DfT shared-services plan under fire
Kablenet.com
Published: 23 May 2008 11:24 BST
The transport department's poor management of shared services is likely to cost, rather than save, tens of millions, says an National Audit Office report.
Plans to improve human resources, payroll and finance services through new shared facilities for the Department for Transport and its agencies could cost £81m over the next few years, instead of saving £57m as planned.
The claim is made by the NAO in its report, published on 23 May, 2008, which says the DfT's original estimate was over-optimistic.
Changes to initial cost estimates, inadequate contract management and poor initial implementation mean the programme will not achieve the value for money originally envisaged, according to the report.
The latest forecast is for the programme to cost more than £120m, against the £40m gross savings identified over its lifetime to March 2015.
Tim Burr, head of the NAO, said: "It is disappointing to see a programme which aimed to improve the efficiency and effectiveness of a department leaving it on current projections some £80m worse off."
The DfT's original expectation that the shared-service centre could become operational one year after an outline business case was approved was unrealistic, says the report.
But there were also problems with implementation, which the programme board failed to manage properly. For example, the board did not have enough control of the design of support systems, which resulted in less standardisation of business practices and increased costs and delays.
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IBM, the department's main IT contractor, was not managed properly, according to the report. The DfT's technology specification was poor, it failed to take advantage of the company's cheap bulk rates and poor cost control resulted in overpayments, which then had to be recovered.
The report says the department should renegotiate the terms and conditions of its contract with IBM to ensure value for money. It also emphasises that experienced civil servants and contractors should be retained through the life of the programme.
"Departments need to be realistic about the challenges of implementing shared services and to manage suppliers effectively," Burr warned. "Over the past year the department has made efforts to improve the performance of the shared-services programme and it cannot afford to fail."
Lessons for other government departments highlighted by the findings include:
- Establishing a sound a business case, based on a rigorous prior analysis
- Underpinning the implementation timetable with realistic planning, rather than driving it by a desire to introduce shared services by a non-negotiable date
- Appointing high-calibre personnel with relevant experience of implementing shared-service transformation programmes
- Transferring individual organisations to shared services incrementally, so lessons can be learned from each phase
- Providing adequate resources for data cleansing, migration planning and testing of data prior to service migration
- Engaging closely with users before and after migration to resolve system glitches
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