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Public Accounts Committee publishes its report into the Major Projects Authority as Tenth Report of Session 2014-15, HC 147. 

• Report: Major Projects Authority
• Report: Major Projects Authority (PDF 143.6KB)
• Inquiry: Major Projects Authority
• Public Accounts Committee

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

"We support the work of the Major Projects Authority and welcome the progress it has made so far, but without stronger powers it is unlikely to achieve its aim of a systemic improvement in project delivery across government. 

"The projects in the MPA’s portfolio represent a huge and rising cost to the taxpayer. In May 2014 the total cost over the lifetime of these projects was estimated at £488 billion, an increase of some £134 billion on the previous year. The portfolio includes high-profile and extremely challenging projects such as Universal Credit and the Queen Elizabeth aircraft carrier programme.

"However, the MPA only has informal influence over departments. It supports the Treasury in approval and funding decisions but there is no obligation on the Treasury to follow its recommendations. It has no powers if a department decides to proceed with a project against MPA advice. 

"It needs to have stronger, more formal mechanisms for driving change, and there should be transparency where ministers or officials have rejected its recommendations.

"We constantly encounter projects that suffer from a lack of robust planning. The MPA needs to focus its efforts more on the early stages of a project, working with departments to ensure that they have devoted sufficient attention to the concept, design and business case for projects before seeking approval. 

"It could also improve its impact by prioritising its work more effectively, focusing on departments with current high-risk projects – the Department of Health has 2 red and 9 amber-red rated projects, while the Ministry of Defence has 1 red and 6 ambers, for example.

"There remain serious weaknesses in government’s project delivery capability. We welcome the creation of the Major Projects Leadership Academy, but the MPA needs to target top decision-makers as well as managers. This should include ministers, shadow ministers and permanent secretaries.

"Despite the scale and the cumulative risk to the taxpayer, these projects are managed as a series of individual projects rather than a portfolio. Nobody in central government is responsible for overseeing projects at a strategic whole-of-government level. We recommend that the Treasury should take ownership and responsibility for overseeing the government portfolio.

"The MPA should also publish more information on each project, including the amount spent to date, even if this means reviewing the Government’s transparency policy. We are particularly concerned that the decision to award a ‘reset’ rating to the Universal Credit project may have been an attempt to keep information secret and prevent scrutiny."

Margaret Hodge was speaking as the Committee published its 10th Report of this Session which, on the basis of evidence from John Manzoni, Chief Executive, Major Projects Authority, examined the Major Projects Authority. 

We support the work of the Major Projects Authority (MPA) and recognise the progress it has made in strengthening project assurance and improving the transparency of information on the costs, risks and performance of government major projects. However, it faces significant challenges in achieving further improvements because there are still serious weaknesses in government’s project delivery capability and its portfolio of projects is rapidly increasing in size. There is still a lack of prioritisation and portfolio management at both a departmental and a cross-government level. The MPA is currently involved in many aspects of project management but in certain areas, such as ensuring departments act on its advice or in recruiting leaders for major projects, it is constrained by having to rely too heavily on informal means to influence departments.

Conclusions and Recommendations

The MPA was established in March 2011 as a partnership between the Cabinet Office and HM Treasury with a Prime Ministerial mandate to improve project delivery across government through robust assurance measures. Since then the MPA has developed a range of interventions to give assurance over government major projects and to support HM Treasury approval and funding decisions. It has also established the Major Projects Leadership Academy to train senior project leaders in the civil service. In September 2013, the Government Major Projects Portfolio consisted of 199 major projects covering a wide range of activities, from transforming how departments do their work to building ships and motorways. These projects represent a considerable and rising cost to the taxpayer: the MPA reported in May 2014 that the whole-life cost of these projects was £488 billion, an increase of some £134 billion on the previous year.

The MPA is unlikely to achieve a systemic improvement in project management without stronger, more formal mechanisms for driving change. At present, the Treasury does take account of MPA recommendations when making spending decisions, but it is under no formal obligation to follow them. Equally, the MPA often has to rely on personal credibility and informal influence, rather than having formal mechanisms, to get its voice heard in its work with departments. For example, the MPA is helping with recruitment for leadership positions on several major projects, but only on an ad hoc basis and told us that its role is not yet ‘systematised’. This lack of formal powers reduces the influence of the MPA with the Treasury and with departments, limiting its ability to drive improvements in project management.

