A shared services programme being implemented by the Department of Transport (DoT) to improve efficiency and save as much as 57 million pounds is now expected to cost the department around 80 million pounds, according to a new report from the National Audit Office (http://fastlink.headstar.com/dot1).
The programme, launched in 2005 after an 11-month review, has seen back-office services such as human resources, finance and payroll for the department and its agencies relocated to a shared services centre in Swansea.
The project’s costs were initially estimated at 55 million pounds with gross savings predicted of 112 million, resulting in a net saving of 57 million pounds. But current estimates suggest the final costs will be as much as 120 million pounds while the estimated savings have shrunk to about 40 million in the period to 2015, the report finds. This would result in a net loss to the DoT of as much as 80 million pounds
The report finds that the department’s programme board failed to provide adequate control, resulting in less standardisation for the shared services than was required. With some of the agencies ill-prepared for the changes there were also delays in implementation, and some agencies have still not yet begun to use the centre.
Rather than putting the contract out to competitive tender, the department opted to take advantage of an existing IT contract with IBM to save time, but failed to specify the requirements accurately. By March 2008 the Department had paid more than 72 million pound to contractors, with 54 million going to IBM. The contract with IBM is currently being renegotiated.
Since April 2007 changes have been made to correct the programme’s deficiencies and performance has shown signs of improvement, the report finds. Nevertheless, in January 2008 it met only 4 out of 18 performance indicators.
