Press Release - Shared services in the Department for Transport
and its agencies
23 May 2008
Plans to increase the efficiency and effectiveness of services
such as human resources, payroll and finance could cost the
Department for Transport £81 million (by March 2015) rather than
saving £57 million as originally expected. There will need to be
substantial improvements in the shared service centre’s
productivity if the Department’s original targets are to be
met.
According to today’s NAO report to Parliament, changes to initial
cost estimates, inadequate contract management and poor initial
implementation mean that the Programme, as originally envisaged,
will not achieve value for money.
The Department envisaged building on existing processes and IT
systems as the basis for developing shared services for the whole
Department. It also decided to use an existing contract with IBM to
deliver the IT system and set a very demanding timetable for
implementation, with rollout to the whole Department set for April
2008. It forecast that the Programme would cost £55 million and
achieve gross savings of £112 million.
In practice, the Department could not agree a common set of
business processes and the initial estimates proved optimistic.
Supplier relations could have been better and inadequate testing of
the system led to an unstable IT system being introduced.
The Programme is now forecast to cost over £120 million against the
gross savings currently identified of £40 million over its lifetime
to March 2015. To date, the Driving Standards Agency, Driver and
Vehicle Licensing Agency and the central Department are using the
services with the Maritime and Coastguard Agency moving later in
2008.
Since April 2007, the Department has made considerable efforts to
improve its management of the Programme and to resolve problems
with the system stability and the performance of the Shared Service
Centre. It is also focusing on extending the functions available
from the Centre to include routine procurement so as to increase
benefits and improve the quality of management information so that
it can identify further savings. Illustratively, if the Department
were to achieve additional savings of £50 million per year, there
would be benefits worth £84.4 million up to 2015, less any
additional set-up costs.
Tim Burr, head of the National Audit Office, said
today:
“It is disappointing to see a programme which aimed to improve the
efficiency and effectiveness of a department leaving it on current
projections some £80 million worse off. Departments need to be
realistic about the challenges of implementing shared services and
to manage suppliers effectively. Over the past year the Department
has made efforts to improve the performance of the Shared Services
Programme and it cannot afford to fail."
Notes for Editors:
- Press notices and reports are available from the date of
publication on the NAO website, which is at http://www.nao.org.uk/.
Hard copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Tim Burr, is the head of
the National Audit Office which employs some 850 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 24/08
All enquiries to Phil Groves, NAO Press Office: Tel: 020 7798
5339
Mobile: 07770 678 477