Major projects

Brexit has been described as the civil service’s “biggest and most complex challenge... in [its] peacetime history”.[1]  Across Whitehall, there are more than 300 Brexit workstreams as departments prepare for multiple scenarios to tight deadlines. Alongside this, the Government is attempting to deliver over a hundred major projects, including high-speed rail, Universal Credit and improvements to military capability. But despite recent efforts to improve project delivery in government, the risk of major projects not being delivered on time and budget appears to be growing.

Departments deliver a range of projects relating to infrastructure, defence capabilities, government IT systems and transforming public services. Supporting this activity from the centre is the Infrastructure and Projects Authority (IPA), a joint unit of the Cabinet Office and the Treasury. Described as a “centre of expertise”, it oversees government projects throughout their life cycle and develops the skills and capabilities of project leaders.

The IPA provides additional direct support to the “most complex and strategically significant” projects, which are included in the government major projects portfolio (GMPP). Every year, the IPA publishes an assessment of how likely each of these projects is to deliver its objectives on time and on budget.

While the IPA also supports the delivery of Brexit projects, for the most part these are not included in the GMPP, so there is no published record of what these projects are, how much they cost and whether they are likely to be delivered on time.

 

Brexit adds to an already large portfolio of government projects

Brexit workstreams per department, as at 10 November 2017 and updates since

Tony Meggs, the chief executive of the IPA, has described implementing Brexit as a “mega-programme”, and “the biggest, most challenging peacetime task the civil service has faced”. Across government, there are at least 300 Brexit-related workstreams, spanning 17 departments and agencies. The Department for Business, Energy and Industrial Strategy (BEIS) alone is responsible for 69 – the most of any department – while the Department for Environment, Food and Rural Affairs (Defra) has the second-highest number, at 55. HM Revenue and Customs (HMRC) and the Home Office could also be required to implement changes to the UK’s customs and immigration systems to meet new post-Brexit requirements.

Number of projects in the government major projects portfolio (GMPP)Alongside this, the Government oversees a portfolio of 133 major projects, which make up the government major projects portfolio. This is an evolving portfolio of its “most complex and strategically significant” projects. Since 2013 (when data were first published), the size of the portfolio has fallen considerably after peaking at 199 major projects in 2014.

Despite their high priority, most of the workstreams relating to Brexit are not included in the major projects portfolio. The exceptions are those that predate the EU referendum and which face additional demands as a result, such as HMRC’s programme to deliver a new customs declaration service. The IPA’s explanation for the lack of Brexit projects in the portfolio is that, when taken individually, these “are not of the same scale or duration as GMPP projects”. But when the additional demands relating to Brexit are taken into consideration, the IPA notes that there will have been a “significant increase in the number of projects and programmes that need to be delivered across government”.[2]

Shortly after the referendum, John Manzoni, chief executive of the civil service, spoke of a need to reprioritise activity across government to take into account the demands of Brexit. There are some signs that this has happened, with the size of the GMPP falling slightly in the past year. Tony Meggs has highlighted HMRC as his “favourite example… of a department that has worked very, very hard to prioritise activity”, while also acknowledging that there is more prioritisation to be done across government. [3] [4]

 

The Government successfully delivered 26 projects last year

Projects joining and leaving the government major projects portfolio (GMPP), with reasons for leavingIn the past year, 18 projects joined and 29 left the major projects portfolio. Of the ones that left, 26 were delivered successfully against their original or revised objectives, including the childhood flu immunisation programme at the Department of Health and Social Care (DHSC), and the construction of the Francis Crick Institute for biomedical research at BEIS. One project, relating to the sale of the Government’s stake in a uranium enrichment company, was brought to an early close after a review concluded that there were no viable delivery options. Of the two other projects to leave the portfolio, one no longer met the criteria to be included and the other was replaced by a new project.

This means that the Government completed more projects successfully in 2018 than in 2017, when only 21 of the 36 projects that left the portfolio were successfully delivered.

