The National Audit Office’s latest report says governments often fail to sufficiently recognise the ‘inherent uncertainties and risks’ in these estimates. It adds that using them to set budgets and completion dates can incentivise delivery bodies and suppliers to make ‘over ambitious’ attempts to find efficiency savings and meet risky schedule targets.

The report draws together lessons from the NAO’s work scrutinising several major public projects and programmes, including Crossrail and High Speed 2.
It highlights how schemes within the Government’s Major Projects Portfolio – of which there are currently 125 at a combined whole life cost of £448Bn – often encounter difficulties, take longer and cost more than planned and fail to deliver intended aims.

“While it is understandable that a government wants to be ambitious in meeting its goals,” the NAO says, “this too often overrides a frank assessment of the mounting risks and potential negative consequences of over reaching for a deadline, such as service failure and unnecessary costs”.

It recommends that any early estimate of programme cost and schedule should be seen as provisional and used only in an indicative capacity until a detailed design supported by industry pricing is available.

Moves towards the use of ranges rather than fixed point budgets and completion dates are welcome, it adds, but decision makers must understand what these ranges represent and how much confidence they can place in them.

The report also highlights poor practice in the identification of efficiency savings on projects, including targets being set with ‘no solid basis’ and no detailed plan for how they will be achieved. “As a result, it is rare for bodies to realise savings as planned.”

In addition, it calls for greater transparency and honesty within Government and throughout the supply chain to help improve performance on schemes. “The pressures that sponsor or delivery bodies are under can make them defensive about the programme or allow a ‘good news’ culture to develop which can undermine processes intended to transmit accurate information,” the report says.

“This means that opportunities to identify and mitigate serious issues may be missed, and instead emerge suddenly and unexpectedly.”

Association for Project Management head of external affairs David Thomson welcomed the report and said: “We share the desire of the NAO to use the evidence, lessons learned and data from previous public projects to improve performance in the future – and not just in the public sector. We are committed to collaborating with the NAO, and with the Infrastructure & Projects Authority, to embed these lessons with our members and the project profession in general.”

The report comes as Highways England has withdrawn its development consent application for the Lower Thames Crossing, following issues identified by the Planning Inspectorate. The strategic road network operator is expected to resubmit early in the new year after collating information required to address points raised by the Inspectorate.

(Photograph: Crossrail)