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.
"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."
Jeremy Peat, BBC Trustee, 25 February 2010
"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."