In 2003, Metronet took control of two thirds of the Tube's infrastructure and was responsible for maintaining and improving nine lines, including 150 stations. It had promised to spend £17bn improving the ageing network during its 30 year PPP contract. Metronet collapsed in 2007 and Prime Minister Gordon Brown was faced with a bill of £2bn to fix what has since become a case study against PPP. At the time it would have been barely conceivable that a few years later, David Cameron would be faced with almost exactly the same issue with its twin, Tube Lines. Yet so it was proved and a further £2bn of taxpayers’ money was spent cleaning up the issue.
Recent headlines have now documented the breakdown and failure of a flagship procurement by the Nuclear Decommissioning Authority (NDA), the Magnox contract. This 14 year long contract was terminated nine years early because of a successful 2016 legal challenge by the losing bidder. Their case was simply that the procurement process had been unfair, and the High Court agreed, costing the UK taxpayer a further £97.5m. The total bill for this issue is not known but is already in excess of £122m. The government is now considering whether to bring the whole programme of works back in house in two years’ time, as they did with Sellafield Ltd some years ago.
What links these issues is that in each case, there has been a fundamental misunderstanding of the sheer complexity of these programmes. In addition, there has been a lack of regard for adjacencies and interdependencies that has proven fatal to the forecast budgets.
The disheartening regularity of issues in large and complex public programmes has not gone unnoticed. The National Audit Office (NAO) has been prompted to produce a framework to review programmes with the intent of reducing the number of programmes they are forced to classify as failures. There has now been more than a hundred of these since 2010. The guide is not intended as a checklist but is rather a set of 18 questions in four key areas that have been identified as the key determinants of sub-optimal performance of large programmes. These four key areas are:
Addresses the questions of identifying a clear need for the programme outcomes, congruence with strategic policy vectors from central and local government, and other externalother interested parties (OIPs), and ensuring that there is a sufficiently broad and deep stakeholder group to both support and challenge the programme from inception to delivery. A flawlessly executed programme without a clear policy, that fails to meet a clear need or that is disengaged from any meaningful stakeholder, is no better than a poorly executed one – other than it wastes less time and money.
Intersects with Purpose but looks at a narrower set of deliverables:
- is it the right option?
- does it have a robust business case including a clear Value for Money assessment, rigorous risk and contingency modelling for the whole life of the programme?
- does it have a robust, preferably rolled up cost and schedule profile?
- is there a transparent and practicable mechanism for tracking progress and capturing benefit realisation?
3. 'Programme Set Up’
There are abundant clichés about the general lack of management preparation when initiating any kind of activity. “Ready, fire, aim” and “Proper Planning and Preparation Prevents [sub-optimal] Performance (the 7Ps)” being just two examples of these. The NAO has identified the key predictors of programme failure prior to commencement:
- governance – the need for robust challenge and frequent reviews must not be underestimated;
- leadership – strong, effective, just and active leadership is essential in developing a culture of accountability;
- resources – have the correct levels and mix of resources been budgeted for and applied? Unless on a war footing, programmes must be fully resourced;
- deliverability – can the programme be made a practical reality? There can be no reliance on last minute planning; and
- risk management – has a realistic and flexible risk plan been put in place? Early warnings and frank conversations before a risk becomes an issue resulting in nothing worse than hurt feelings.
4. 'Delivery and variation management’
Consists of what, to many, will seem like stating the obvious:
- are the right incentive mechanisms in place and are they driving behaviour aligned with strategy?
- is change under control?
- is the programme set up for agility and responsiveness to external change?
- is there an effective performance management process focused on the delivery of outcomes?
- is the programme able to quickly assimilate lessons learned and apply them to later phases of itself?
- is there a realistic plan to transition into operational delivery?
Each question within the four key areas has a subset of questions and a guide to what evidence is required to support the answers.
Reading all of the questions and evidence will not develop the discipline of programme management by very much. Most practitioners will not find anything particularly revelationary or new in this publication – indeed much of it has already been published in the OGC’s Common Causes of failure (2007), the OGC’s Common Causes of Confidence (2010) and more recently the IPA’s Project Initiation Routemap (2016) from HM Treasury. It is an important piece of work however. We tend to fail most often when we decide to proceed at risk without fully understanding the nature of that risk. We have to learn to ask the right questions at the right times, and more importantly to listen closely to the answers.
At the outset, for instance, if we do not take account of the policy environment in which our programme is set, we are proceeding at risk - though it might not feel that way so early in the initiative. Time spent considering the adjacencies and evaluating our programme environment is rarely wasted. It may lead to a delayed start, or even a major rethink of the approach, but as the authors of the NAO framework point out in a related article, unquestioning devotion to schedule can prove to be the greater error at the programme level. Situational awareness is a trait worth developing in this arena. There are strong parallels with other industries such as aviation. It has been well understood for many years that “Get-there-itis” or “plan continuation bias”, has caused several major air incidents causing great loss of life. How many of us have not, as project or programme managers, ignored new data in pursuit of the finish line?
The NAO framework is important because it gives us a safety envelope within which to operate. Combine the disciplined approach of Managing Successful Projects ( MSP®) and Project Initiation Routemap with this safety envelope and many of the recent high profile case studies in programme failure would not have happened. In any risk model, the greatest opportunities for significant cost overruns present themselves in the execution phase. Here, resources are committed in the greatest quantities and the remediation costs of errors can be huge. This may have accounted for re-laying miles of the Wetherby Bypass extension because of a small error in the composition of the asphalt several years ago. Ross Brawn, the Formula 1 team principal who guided Michael Schumacher to all of his world titles had a motto: “Go steady, and go sure”. He fully understood the catastrophic impact of his failures of execution, broadcast live to millions every other Sunday in the Summer.
The Latin roots of the word circumspection are, ’circum’ meaning around, and ’specere’ meaning to look. This framework engenders a level of circumspection in programme leaders that, when it has been absent, has proven in many cases to be costly and damaging. It encourages honest reflection, analysis and maturity in decision-making; a preparedness to confront issues that might allow risk to leach rightward into execution without justifiable operational reasons, and those issues that might undermine the entire purpose of the programme and bring it to an end - if that’s the right decision. The NAO framework is a welcome reminder of the frailty of ourselves as programme leaders in complex environments, and a safety net that can protect us from forgetting to lift our eyes, and look around us.
Our Consulting team can help you manage your projects and programmes better - quicker, for less money, with greater impact and improved stakeholder confidence. Our specialists have been at the heart of the development of internationally recognised best practice guidance, such as MSP®, PRINCE2®, MoP®, P3M3® and the Project Initiation Routemap. Contact us to discuss how we can boost your organisation’s capability to deliver your projects and programmes better.
For further information on how RSM can help improve your projects and programmes please contact Andy Murray or Paul Dowell.