Further evidence that bad projects not bad project managers lead to cost overruns on public projects has been revealed in research seen exclusively by NCE.
Last month the government launched its £6.7M major projects leadership academy to train civil servants as part of a bid to reduce costs and improve efficiency.
Now research by project management consultant Turner and Townsend supports the argument that better thought out projects right from the outset would reduce costs.
The consultancy invited 25 client organisations – representing up to £10bn of annual new build construction in the UK – to a commercial performance seminar in November. The results have only now been revealed.
Participants were asked how effective their organisation was at setting clear scope on major programmes and mitigating change. Some 38% said their organisation was “not very effective” at this and 21% said it was “poor”.
Just 33% said they were “effective” and only 4% described their organisation as “very effective”.
Turner and Townsend associate director David Whysall explained that a clearer brief from the outset would result in less change and reduce costs right from the outset. “If you have unclear scope there is lots of change, which results in cost escalation,” he said.
However, the research did also identify some of the benefits that could arise from the new academy scheme. Previous government work such as the McNulty and Cooke reports recommended that big government infrastructure projects trial new business models and integrate the supply chain.
But the seminar found that most client organisations did not understand how risk was passed down the supply chain. Whysall thought that the UK model of working tended to pass risk down the supply chain, which inflated costs.
Of the seminar participants, 37% did not understand how risk was passed down (although encouragingly 50% said they did). This is where the academy could be beneficial if it helped civil servants to, according to Whysall, “get into the supply chain deep enough to understand the costs”.
Seminar participants said they had identified value and innovation at the second and third tier of the supply chain. Some 67% thought they had better value engaging directly with these suppliers so if civil servants are confident enough to bypass tier one, they could reap savings.