"This is yet another example of a project embarked upon
without the necessary planning. Once it did start to go wrong,
proper governance or intervention from the Department should have
rectified the problems, but this did not happen until a great deal
of taxpayers' money had been spent.
"The Department, the research councils and the Shared
Service Centre now need to get performance up to where it needs to
be. Any plans for expanding the range of clients served by the
Centre must be based on a thorough and realistic assessment of
value for money."
Amyas Morse, head of the National Audit
Office, 21 October 2011
The implementation of a project to create a
centre to streamline back-office functions for the seven research
councils has so far not been good value for money and there is a
risk that the councils may not recover their investment. When
finally operational 15 months late, the Centre was delivering
services across the five functions planned but some services,
particularly finance, are not yet where they need to be.
The aim of the Shared Service Centre was to
share services, such as finance, HR and procurement, in order to
make savings. By the end of March 2011 the project was £51 million
over budget. The councils have not monitored benefits effectively,
resulting in a lack of clarity about the savings delivered.
However, the available evidence indicates that to date the project
has underachieved against total expected savings by at least £73
million. And it is likely to take two years longer than planned
before the project recovers its set up costs.
The original business case, which led to the
decision to opt for the shared service centre, was flawed. The
projected savings to be made from better procurement were uncertain
and a proper financial analysis should have prompted a
re-evaluation of the available options, but this did not
happen.
According to today’s report, the reasons for
the overrun and delay included complex governance arrangements,
slow decision making and the lack of a clear vision for the project
from the outset. The contract with Fujitsu, the supplier of the
Centre’s ICT systems, was terminated wasting £13 million because
some elements of the system then had to be rebuilt in-house. When
the project did start to go off-course, the Department for Business
Innovation and Skills, as sponsor Department, did not
intervene.
A single shared service platform has the
potential, if managed effectively, to offer broader benefits
through streamlined processes. The performance of new services can
take time to stabilise following launch. In this instance, some of
the functions, particularly finance, have yet to operate at the
performance level required. The report concludes that there is
significant scope for further savings.
Publication
details:
HC: 1459, 2010-2012
ISBN: 9780102976731