Recommendation: The Chief Executive of the MPA should have a formal mechanism available, equivalent to an Accounting Officer letter of direction, to set out his position if a project proceeds contrary to MPA advice to cancel or re-scope. More generally, where ministers or officials reject MPA recommendations, there should be a formal and transparent process in place to document this.

The MPA provides welcome visibility of the Government Major Projects Portfolio, but despite the scale and the cumulative risk to the taxpayer, it is managed as a series of individual projects rather than a portfolio. Although we have previously recommended that major project data should be used to manage spending and prioritise resources between projects, nobody in central government is responsible for overseeing projects at a strategic whole-of-government level. The value of the portfolio grew by £134 billion between September 2012 and September 2013, but much more could be done to assess and manage the increased level of risk this exposes government to, including to identify areas where too many projects are underway and departments may be struggling to cope.

Recommendation: The Treasury should take ownership and responsibility for overseeing the government portfolio. It should ensure that decisions about whether, and how, individual projects should proceed are based on each project’s impact on the total portfolio’s value and risk, and the relevant department’s delivery capability and existing portfolio of projects.
The MPA could increase its impact by prioritising its assurance work more effectively. The lack of robust planning in the concept, design and business case stages of projects has been a serious issue with government major projects for many years and exacerbates problems during project implementation. The two red-rated IT projects at the Department of Health are good examples of where the effects of past poor planning are still felt today. The MPA has introduced Project Validation Reviews to strengthen its assurance work at the early stages of projects. However, it acknowledges that more needs to be done to “work the front end harder”. It is also notable that some departments have significantly worse delivery confidence ratings across their projects than others and these would benefit the most from MPA interventions. For example, the Department of Health has 2 red and 9 amber-red rated projects, while the Ministry of Defence has 1 red and 6 amber-red rated projects.

Recommendation: The MPA should work with departments to improve their project planning, and ensure that they have devoted sufficient attention to the planning phase before seeking project approval. The MPA should pay particular attention to departments with challenging, high-risk portfolios of major projects, such as the Department of Health and Ministry of Defence.
The Major Projects Leadership Academy (MPLA) is a welcome development but there is scope for it to target top decision-makers as well as project managers. The MPLA is currently focusing its efforts on training Senior Responsible Owners (SROs) and programme directors. It has already trained 200 of these, and by the end of 2014 expects all government project leaders to have taken part in its training. Two ministers have attended half-day or full-day courses on project management run by the MPA and found it helpful. It would be beneficial to extend this support more widely, as it would help to develop greater awareness of project delivery issues at the highest decision-making levels in government.

Recommendation: The MPA should develop and implement a tailored approach to improving the project delivery skills and awareness of ministers, shadow ministers, and permanent secretaries.

The MPA’s assessment of major projects does not cover value for money considerations. The value for money of projects is considered by the Treasury when assessing project business cases, but there is little monitoring of the issue once projects are being implemented. At present, the MPA reviews focus primarily on the budget and timetable of projects. The lack of scrutiny has allowed projects which achieved poor value for money, such as the sale of Royal Mail and the awarding of the rural broadband contract, to proceed without challenge. The MPA Chief Executive acknowledged that value for money was not ‘front and centre’ for the MPA, and agreed with us that it should be an integral part of reviews.

Recommendation: The MPA assessment should include explicit consideration of whether the project is likely to deliver good value for money, alongside its existing assessment criteria.

Despite welcome progress in extending the range of information published, the data is infrequent and out-of-date, and too much is still withheld. The MPA’s second annual report was a significant improvement on the first, with 30% less data withheld and more analysis provided. However, too much data is still missing. We are particularly concerned that the decision to award a ‘reset’ rating to the Universal Credit project was an attempt to keep information secret and prevent scrutiny. The Government’s transparency policy is too restrictive as it prevents useful data sets, such as the amount spent so far, from being published and stipulates that major project data can only be published once a year. This is too infrequent and means that the data available on high-profile, high-cost projects can be significantly out-of-date.

Recommendation: The MPA should publish project data more frequently and continue its efforts to reduce the amount of data exempted from publication. The MPA should publish more information on each project, including spend-to-date, even if this means reviewing the government’s transparency policy.