understand how the government manages relationships with the firms that have been contracted to deliver these major projects. It found that the government typically takes a transactional approach to contracting - whereby it prioritises cost minimisation and the aggressive transfer of risk.
The government (following the collapse of Carillion) has published an Outsourcing Playbook to help improve how it manages commercial relationships - but the Committee thinks that it could go further and develop “productive, collaborative relationships with its contractors”.
One suggestion is to move to an ‘enterprise approach’, the kind developed by the Project 13 Initiative, which shifts viewing project delivery as a chain of discrete tasks that can be contracted to viewing project delivery as a ‘shared enterprise’.
The report states:
We have been critical of the transactional approach the Government tends to adopt in its commercial relationships, at the expense of the quality of personal relationships and trust between contracting parties. An exclusive focus on minimising costs and aggressively attempting to offload risk has neither yielded value for money for taxpayers nor resulted in genuine risk mitigation.
There are clearly benefits to a more collaborative approach. However, the circumstances under which this can take place and those where the benefits of a more conventional, transactional approach might be more appropriate are not yet clear to us. This is an issue that, should our successor Committee return to the subject of major projects, it could usefully inquire further.
Here’s the answer. What’s the question?
The report also looks at the systemic problem of ‘benefit hunting’ in major projects approval. Despite intense scrutiny of business cases, the link between prospective projects and the policy goals they are supposed to achieve is not as strong as it should be.
For example, Professor Williams, University of Hull, told the Committee:
...projects should be there to address a need and, having decided to address a need, you should then think about how to address it. There is quite an emphasis on, “Here is a solution and this is a solution we will use” and then thinking about how it addresses a need.
The Committee said once a project commences, the focus is on successful completion, rather than on the extent of any delays and cost overruns. And Much less attention is given to assessing whether projects delivery the benefits that they promised. Professor Williams added:
We also have the impression now where the emphasis perhaps of the IPA is on the delivery of the project as defined: getting it on time, on cost, as defined at the beginning, and the actual benefits that the project is there to deliver sometimes get—I will not say lost but there is less priority put on that than the actual delivery of the project.