Press Release - BBC Trust
publishes NAO report on the BBC’s management of three major estates
projects
25 February 2010
The BBC Trust has today published an
independent report prepared by the National Audit Office (NAO) on
the BBC’s management of three major estates projects. These were
the refurbishment and redevelopment of Broadcasting House in
London, the construction of Pacific Quay in Glasgow and the
Corporation’s forthcoming move to Salford Quays.
The NAO report, prepared at the request of the
Trust, builds on previous work by the Governors and the Trust and
found that the BBC has learned lessons from phase one of
Broadcasting House, which suffered from significant cost and time
overruns. The Broadcasting House project will be completed in April
2013, four years later than first planned. The project will cost
£1.046 billion, £55 million more than originally approved. On top
of this, delays have added a further £52 million of
costs.
The report acknowledges that the BBC has since
improved the management of the three projects examined, which have
a total budget of £2 billion, although there is room for further
improvement. The report concluded that the BBC did not set out a
clear assessment of the intended benefits for the projects at the
outset, meaning it is not well placed to demonstrate value for
money.
Alongside its acknowledgement of the progress
in improving project management processes made by the BBC to date,
the NAO has made a number of recommendations to bring the BBC’s
processes into line with good practice. These include:
- business cases should at a minimum contain a detailed
assessment of costs, delivery timetable, measurable expected
benefits and a quantified assessment of the risks and opportunities
before the BBC Trust approves investment;
- the Executive should assess the skills needed for each project
from the outset and match this against the skills available in the
organisation to identify gaps; and
- financial contingency should be calculated on the basis of an
assessment of the cost and probability of known risks. This
contingency should be released only when it is needed to deliver
the approved scope of the project.
Jeremy Peat, BBC Trustee said:
"The Trust takes its responsibility
for ensuring the BBC achieves value for money on behalf of licence
fee payers extremely seriously, and we are supportive of the
Executive’s plans to modernise the BBC’s facilities. Since its
inception, the Trust has put pressure on the Executive to improve
its project management processes, particularly in relation to the
estates projects. Having identified the problems with Broadcasting
House phase one and taken steps to remedy these, we then sought
external examination of the BBC’s changes. We asked the NAO to
carry out this process, and we thank them for the analysis and
recommendations within their report.
"Serious mistakes were made in the
first phase of the Broadcasting House project. Licence fee payers
were let down, and the Trust regrets this. The Governors took steps
to get the issue under control and then the Trust, when it was
formed in 2007, continued their energetic oversight. We are
reassured that this report shows lessons learned have been applied
in the second phase of Broadcasting House, Salford and Pacific
Quays. But there is still considerable room for improvement, and
consequently we will follow up the NAO’s recommendations vigorously
and as a matter of urgency.
"The Chairman has today written to the
Director-General asking for his plans in response to the NAO’s
recommendations, and requesting a health check of all major
projects currently being run by the BBC without delay. The Trust
expects the Director-General to report his findings to the Trust
next month."
Amyas Morse, head of the National Audit
Office, said:
"The BBC let the Broadcasting House
project run into serious difficulties before the Governors and then
the Trust took action and the result is a four year delay and a
cost overrun of £100 million.
"The establishment of a Programme
Management Office in 2009 is a welcome development, but the BBC
must take on board fully the lessons from its difficulties with
Broadcasting House. For future major projects, the BBC needs to
make sure that: investment decisions are based on a full assessment
of the scope and cost of the project; there are clear baselines so
that performance can be measured and project teams held to account;
and proposals submitted by management are reliable and subject to
effective challenge by the BBC Trust."
Notes to Editors
The Trust’s responsibility for value for money at the
BBC
It is the responsibility of the BBC Trust,
under the Royal Charter, to ensure that value for money is achieved
by the BBC through its spending of the licence fee. In order to
fulfil this responsibility, the Trust commissions and publishes a
series of independent value for money reviews each year in
consultation with the Comptroller and Auditor General – the head of
the NAO. The reviews are undertaken by the NAO or other external
agencies.
The Trust commissioned this report to
scrutinise how the BBC Executive implemented a series of changes to
the project management processes of the three projects, following
the identification by the Governors of some significant failings in
the first phase of the Broadcasting House refurbishment between
2003 and 2006. The NAO was also asked to look at how the BBC has
applied the lessons learnt from these failings in the second phase
of Broadcasting House, as well as the Pacific Quay and Salford
Quays projects.
The Trust picked up the oversight of all three
estates projects from its predecessors, the Governors, when it was
formed in January 2007. The BBC realised in 2003 that the phase one
of the Broadcasting House project was at serious risk, and at that
point actions were taken to rectify the situation, including
appointing a new project team. Following this, the Governors
brought in consultants Ernst & Young to examine the contract
for, and delivery of, the first phase of Broadcasting House. Ernst
& Young’s report was delivered in May 2006 and was shared with
the NAO. Shortly afterwards, the Governors also agreed the
Executive’s proposal for a 30 per cent increase in building size
for the Pacific Quay project, following a decision to produce more
programming in Scotland (July 2006).
More on the NAO
The Comptroller and Auditor General, Amyas
Morse, is the head of the National Audit Office which employs some
900 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.
For more information:
BBC Trust Communications team (Hannah
Bailey/Linda Scott) 020 3214 4494
NAO (Phil Groves) 020 7798 5339/ 07770
678477