The National Audit Office is warning that a third of major government projects due to deliver in the next five years, including infrastructure and construction, are rated as being in doubt or unachievable if action is not taken to improve delivery.

The warning comes in a progress report on measures to improve the delivery of major government projects (including major service reforms, ICT projects and infrastructure and construction projects) by the NAO for the Committee of Public Accounts published today. 

Introducing the report, the NAO said:

“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 currently 149 projects in the Government Major Project Portfolio, with a combined whole-life cost of £511 billion and an expected spend of £25 billion in 2015-16. All the projects require Treasury approval based on their size, risk and impact. In addition, 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.

According to the NAO, 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, it 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 report says that while 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, 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 - a mixed picture with high risks to delivery in the next five years

Delivery confidence shows a mixed picture with high risks to delivery in the next five years, according to the report. 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.

The report says 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.

It also describes progress in improving portfolio management as 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.

“Difficulties caused for government projects by unrealistic expectations and over-optimism”

The NAO says 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 said it has often reported on the “difficulties caused for government projects by unrealistic expectations and over-optimism.”

Commenting on the report this morning, Amyas Morse, head of the National Audit Office said:

“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. “

CECA: Infrastructure Commission must be given real authority

The Civil Engineers Contractors Association, which represents firms who together carry out an estimated 70-80 per cent of all civil engineering activity in the UK, has separately expressed concern and are calling for the Infrastructure Commission to be given more teeth.

Commenting on the National Audit Office's report, CECA Chief Executive Alasdair Reisner said:

"We have long argued that the development of infrastructure in the UK has historically lacked long-term strategy.”

"The NAO highlights more than ever the important role the newly established Independent Infrastructure Commission will play in ensuring infrastructure demand is met in an efficient manner.”

“It is therefore imperative that the new Commission is given real authority to assess and make proposals for long-term major infrastructure projects alongside its development of innovative solutions to fund these infrastructure requirements."

Click here to download Delivering major projects in government: a briefing for the Committee of Public Accounts