Total whole-life cost of the government major projects portfolio, and breakdown of change, 2013–18As a result of projects leaving in 2018, the overall cost of the portfolio has fallen to£423bn, down from £455bn a year earlier. The largest to leave was the £50bn Hinkley Point C project, which exited the portfolio after a contract was signed with the French energy group EDF (the project’s objectives were to “agree a contract to enable the construction and operation of a new nuclear power plant”, rather than deliver construction itself). New projects entering the portfolio had a combined value of less than £1bn, but for some projects, costs increase as they move beyond the scoping phase.[5] There was a £31bn increase in reported costs for projects already in the portfolio, with £23bn added to the airport capacity programme at the Department for Transport (DfT) due to the inclusion of previously misreported non-government costs associated with the project.[6]

 

Risk levels in the Government’s major projects portfolio are growing

Delivery confidence ratings for projects in the government major projects portfolio (GMPP)

Each year, the IPA assesses the likelihood that major projects will achieve their objectives on time and on budget. Every project is awarded a red/amber/green (RAG) delivery confidence rating as follows:

  • green – successful delivery appears highly likely
  • amber/green – successful delivery appears probable, but attention is needed to ensure that risks don’t develop into major issues
  • amber – successful delivery appears feasible, but there are significant issues and intervention is required to bring the project back on track
  • amber/red – successful delivery appears in doubt, and urgent intervention is required to address problems or to assess whether they can be resolved
  • red – successful delivery appears to be unachievable, and the project may need to be rescoped or have its overall viability reconsidered.

While delivery confidence ratings are not a definitive measure of project performance, they do offer an indication of the risk of the Government failing to deliver its major projects.

Delivery confidence ratings were first published in 2013 by the IPA’s predecessor, the Major Projects Authority. In every year since then, the proportion of projects on track to achieve their aims on time and budget has fallen. Less than a fifth now have a green or amber/green rating, compared to almost half in 2013. Meanwhile successful delivery appears ‘in doubt’ or ‘unachievable’ for 36% of major projects, double the percentage five years ago.

There are several plausible explanations for this. In recent years, steps have been taken to improve project delivery capability in the civil service, and this could have resulted in delivery confidence ratings becoming more realistic. New projects entering the portfolio are also, by nature, likely to have more unresolved challenges than those leaving on completion.

But there are signs that risks and issues are not being resolved quickly enough once projects enter the portfolio. Between 2017 and 2018, there was only a very marginal improvement in average delivery confidence. The IPA upgraded its assessment of 26% of projects but downgraded almost as many (22%), while more than half (52%) of projects received the same rating. Tony Meggs has acknowledged that the number of ‘at-risk’ projects is concerning, noting that there are “more reds and amber/reds than we would like” in the portfolio.[7]

Delivery confidence ratings for projects that remained in the government major projects portfolio (GMPP) between 2015 and 2018

There has also been no obvious improvement in the delivery confidence for the 56 projects that have been in the portfolio since at least 2015. In 2018, 14 of these appeared on track (with a rating of green or amber/green), the same number as in 2015. In the same period, the number of projects appearing to be at risk (amber/red or red) increased from 16 to 20.

 

Military and infrastructure projects are the most at risk

The IPA breaks major government projects down into four categories:

  • Military projects help maintain national security.
  • Infrastructure projects add to the UK’s stock of fixed building assets and help promote growth in the economy.
  • Transformation projects make the delivery of public services more efficient and improve the experience of users.
  • Information and communications technology (ICT) projects enable cost savings by improving or replacing government IT systems.

Average costs and durations for different types of major government project, 2018

On average, military and infrastructure projects cost more and last longer than ICT and transformation projects, reflecting their greater complexity and scale.

Delivery confidence ratings for different types of major government project, 2014–18ICT projects are the most likely to have high delivery confidence, with 28% appearing on track to achieve their objectives on time and budget in 2018. Fewer than a quarter of ICT projects are at risk, compared to almost half two years ago.[8] In the same period, the delivery confidence of military and infrastructure projects has deteriorated.

Almost half of military projects are at risk, up from fewer than one in five in 2016, with a similar increase from 14% to 40% for infrastructure projects. These two project types account for all eight red-rated projects in the portfolio, including five defence projects, the intercity express programme (which will renew the UK’s high-speed train fleet on the Great Western and East Coast lines) and the M20 lorry area (which aims to minimise disruption in Kent when the Channel Tunnel is forced to close). The IPA attributes these red ratings to an “overprogrammed portfolio” for military projects (suggesting that there are too many projects to manage), and “specific technical and commercial issues” for infrastructure projects.

 

These projects are concentrated at MoD and DfT

Major government projects broken down by department and type, 2018The number, type and cost of projects vary significantly by department.

