Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 40 - 59)

WEDNESDAY 7 NOVEMBER 2001

MR PETER GERSHON AND MR BRYAN AVERY

  40. I will just raise a couple of points with you that rang alarm bells for me. Paragraph 3.1 and 3.2 of your best practice guide for "why IT projects fail". "Does the supplier understand our business needs and do we understand the business and commercial interests of the supplier?" Those to me are, obviously, related questions that the person drawing up the project ought to be considering, but they are also huge questions about the understanding of each other's business, their core values and where they are going. Surely, questions like those need a lot more support than this. Can you tell me how you would use this, in that context?
  (Mr Gershon) Accounting Officers only get involved in the projects at a limited number of points. They tend to get cases presented on a review at an early stage. This is to help them satisfy themselves that their staff are dealing with the right matters. They are not sitting there in isolation trying to determine what the answers to these questions are. This helps them to ask the right questions of their people and, in face-to-face meetings with suppliers, to satisfy themselves, because they have always had to satisfy themselves as Accounting Officers.

  41. Who is the audience, then, of this?
  (Mr Gershon) Accounting Officers. There is a mass of business and operational guidance, say in the IT area, much of which emanated from what was the Central Computer and Telecommunications Agency,which is now part of the OGC, which is targeted at practitioners and, as I said, middle management, which has a huge amount of guidance that underpins these sorts of questions.

  42. That is the actual context I am looking for, is it not? This is not floating around in departments doing nothing in particular. Looking at it, it is very unclear to me who it was aimed at. Given who it is aimed at, I want some assurance that other best practice guides are available to the rest of the chain so that we can be confident that the sort of best practice you are looking for is capable of being achieved.
  (Mr Gershon) As I say, that exists in a very substantial amount of business and operational guidance. So, for example, there are, I think, documents from CCTA around managing successful projects, managing successful programmes and how to establish long-term IT-based service contracts.

  43. Do you oversee consistency between all of those?
  (Mr Gershon) That is what I said. The issue we are facing now that it is all together under one roof, is that when you come to more generic issues like partnering, what we have found is differences in approach, sometimes slight differences in terminology between the different things that we have inherited, which we recognise very clearly now we have got to put it into a much more integrated and coherent fashion.

  44. One last question: given the three guides you have already produced, what are your future plans for more of them, and what would they be?
  (Mr Gershon) The one we are looking at, at the moment, is about value for money in complex procurements.

  Kali Mountford: I look forward to seeing that one!

Mr Cousins

  45. Mr Gershon, the Gateway programme. I wonder if you could enlighten us as to what the thresholds for the Gateway process are. They are not entirely clear from the information that we have.
  (Mr Gershon) We have issued what is called a project profile model, to flesh out what I said about the attributes of scale, complexity and novelty, and the projects that score above a certain threshold using that model are the ones which are the subject of the Gateway Review process.

  46. I see.
  (Mr Gershon) That score is some measure, if you like, of risk. So, again, what we started off doing was to focus on high risk projects and we are now moving—because we had to phase the implementation of this—the process into medium-risk projects which, clearly, will have a lower score within this project profile model.

  47. The information we have from, as it were, the launch pack information on the Gateway Review says that all new, high risk projects that involve procurement will be covered, and then all information technology procurement projects of all sizes. It is not entirely clear from that what the thresholds are of "new, high risk". So every project is scored?
  (Mr Gershon) Against this project profile model, yes.

  48. Could you tell us roughly how many projects are put into this scoring process and how many emerge on the other side as requiring a review?
  (Mr Gershon) What I can tell you is that to date we have done 70 Gateway Reviews and our current projection is that by the end of this calendar year we will have done about 128 reviews. So we have got another 58 to do before the end of the calendar year. I cannot tell you how many have been put in by departments and have fallen short of the scoring, but that gives you an indication of the numbers coming forward. Most of them are at a fairly embryonic stage. There have been one or two where Accounting Officers have decided that a review later in the life-cycle would be helpful, and they have asked me to organise a review of the project. However, as I said earlier, the greatest opportunity to influence the outcome is, really, pre-procurement. That is where we are focussing our efforts, unless an accounting officer says he wants a particular project looked at because he wants to gain some level of assurance about it. So the bulk of those reviews are around new projects which have not yet reached procurement.

  49. Those are reviews which you are undertaking?
  (Mr Gershon) Let me explain what we do. We mobilise a review team. That review team will be trained by us and it will typically comprise a mixture of staff from departments other than the one that owns the project that is being reviewed, who will have had relevant experience of other similar types of projects. There may be an OGC person in it and, occasionally, there is an external consultant. The bulk of the effort is undertaken either by my own people or by resources from the departments. We mobilise the team, we appoint the team leader, we satisfy ourselves that the people we are putting in the team have got relevant experience and can add value, but they are not box-tickers; they go through a standard training programme so they undertake the review to the quality standards that we have laid out for a Gateway Review.

