17 July 2015

Thanks to the transparency of the Major Projects Authority, we know more about government’s major projects than ever before. But what does the MPA’s third annual report, published in late June, tell us? Emily Andrews and Gavin Freeguard have the answers. We are very grateful to the data team at the MPA for their help with the numbers.

The Major Projects Authority aims to improve how government manages major projects.

The Major Projects Authority (MPA) was established in 2011 to improve the government’s delivery of major projects – or ‘get firmer control’ of them, according to the MPA’s mandate from the Prime Minister.

The projects in the MPA portfolio are developed and implemented by individual government departments, but the MPA provides support and challenge and reviews their performance.  It also leads the Civil Service’s training and development in project delivery through the Major Projects Leadership Academy.

According to the MPA, these ‘major projects’ include those changing the way government works and delivers services (e.g. opening rehabilitation up to the market at MoJ), big infrastructure and construction projects (like Thameslink or Crossrail at DfT), defence projects and ICT projects. Some projects – such as DWP’s Universal Credit – might fall under a number of categories.

The MPA’s third annual report gives us a wealth of data on these projects as of September 2014, including a delivery confidence assessment or RAG (Red Amber Green) rating for each.

There are now 188 projects in the Government Major Projects Portfolio (GMPP), down from 199 in 2014 and 191 in 2013.

1 Portfolio size

Since 2014, 49 projects have left the portfolio, and 38 new ones have been added.

A higher percentage of projects across the portfolio are now rated red or amber/red than in either 2014 or 2013...

2 RAG portfolio

A quarter of major projects are now rated red or amber/red, up from 20% in 2014, and 16% in 2013. This is mainly driven by most of the 38 new projects entering the portfolio at the lower end of the confidence scale, 29 of them being rated either amber, amber/red or red.

The proportion of projects rated green or amber/green has also risen slightly from last year (from 36% to 38%), as has the proportion of amber projects (32% to 34%). This across-the-board increase is possible because exemptions (such as Freedom of Information) are being applied to fewer projects, falling from 23 in 2014 to just four.

…but, looking at those projects in the portfolio since 2013, more are now rated green and amber/green.

3 RAG projects 2013-15

 

Looking only at the 89 projects with RAG ratings in all three MPA annual reports gives us a better sense of how the MPA’s scrutiny and interventions might be affecting individual projects.  In 2015, 19 are rated green, up from eight the year before.  Most of these were previously rated amber/green or amber in 2014. This shows – as you would expect – that delivery confidence tends to increase over a project’s lifetime.

The number of projects that are rated amber/red (17) or red (2) has decreased by one since the last report, although these are not all the same projects. For example:

  • the two red-rated projects in 2015 (the National Offender Management Service ICT project at MoJ and the Future Reserves Project at MoD) have declined from amber/red and amber since 2014
  • the two rated red in 2014 – Aircraft Carrier procurement (MoD) and ICT modernisation at the National Crime Agency (HO) – are now both rated amber/red.

Most of the projects rated red or amber/red in 2013 have improved – but 9 remain amber/red.

 

4 Project mosaic

Although this may not be ideal from a delivery confidence perspective, it does underline the realism the MPA brings to major projects. We warned in 2013 of the potential for ‘grade inflation’ – but these ratings suggest that the MPA is prepared to award a project low confidence ratings several times.

The whole-life cost of projects in the portfolio is at least £489bn – but we don’t have an exact figure in 2015.

5 Cost of portfolio

The total whole-life cost of the portfolio reported by the MPA has gone up, from £306bn in 2013, to at least £489bn in 2015.

However, we don’t know the exact cost of the portfolio this year. Every year, the financial information for some projects is not published owing to exemptions. In 2015, this is the case for 15 projects:

  • Freedom of Information exemptions apply to nine projects
  • Departments have not provided data in six cases for various reason (for example, DfE’s Priority School Building Programme is a ‘Private Finance project’).

In 2013 and 2014, the MPA published a headline figure showing the whole-life cost of the entire portfolio, which included (at least some of) those unreported costs. But this year, the headline figure does not include these exempted projects: £489bn is the sum of all of the whole-life costs published in the report.

Almost half of the known total life cost of major projects is being spent on projects rated amber.

6 RAG cost

Amber-rated projects have a combined whole-life cost of £235bn (where costs are known), 48% of the total portfolio.  The known cost of red projects is half what it was last year (down to £38bn from £77bn).  But half of all red-rated projects (four out of eight) have no published whole-life cost, including MoD’s reorganisation of Army Bases, and two digital NHS projects (care.data and NHS choices).

Over the last three years, the proportion of the overall whole-life cost of the portfolio being spent on green or amber-green projects has gone down, and now stands at 20%.  Taking into account the low confidence ratings of the 15 projects with no published-life costs (eight are rated red or amber-red), the actual proportional cost of high-rated projects may well be even lower.

Most projects have total life costs below £500m, and are apparently due to complete in the next five to ten years.

7 Whole life cost and end date

8 Whole life cost and end date - detail

Charting the whole life costs of projects against the end date given by the MPA, most projects appear to be under £500m and due to complete before 2020. However, there are some limitations to the data released:

  • We cannot chart those projects missing either a whole life cost figure or end date (18 in total)
  • The way whole-life costs are calculated is not always consistent – for example, DECC’s Geological Disposal Facility is expressed in real rather than nominal terms because of the long timescale involved
  • The end date is often not the actual end date and isn’t used consistently – for example, DECC’s Renewable Heat Incentive has an end date of 2014 despite continuing (according to the commentary) until 2040, which the whole life cost calculations run to.

We’ll look at the details by department in a separate post.

You can find our spreadsheet collating the Major Projects Authority annual reports here.

 

 

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