The Ministry of Defence (MoD) has the largest project portfolio, which includes all 32 military projects as well as a handful under transformation and ICT. DfT is responsible for the second-highest number, and 15 of its 16 projects relate to infrastructure (mostly rail and road). BEIS and the Department for Digital, Culture, Media and Sport (DCMS) also have portfolios that are dominated by infrastructure projects, relating to areas such as energy, radioactive waste disposal and superfast broadband.

Whole-life costs of major projects by red/amber/green delivery confidence rating and departmental group, 2018

Other departments – DHSC, the Home Office, Ministry of Justice (MoJ), Cabinet Office, HMRC and the Department for Work and Pensions (DWP) – tend to have more transformation and ICT projects. These are mostly departments with major service delivery responsibilities, whose projects often focus on making operations more effective and efficient. They include the NHS e-referrals service to allow paperless referrals, the Cabinet Office’s programme to set up new government office hubs outside London, and HMRC’s project to establish a system giving parents access to tax-free childcare.

As well as having the most projects, MoD and DfT also have the most expensive portfolios, at £135bn and £132bn respectively. BEIS has the third-most costly portfolio at £64bn, despite having fewer projects than DHSC, the Home Office and MoJ. This reflects the tendency for DfT, MoD and BEIS to focus on more expensive military and infrastructure projects. Together these departments account for 78% of major project costs across government.

MoD and DfT are also responsible for a disproportionate level of project risk. Of the £183bn of ‘at-risk’ projects in the Government’s portfolio, £152bn (82%) is at either MoD or DfT.

 

High-speed rail is the biggest project in the portfolio

Major government projects, by delivery confidence rating, duration and whole-life cost, 2018

The major project with the highest whole-life cost is DfT’s £55.7bn high-speed rail programme. Legislation has been passed to allow phase one of the project to proceed, with high-speed trains due to run between London and Birmingham by 2026; it is “expected to be completed on time and on budget”. However, legislation is yet to be passed for phase two – extending the route to Manchester and Leeds – and the project overall is rated amber/red, suggesting “major risks or issues apparent in a number of key areas”. In September 2018, the project was hit by the departure of its phase two managing director, Paul Griffiths, and in December 2018 Sir Terry Morgan stood down as chairman of both the high-speed rail and Crossrail programmes.[9]

The £14.8bn Crossrail programme received an amber rating in September 2017, indicating “resolvable” issues, which “if addressed promptly, should not present a cost/ schedule overrun”. However, in August 2018 it was announced that the opening of the new rail line would be delayed by almost a year, and in December further delays were announced alongside a £1.4bn bailout for the project.[10]

Another high-profile project with an amber rating in September 2017 was the £13.6bn Universal Credit programme. In June 2018 the National Audit Office published a damning report, highlighting hardship among claimants, a failure by DWP to listen to feedback, and doubts that the project would ever achieve value for money, and in January 2019 the Work and Pensions Secretary Amber Rudd announced that the next phase of implementation would be delayed.[11]

 

Whitehall is trying to improve its ability to deliver major projects

The civil service has taken steps to improve its ability to deliver major projects in recent years. Since 2012, more than 500 senior civil servants have enrolled in the Major Projects Leadership Academy, and in 2016 a specialist project delivery stream was added to the civil service Fast Stream (which recruits and develops future civil service leaders). This was also the year that the IPA was established to “ensure infrastructure and major projects are delivered efficiently and effectively”.

Percentage turnover for leaders of major government projects (rolling three-month average)There are some signs that these efforts are achieving results. For example, there has been a reduction in turnover among project leaders since 2013. Ensuring that experienced people remain in post is crucial; the IPA has noted that “consistency of leadership within projects is important for smooth and successful delivery”. A recent report by the Institute for Government highlighted DWP’s Universal Credit programme, DfT’s West Coast Mainline project, and Defra’s Common Agricultural Policy rural payments scheme as having been blighted by excessive turnover in project leaders.

Turnover for senior responsible owners – who oversee project governance, secure necessary resources and answer to select committees – has now fallen to 6%, compared with 18% in June 2013. For programme or project directors – who manage the day-to-day running of projects – it has fallen to 11%. While this is an improvement on the 17% turnover in June 2013, turnover has increased slightly from a low of 8% in March 2017.

The IPA has also established an early development pool, to provide support for projects that “have the potential to join the GMPP in the future” such as MoJ’s Youth Justice Reform programme. This pool is intended to tackle some of the common causes of failure, including a “lack of clear objectives, insufficient resources, and overambitious cost and schedule”, which can be avoided if projects receive effective support early on.