The DfT had intended to streamline its procurement and set-up a 'shared services' centre. Economies of scale and administration would normally bring significant savings. The PAC found that the opposite had occurred.
PAC chairman Edward Leigh MP explains: "The DfT planned and implemented its shared corporate services project with stupendous incompetence. This is one of the worst cases of project management seen by this Committee.
"The plan was for the central part of the DfT and its seven agencies to be sharing services by April 2008. The Department knew that it was pushing things with such a tight timetable but, without robust challenge to such a risky strategy, ploughed on confidently.
"The result was lamentable. The underlying computer system was inadequately procured and tested, resulting in an unstable setup when it was switched on. DfT staff do not trust the system which is hardly surprising when we hear that on occasion it took to issuing messages in German. So far only the central department and two of its agencies are using it.
"Remember that this was an efficiency drive aimed at saving £57M by 2015. It now looks like the taxpayer will have to stump up £81M to pay for it."
Leigh said that the senior managers responsible for the fiasco have not been held to account.
"The DfT must now work to deliver a functioning system which provides benefits and which its users trust. The Department must also overhaul its project management capabilities, closely examining the expertise of its project managers, setting up systems for subjecting future plans to rigorous challenge and, crucially, establishing incentives to officials for success and penalties for failure."
According to the Cabinet Office, central and local government could save some £1.4bn every year by sharing their corporate services, but the projects need to be set-up effectively and efficiently. Three routes to failure were cited by the Cabinet Office:
delay in introducing planned developments;
increased cost; or
by providing poorer services. .
The PAC say that the DfT suffered all three, and was 'overly optimistic' in planning to introduce shared services within one year, and for all its agencies to use the system by April 2008.
To date, only the central Department and two of the Department's seven agencies are using the Shared Service Centre.
The PAC say that in trying the rush to meet its original timetable, the DfT took shortcuts. For example, it did not subject its IT support arrangements to full competitive tender, specify its requirements precisely enough or manage its suppliers sufficiently closely. It also reduced the time available for testing which meant that the system was unstable when it was switched on.
Initial estimates were put at £55M to set the shared service system up, yielding savings of £112M in the first 10 years - a net gain of £57M.
Forecasts show that the shared services programme will cost £121 million, with benefits over the first 10 years of £40M - a net cost of £81M.
According to the PAC, users of the system have little confidence in it, and performance is poor and variable. In some cases the service is worse than that previously provided.
The DfT say they will turn the project around, but the PAC say they will continue to monitor it.