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Delivering major projects in government: a briefing for the Committee of Public Accounts

The National Audit Office has today published a progress report on measures to improve the delivery of major government projects. These include major service reforms, ICT projects and infrastructure and construction projects. There have been initiatives designed to improve the oversight and delivery of projects but their impact is unclear, and it is of particular concern that a third of projects due to deliver in the next five years are rated as being in doubt or unachievable if action is not taken to improve delivery.

There are 149 projects in the Government Major Project Portfolio (the Portfolio), with a combined whole-life cost of £511 billion and an expected spend of £25 billion in 2015-16. These projects require Treasury approval based on their size, risk and impact. The public sector as a whole delivers many more projects outside the Portfolio, for example, through arm’s length bodies and other bodies such as Network Rail.

The public sector has had a poor track record in delivering projects successfully. While in the last Parliament, the NAO reported on improvements in the way aspects of programmes in some departments were managed, we also reported regularly on project failures and on ongoing projects that were experiencing considerable difficulties. Key recurring issues included an absence of portfolio management at both departmental and government level; lack of clear, consistent data with which to measure performance; poor early planning; lack of capacity and capability to undertake a growing number of projects; and a lack of clear accountability for leadership of a project.

The Infrastructure and Projects Authority (the former Major Projects Authority) and departments have taken many positive steps to develop capability and provide greater assurance on improving project delivery.  However, it is difficult to tell whether performance is improving without reliable and consistent measures of project success. Despite some improvements in the level of information published on major projects, there are still a number of issues which make it difficult to form conclusions about trends in performance. These include the amount of project turnover in the Portfolio; the limited data published by departments; inconsistent reporting of costs; and no systematic monitoring of whether the intended benefits have been achieved.

Delivery confidence shows a mixed picture with high risks to delivery in the next five years. The number of projects where successful delivery was in doubt or unachievable unless action was taken (rated red and amber-red) has increased since 2012 as more risky projects have entered the Portfolio. Uncertainty should reduce through the project lifecycle but not all project ratings improve over time. Of 56 projects which remained on the Portfolio from 2012 to 2015, 17 had red or amber-red ratings in June 2015 compared with 12 in 2012, although the number of projects considered highly likely to deliver on time and on budget (rated green or amber-green) also increased from 16 in 2012 to 25 in 2015.

It is particularly worrying that a third of projects (37 out of 106) due to deliver in the next five years are rated as red or amber-red.  Nearly 80 per cent of the Portfolio projects due to be delivered by 2019-20 are to either transform or change the way that services are delivered or accessed. Transformation programmes can present the greatest risk of failure and there is a need to balance ambition and realism in setting goals. For instance, the Better Care Fund was a challenging initiative which Ministers paused and redesigned after the early planning and preparations did not match its scale of ambition.

Progress in improving portfolio management is disappointing with no single organisation having a view of the whole portfolio of government projects. The Portfolio provides increased assurance, and other central departments have an increased role in assuring, approving and improving quality of delivery. But an effective mechanism still needs to be developed for prioritising projects across government or judging whether individual departments have the capacity and capability to deliver them. The NAO has often reported on the difficulties caused for government projects by unrealistic expectations and over-optimism.

“I acknowledge that a number of positive steps have been taken by the Authority and client departments. At the same time, I am concerned that a third of projects monitored by the Authority are red or amber-red and the overall picture of progress on project performance is opaque. More effort is needed if the success rate of project delivery is to improve. “

Amyas Morse, head of the National Audit Office, 6 January 2016

Notes for Editors

£511bn
Whole-life cost of the Government Major Projects Portfolio in June 2015

149
Projects in the Government Major Projects Portfolio in June 2015

34%
Of major projects where, as at June 2015, the Major Projects Authority assessed successful delivery as in doubt or unachievable unless action was taken

£411
Billion value of projects in the national infrastructure pipeline in July 2015, of which 36% by value are either taxpayer-funded or have mixed private/public funding. Not all of these are included in the  Government Major Projects Portfolio (the Portfolio)

149
Projects removed from the Portfolio since the publication of the Major Project Authority's first annual report, between September 2012 and June 2015

107
Projects added to the Portfolio since publication of the Major Projects Authority's first annual report, between September 2012 and June 2015

71%
Projects in the Portfolio that are scheduled to complete between 2015-16 and 2019-20 (June 2015 data)

  1. ‘Major projects’ are those which require HM Treasury funding approval during their life cycle. Examples include Crossrail, Universal Credit and Smart Meters. The government funds most of the projects (£392 billion), with the remainder funded by consumers or business (£119 billion).
  2. The Major Projects Authority and the Infrastructure UK merged on 1 January 2016 to form the Infrastructure and Projects Authority. It works with HM Treasury and other government departments to provide independent assurance on major projects.
  3. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
  4. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 810 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £1.15 billion in 2014.

Contact

NAO Press Office
+44 (0)20 7798 7400 or email pressoffice@nao.gsi.gov.uk

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