Shared Services
4. The Department for Transport is an 'early adopter'
in the programme to introduce 'shared services' across Whitehall.
The purpose of the Shared Services programme is to "introduce
more modern, simpler and standardised support services processes—initially
in HR, finance and payroll—leading to both efficiency and
effectiveness improvements."[3]
The Programme is part of the Department's response to the Gershon
efficiency review.[4] When
we looked at the Shared Services programme during our inquiry
into the Department's Executive Agencies[5],
we noted that the exact cost remains unclear.[6]
We also raised concerns over whether the level of optimism bias
included in the plan—then £5.3 million—was sufficient.
[7]
5. We were therefore less than impressed when the
Permanent Secretary told us in our recent evidence session that
the optimism bias "was not optimistic enough" and that
the overall cost of the project had escalated from the original
£50 million.[8] One
reason for the cost increase is because implementation of the
project has been delayed. The migration of the Driver and Vehicle
Licensing Agency and the Driving Standards Agency onto the system
has been held back from August 2006 to April 2007 while problems
are resolved. The Department told us that: "getting the solution
right before its 'switch on' is more sensible and ultimately likely
to be less costly than trying to deal with problems or issues
afterwards."[9] We
agree that the Department should ensure the new system works before
attempting to move operations on to it, but we are disappointed
by the delay and concerned by its effect on the Department's ability
to deliver its programme.
6. Firm revised cost estimates are not yet available
but the Permanent Secretary told us: "this project has been
put together on the basis of a very conservative business case,
and even with some cost increase the business case is still positive".[10]
The estimated costs of the programme have risen consistently since
its inception and we expect the Department to keep a tight control
on further cost rises to ensure that the programme ultimately
delivers value for money.
7. There are also concerns over the suitability of
the Department for Transport to be in the vanguard of the project.
The Cabinet Office's policy is that "Government Corporate
Services (human resources, finance, IT, procurement, etc) could
be delivered through a handful of professional organisations—serving
a minimum of 20,000 but preferably 50,000 or more customers [i.e.
staff]."[11] But
in the Department for Transport group, there are just 19,000 staff.
The Permanent Secretary explained that 3,000 volunteer staff in
the Coast Guard Rescue Service took the total number of staff
over the minimum threshold for a viable shared services programme.[12]
The volunteers require travel and subsistence payments and therefore
need to be included in the system. We are concerned that the Department
has to rely on thousands of volunteers to make up the numbers
to ensure a viable service. It is possible that in the long-run
a shared services function serving fewer than 50,000 staff will
not survive and we believe the Department, being one of the most
advanced in developing a shared services function, is well placed
to offer its services to other Departments.
8. The Committee applauds the Department's efforts
to improve the efficiency and effectiveness of its support services
but we continue to be concerned by cost increases and delays in
implementation of the shared services programme. In July 2006
we drew attention to likely problems with the level of optimism
bias in the project, and we are concerned that this continues
to cause difficulties. We urge the Department to scrutinise its
figures carefully and re-examine its risk assessment in order
to ensure that the plans more accurately predict the likely final
cost. We encourage it to actively seek customers for its service
from outside the Departmental group in the future, in order to
secure the long-term viability of the programme.
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