  50. What is the outcome of these 70 reviews of procurement that you have concluded?
  (Mr Gershon) Procurement-based projects. These are looking at the totality of the project, not just the narrow procurement element of it. They are looking at how the project relates to the business needs of the department. They are looking at the involvement of stakeholders in the project.

  51. This is your memorandum to us, in which you state that 70 reviews of procurement with a total value of in excess of 13 billion have been completed successfully.
  (Mr Gershon) Yes.

  52. In the information pack about this—and I pick this out at random—there is a school in the Rhonda here and there is a nice picture of a lady standing outside her school and she says "We are 100 per cent confident. We are looking forward to the future with great excitement." That is fine. What is the outcome of these reviews?
  (Mr Gershon) The outcome is that the senior responsible owner of the project within the client organisation receives a report from the review team, which sets out the findings of the review team and appropriate recommendations in the light of those findings where it is felt there is scope for improving the project. As I said earlier, usually strengthening the foundations of the project. That is the outcome.

Kali Mountford

  53. I was just wondering, Mr Gershon, how you measure that. What would you consider to be a successful outcome?
  (Mr Gershon) I would consider a successful outcome to be a review that came up with constructive recommendations that were adopted by the project owner.

Mr Cousins

  54. That is great, and no doubt we can have a chain of pictures like this with acting head teachers outside their schools saying they are looking forward to the future with great excitement. Is there anything that you can give us that is objective and quantified, apart from this touchy-feely stuff?
  (Mr Gershon) The acid test of that over time is going to be whether the public sector's record in project outcomes improves. This is about long-term reform, trying to deal with a problem which has been around in government for a very long time. That is what we are trying to do. We are trying to reduce the incidence of project failure and improve the track record of success, particularly in the context of the increased emphasis of the Government on successful delivery.

  55. Yes. All, of course, we have available to us is the results of the pilot projects. Please do not misunderstand me, because I do not under-estimate the potential value of this process—I do—but results of the review process are a whole series of one-page things, like this, with people saying "It was wonderful". You will see from our point of view that we do need something more than that. We need something—I do not know—maybe numbers, cash values. I do not know, that might not be possible. It might be it is just touchy-feely, but even if it is just touchy-feely, you would still want some numbers, would you not; some concrete outputs, rather than some people standing in photographs saying "My Goodness".
  (Mr Gershon) But, as I said earlier, this is about trying to tackle some systemic issues. The acid test of that is going to be whether in the longer term the track record of success improves. That is measurable over the long-term. Given the gestation period of public sector projects, if you start to do Gateway Reviews early on in the life-cycle then probably you are not talking about ready for service, in a lot of areas, happening, if you capture the project on a pre-procurement phase, two to three years downstream. That is when the real acid test occurs, whether we start to see a greater track record of success.

  56. On the basis of the 70 reviews you have carried out so far, could you give the Committee a list of the recommendations that have been made as an outcome of those reviews and how they have influenced events, what improvements either qualitative or in terms of cost-savings they have achieved?
  (Mr Gershon) There will not be cost-savings yet, in the main. What is happening is the department will be taking early action in one form or another to strengthen the projects, either by, for example, reinforcing the role of the senior responsible officer, strengthening the project management arrangements, strengthening the risk management arrangements—there will be a variety of actions. The cost-savings typically occur because a project will not over-run in future. That is where the real cost-savings occur. The only way you can tell is whether you see a greater incidence of project success, in terms of projects coming in on schedule and to budget.

  57. What is your view, as somebody who came in from the private sector, of the quality of government procurement, on the basis of the 70 reviews?
  (Mr Gershon) There is room for improvement.

  58. Substantial improvement?
  (Mr Gershon) Yes. Substantial improvement. It is no secret, I went back and looked at the White Paper setting new standards in 1995 again recently and that has data in it about public sector track record in construction projects in terms of costs and time over-runs. There was a study done in 1999 which identified the public sector's record in construction procurement. Of course there is substantial room for improvement. You have only got to look at not just individual NAO reports on particular projects but data which has been in the public domain for some time. There is a significant amount of cost and schedule over-run on things like construction projects and a mixed record on IT. There has got to be substantial improvement.

  59. On the basis of the 70 reviews you have carried out, you ought to be able to demonstrate some concrete improvements.
  (Mr Gershon) Not yet. The concrete improvement will come when a project comes in on cost and schedule. We have been undertaking a balanced mixture of activities, some of which have quite long term implications and the Gateway is the best example of it. You cannot see the real benefit of the Gateway review until, in my view, three or four years' time. I think that was made quite clear in some of the publicity around the launch when we indicated the likely level of benefit and the time it would take for those benefits to come through.


 
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