16 December 2008 | Paul Snell
MPs have described a plan by the Department for Transport (DfT) to save £57 million by establishing a shared services centre as an example of "stupendous incompetence".
The DfT initially estimated the centre would cost £55 million to set up, and deliver savings of £112 million. But estimates show the programme will cost £121 million and save only £40 million over the next 10 years, leaving the taxpayer £81 million out of pocket.
"This is one of the worst cases of project management seen by this committee," said Edward Leigh, chairman of the Public Accounts Committee. "The result was lamentable. The senior managers responsible for this failure have not been properly held to account."
The shared services centre was set up to provide finance, payroll and human resources to the central department and its seven agencies. But so far, only the central DfT and two of its agencies are using it.
Some procurement activity has since been added to the centre, which the DfT believes will deliver "substantial benefits". However, the PAC said this optimism was misplaced as the cost and timeframe of doing this has not been established.
These issues were highlighted in the DfT's procurement capability review, released earlier this summer, which pointed out the "many issues" that had not been resolved at the centre, with its performance "threatening supplier relationships".
One aspect of the project singled out for criticism was a computer system that was "inadequately procured". The PAC blamed the use of an existing framework agreement, rather than competitively tendering the contract. This meant specifications were not precise and suppliers were not managed closely enough.
MPs said the DfT must overhaul its project management capabilities, and establish incentives and penalties for success and failure.
The department said it recognised the problems identified and would respond to the recommendations with an update on progress in due course.