Government slated for project overspend

30 November 2009

1 December 2009 | Allie Anderson

Lack of clarity on the requirements of major UK public sector projects has led to huge overspending, research has found.

A study carried out in November by the Taxpayers’ Alliance (TPA) looked at 240 government projects and found a total net overrun of more than £19 billion. This is equivalent to more than £750 for every household in Britain.

Of the projects examined in Out of control: how the government overspends on capital projects, the average overspend was more than 38 per cent. The largest cost

overrun was found in the NHS National Programme for IT, which is running £10.4 billion (450 per cent) over budget.

Uncertainty about a project’s requirements is one of the problems that often leads to overspend.

The report said increased productivity among public sector staff, including buyers, would need to accompany spending cuts in order to counter the overspend.

This echoes a recent study by the National Audit Office, which highlighted the need for government departments to make better use of procurement expertise in order to keep costs down.

John O’Connell, political analyst at the TPA, said: “Too many projects are coming in late and over budget, and this failure is costing the taxpayer billions and endangering essential services.”

Meanwhile a survey by the North East Chamber of Commerce (NECC) has found that 80 per cent of firms are put off public sector tenders because they are too complex. Almost three-quarters said they would be more likely to bid if documents were simpler.

Ross Smith, head of policy and research at NECC, said: “The public sector needs to do all it can to pick up the pace of its reforms to the procurement system.”

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