News focus: Signalling change

7 March 2013

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13 March 2013 | Anna Reynolds

Major Projects Authority ‘traffic light’ ratings are to be published to show the progress of large government works, says Anna Reynolds.

From May, central UK government departments will have to reveal whether their major projects have been rated red, amber or green by the Major Projects Authority (MPA).

The announcement made last month followed concerns raised by MPs that departments were ignoring warnings raised by the MPA and going ahead with projects that fail to deliver value for money.

According to the Cabinet Office, before 2011 – when the MPA was established to oversee high-risk projects – less than a third of major projects were delivered on time and budget, leaving taxpayers to pick up the bill. The original intention was that ratings would be published as soon as the MPA was up and running, but delays mean the government has only now made the scheme mandatory.

A spokesman for the Cabinet Office told SM four quarters of data was needed first, which meant waiting a year, while reports by the National Audit Office and Committee of Public Accounts issued last year also led to a serious review of whether ratings should be published.

Departments will not only have to reveal the ‘traffic light’ ratings, but also provide the reasons the MPA has given for the score, as well as the actions the department has taken to address the potential issues identified. 

A green rating indicates a project is running well and on time. Amber means problems in need of attention, and red indicates the project is at a significant risk of failure, delay or overspend. The Treasury and Cabinet Office took the decision that status reports should be revealed in future, but are aware of concerns that a traffic-light rating alone could be misleading. “If a project is complex and innovative, it could be considered high risk [red], but this is deceptive if you just take it at face value. People assume [it means] poor delivery, which won’t necessarily be the case: they need to look at the whole report,” the Cabinet Office spokesman said.

This information will be published annually by the MPA in an overview of its whole portfolio, which currently consists of 185 major projects. Furthermore, each government department will be responsible for publishing the MPA rating and commentary of their individual projects every 12 months, six months in arrears.

The government’s definition of a major project is one that “could create pressures leading to a breach in departmental expenditure limits” or “are novel and contentious, could cause significant repercussions for others and require primary legislation”.

The Cabinet Office says it will “change the way government works forever and drive out complacency”, raising the success rate and identifying problems with government suppliers through greater transparency and scrutiny.

But there is scepticism about the likely outcome. Yoon Chung, a consultant on public procurement at PA Consulting, says: “In principle, transparency is a good thing, but whether it will add value or improve performance is hard to judge.”

Marc Day, professor at Henley Business School and joint author of a report into transforming public procurement, is also unconvinced. “People are great at hiding bad news – if a project is going down the toilet, you can get around it,” he believes.

Colin Cram, managing director of consultancy Marc1 who gave evidence to MPs on public procurement in January, is also concerned about the schedule.

“Publishing in arrears reduces the accountability of the results. By that time a lot of projects will have been completed and those responsible will have moved on,” he says.

“It limits the effectiveness of the scheme and suggests there is still defensiveness in Whitehall and a reluctance to introduce transparency.”

The internal resistance could also blunt the potential value of greater scrutiny. “The impression I get is that the Cabinet Office, under Francis Maude, is pressing for fundamental changes and improvements, but is being thwarted by government departments,” Cram adds.

“It is a fair bet that in this instance the Cabinet Office has had to accept a much watered-down outcome.”

The scope is also a worry for Cram. “Central government only covers about 30 per cent of procurement spend. Most projects take place in the wider public sector. They are not defined as high risk, but the point is they are going wrong. You can slide out of publishing something by arguing that a particular project isn’t high risk.”

A cause of the delay in the announcement was the government’s evaluation of what information should be withheld. Some would argue this limits the transparency of the process, but Paul Chapman, director of the Major Projects Leadership Academy (MPLA) – which trains civil servants in how to manage major projects – at Oxford University’s Saïd Business School, disagrees.

“It’s unreasonable to expect commercially sensitive information to be released into the public domain because the unintended consequence could be that the best companies don’t bid and don’t seek work on government contracts. However [withholding details] should be kept to a minimum,” he says.

“I think it’s a good start – what’s encouraging is that government is taking this seriously, it wants to perform better and now we will know where the issues lie.”

Chapman believes the additional understanding the scheme provides of projects will also have implications for the private sector. “This will have an impact on its reputation to deliver. It also has implications for private sector organisations that work regularly for the government because there will be transparency between departments. If someone performs well, other departments should be able to take that into consideration when tendering.”

Chung says there could be disputes if suppliers feel the reasons behind the ratings are unfair. It could also cause political embarrassment if departments are under-resourced or if a government minister has been pushing a particular project that fails to deliver.

A positive feature identified by Day is it provides transparency for senior politicians who could make a difference. “Politicians like things to be straightforward; some are project managers and business people,” he says. “It also engages a wider range of stakeholders in the debate about performance and puts extra pressure on those responsible for delivery.”

But he adds the main problem is “a lot of government departments just aren’t that good at project management. Transparency is only going to highlight this. Can’t we just cut all this administration out and get on with the core of the job, which is getting capability from the government to ensure people can deliver results better? If you’re cash-strapped, you need to look at other ways of doing things.”

The MPLA, run in conjunction with Deloitte, was established to address this. More than 90 project leaders have begun training, and the goal is for the course to become a standard so no-one will lead a major project without the right skills.

The MPA has already set down a marker. It recommended the cancellation of the Regional Fire Control programme in 2011 when it was anticipated to cost five times more than the £120 million original estimate. Its interventions contributed to £541 million of government savings in 2011-12.

The expectation is the move to greater transparency will not bring immediate changes in terms of project performance, but represents a first step to tackling the issue.

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