Press Release - Cambridge-MIT Institute
17 March 2004
The head of the National Audit Office Sir John Bourn reported
today on the Cambridge-MIT Institute (CMI). His report acknowledges
the considerable potential and early success of CMI and identifies
important lessons for departments on setting up and managing
innovative ventures in the future.
CMI, a company jointly owned by Cambridge University and the
Massachusetts Institute of Technology, was established in June 2000
to enhance the competitiveness, productivity and entrepreneurship
of the UK economy. Government grants to CMI will total £65.1
million over six-years, and £27 million had been spent by November
2003.
The NAO report recognises that CMI is an experimental initiative
and its outcomes cannot be confidently predicted. The report sets
out the following findings and issues for departments to consider
when assessing and managing innovative projects.
- Standard appraisal procedures should be applied or
adapted for use and appropriate levels of control and risk
management defined. For CMI, the Treasury decided on a
two-stage process whereby it handled the negotiations up to
announcing a funding commitment, subject to the Department of Trade
and Industry agreeing details at a second stage. Given the
difficulty of applying standard financial and economic appraisal in
the early negotiation of such an innovative proposal, it was
appropriate that the Treasury did not follow the usual
arrangements, but the NAO would have expected to see some evidence
that elements of the standard appraisal process were
considered.
- It is important to involve key experts from other
relevant departments at an early stage, where possible, without
risk to the project. The Department of Trade and Industry
expertise was used effectively in the second-stage detailed design
and financial negotiations for the project. The Treasury could have
used this expertise earlier in the process, but judged that this
would have risked securing the project for the UK. The Department
would have benefited from becoming familiar with the project in the
first stage, before taking responsibility for the second-stage
negotiations.
- Sufficient time and resources need to be given in order
to establish a satisfactory infrastructure. A complex
initiative like CMI requires time to set up, and there is a need to
guard against ambitious expectations that results can start being
delivered more or less straight away.
- We believe that indicative objectives and measures
(that should be genuinely indicative and not set in stone) would
support effective monitoring by helping to build a
reliable picture of progress.
- Direct, personal monitoring can bring a range of
benefits in the early days of an initiative that breaks new
ground. As illustrated by the Department’s early work with
CMI, close monitoring can help build positive relationships and
support year-on-year improvements in how an innovative initiative
is managed.
The nature of CMI’s projects (over sixty projects are ongoing or
completed) means that many of its impacts will not be known for
some time – but there is potential for considerable success. For
example, its "silent" aircraft project has brought together
organisations from the civil aerospace and aviation industry
(including British Airways, Rolls-Royce plc, the Civil Aviation
Authority and National Air Traffic Services) to work with Cambridge
University and MIT to discover ways to develop a new generation of
commercial aircraft that could be virtually noiseless. CMI is
experimenting with different ways to facilitate innovation and
entrepreneurship – from collaborations between academics and
industry to lessons in entrepreneurship for students – to identify
what works best.
Sir John Bourn said today:
"CMI has the potential to generate considerable impacts.
Many of these will be long-term and are intrinsically difficult to
measure. After a challenging start, I am pleased that CMI and the
Department of Trade and Industry have been taking steps designed to
maximise long-term success. Public sector organisations are
increasingly expected to manage innovation, and we look to them to
learn from the experience of CMI to improve their appraisal and
management of innovative projects."
Notes for Editors:
- The Comptroller and Auditor General undertook this report in
response to a request from the Committee of Public Accounts.
- The Treasury handled initial negotiations to set up CMI;
responsibility for taking these forward and for managing the
initiative was given to the Department of Trade and Industry in
November 1999.
- The two universities collaborate on educational and research
projects to apply scientific research to business and industry in
innovative ways that might have substantial economic benefits to
the UK over the long term.
- Press notices and reports are available from the date of
publication on the NAO website,
which is now at www.nao.org.uk. Hard copies can be
obtained from The Stationery Office
on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 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 22/04
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