1.Despite considering it crucial to the future success of EastEnders, the BBC has managed its E20 project badly. EastEnders is a flagship programme for the BBC but is being outperformed by its soap rivals, such as Coronation Street, and its overall audience has reduced as fewer people watch traditional linear TV. Therefore, it is important for EastEnders that the BBC completes E20 so that the programme is best placed to not only succeed but to also secure its long-term future. However, since we last heard about a 26-month delay to the project in 2016, it has gone off-track again. The project is now set to cost £87 million — £27 million more than initially budgeted - and complete in May 2023, nearly five years later than originally planned in 2013. The costs have increased partly because of inflation in the construction industry, the effect of which has been exacerbated by delays — with the construction of the Front Lot only starting in October 2018 rather than August 2017 as planned in 2015. The BBC has also underestimated the scale and complexity of the project, including how it would age the new sets so that they either exactly replicate what viewers are used to, or look realistic where there are new locations. In addition, the BBC initially failed to allocate enough money to manage risks and contingencies. It has encountered problems including asbestos and obstructions in the ground, which have, to date, cost the BBC around £1.8 million and delayed works by around four months. Under its latest plans, the BBC has substantially increased its risk and contingency budget.
Recommendation: Commencing in October 2019 — one year into the construction of the Front Lot — the BBC should annually update the Committee on the progress, expected costs and completion date of E20. These updates should demonstrate how the BBC has learned lessons from previous project failings, and whether its revised risk and contingency budget has been adequate.
2.The BBC failed to get the right construction project management skills in place from the outset of the project. It is disappointing that the BBC failed to consider what skills it needed in critical roles in the E20 project team. The BBC accepts that as a result, it did not have enough construction project management expertise to plan and deliver E20 effectively. One of the impacts of this was that the project team did not introduce design development and change processes early enough. After the 2015 project business case had been approved, it took over a year for a design change process to be agreed between the E20 programme and EastEnders production teams. This led to a build-up of change requests after the design was supposed to be stable. This issue was exacerbated by the project and production teams failing to work together effectively in the early stages of E20.
Recommendation: By July 2019, the BBC should develop, and update us on, processes to make sure the right skills are in place from the outset for all of its critical projects.
3.The BBC’s procurement approach for the Front Lot contract was ineffective and increased the cost of the project by £2.3 million. In 2016, the BBC carried out a single-stage open procurement for the Front Lot but this was unsuccessful owing to limited market interest. This led the BBC to move to a two-stage procurement through its Building Contractor Service Framework, which cost it £2.3 million and delayed the project by six months. The second procurement, in which only two bidders met the BBC’s requirements, led to Wates being awarded the contract at a cost of £24.2 million, £9.5 million more than budgeted. The BBC’s cost consultants were unable to validate £3.1 million of the costs that were included in the final contract and concluded that limited market interest was likely to have inflated prices. In addition, the BBC’s contract negotiations with Wates took six months longer than planned, partly because of discussions about what bricks to use for the set. The commercial problems the BBC has encountered on this project demonstrate its ineffective sourcing and negotiating approach, which may have implications for other contracts.
Recommendation: By October 2019, the BBC should provide us with evidence of how it ensures best practice in procurement and contract management across its diverse range of contracts — for E20 and other contracts.
Published: 20 March 2019