"How not to run a major project" – DfT in the firing line over Great Western rail upgrade

Public Accounts Committee says accountability system for major electrification programme was too complex, and casts doubt on cost estimates even after £1.2bn increase

By Civil Service World

03 Mar 2017

The Department for Transport has been urged to learn the lessons of "serious failings" in one of its key rail modernisation programmes, with MPs warning that major problems with the DfT and Network Rail's Great Western upgrade risk being repeated in future schemes.

The Public Accounts Committee last reported on the department's plan to electrify the Great Western Main Line, which runs between Maidenhead and Cardiff, in 2015, after it emerged that estimated costs for the programme had risen by £1.2bn in a single year, with the completion date slipping by up to three years.

The latest report from the cross-party group of MPs attempts to dig into the detail, and finds that there were "significant failings" in the design, planning and costing of the programme.

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The PAC says that the "tripartite" system of accountability for the GWR project, which saw the DfT setting high-level requirements, and the Office of Rail and Road then scrutinising Network Rail’s plans, was "too complex", with the DfT failing to scrutinise Network Rail's cost estimates effectively "despite the very significant sums of public money at risk".

"Depite being liable to pay £400,000 per day to lease new trains that could not be used until the overhead electrification was complete, the department did not adequately challenge Network Rail’s plans to carry out the infrastructure work," the report finds.

According to the PAC's report, the department also did not do enough to integrate the different elements of the rail modernisation programme "in a joined-up way",instead managing electrification and the roll-out of new trainsas separate projects until March 2015.

The committee notes that the DfT has since overhauled its approach to infrastructure planning, and says it is now "trying to align decisions about infrastructure improvements with franchise timetables".

"The department failed to adequately challenge Network Rail's plans to carry out the infrastructure work" – PAC chair Meg Hillier

But the MPs remain unconvinced over whether the electrification of the GWR "can be delivered to the revised target of December 2018 and budget of £2.8 billion".

Speaking during PAC's inquiry, DfT permanent secretary Philip Rutnam – who will soon be moving on from the transport ministry to head up the Home Office – said the DfT had made efforts to get at the "root causes" of weaknesses in the rail system since a high-profile blunder with the West Coast rail franchise in 2012.

"Within the department we have greatly strengthened and clarified accountability," he said.

"We have a very clear structure of accountability for our role as client and sponsor of major projects and programmes. We have done an enormous amount to develop our project and programme expertise and profession, and our commercial expertise. We have enormously expanded our approach to assurance.

But he added: "Unfortunately, those changes were too late to catch this one. They have, however, been really important in the way in which we have approached the reset of this project from 2015 onwards. Although it is not perfect, the improved performance since 2015 owes a lot to Network Rail but also certainly owes something to a greater maturity and depth of challenge within the department."

The group of MPs, however, remains "concerned that serious failings in planning and delivering this programme will affect the case for future investment in rail programmes".

"Angry and frustrated"

Launching the report, PAC chair Meg Hillier said the Great Western Programme had "hit taxpayers hard and left many people angry and frustrated".

And she added: "This is a stark example of how not to run a major project, from flawed planning at the earliest stage to weak accountability and what remain serious questions about the reasons for embarking on the work in the first place.

"The sums of public money wasted are appalling — not least the £330 million additional costs the Department for Transport will have to pay to keep the trains running because of delays to electrification.

"The department failed to adequately challenge Network Rail's plans to carry out the infrastructure work and, even now, casts doubt on whether electrification work on this and other lines is even necessary.

"Government accepts it got this project badly wrong and must now demonstrate it has learned the lessons."

Responding to the PAC's findings, rail minister Paul Maynard said the GWR modernisation project represented "the most substantial programme of work undertaken on the railway since the Victoria era", and insisted it would "deliver better services for passengers, with new trains and thousands more seats".

He added: “We continually assess our investment decisions to ensure they deliver maximum value for the taxpayer. As the report acknowledges, since autumn 2015 we have overhauled the way the department commissions and oversees work from NR – including a clear structure of accountability, with new governance processes that include independent assurance on cost and deliverability.”

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