Conclusions and recommendations
1. The Department's planning and management
of this important project have been extremely poor. This case
is one of the worst this Committee has seen and responsibility
for these serious weaknesses rests firmly with some of its top
officials. Regrettably, other cases before the Committee in the
recent past have shown similar poor performance by departmental
senior management. To
secure proper accountability, the Department must define and communicate
clearly the incentives for success and the penalties for failure
in projects such as this, including the expectation of the termination
of employment contracts and naming those responsible. More widely,
the Treasury and the Cabinet Office need to advise departments
on the effective handling of new and complex projects, and the
management of change.
2. The Department's plans for implementing
Shared Services were too optimistic and were imposed in the full
knowledge of the risks, difficulties and slippage. The tight timetable
led to the Department taking shortcuts which subsequently caused
problems. In any future work, the Department
should subject planned timetables to rigorous challenge from stakeholders
and gateway reviews, and obtain formal agreement from all those
involved that it is feasible.
3. Two months after the project started, the
Department knew that the initial assumptions were incorrect but
did not deviate from its timetable. At
every significant milestone or change of direction, the Department
should assess progress and its effect on both the timetable and
budget and verify with all those involved that the timetable and
budget are still feasible.
4. To save time the Department used an existing
framework agreement for the development of the system, rather
than competitive tendering, despite an initial cost estimate of
£16 million. This choice contributed to poor specification
of its requirements, the piecemeal placement of work and poor
management of its suppliers. The Department
has a duty to seek competitive tenders for projects of this size
and nature and should not use the absence of competition as an
excuse for failing to specify precisely the requirements and placement
of work with suppliers.
5. The Department lacked sufficiently skilled
or experienced project management staff.
Senior members of staff with ultimate responsibility for project
implementation must have appropriate training and experience in
project management.
6. The Shared Service Centre is not meeting
most of its performance targets and it is clear that some of them
may not be met for some time. The Department
should set a realistic month-on-month improvement target so that
it can monitor the progress of the Shared Service Centre and take
action if the improvements are not satisfactory.
7. Many users do not trust the system due
to the problems that they have experienced but the Department
considers that some key performance indicators such as those for
creating and maintaining customer details are not important.
To build more trust in the system, the Department should take
users' concerns seriously, for example, by improving the performance
of the Shared Service Centre in those functions which are customer
focused.
8. The Department's excuses for failing to
measure up to the performance of private sector organisations
are that it does not have the economies of scale and it has to
satisfy government reporting requirements.
There are clear benefits in regularly comparing performance with
other organisations. The Department should identify a range of
public and private sector bodies with whom to benchmark its performance
against key indicators. This monitoring will allow it to identify
the scope for driving further efficiencies from its shared service
operations.
9. The Department is confident that adding
routine procurement to its Shared Service Centre will deliver
substantial benefits but this optimism may be misplaced as the
costs and benefits of this new facility have not been established.
The Department must produce robust costings and benefits to provide
a sound basis for deciding whether to add routine procurement
to its Shared Service Centre.
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