Examination of Witnesses (Questions 40-59)|
WEDNESDAY 7 NOVEMBER 2001
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
(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
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 movingbecause we had
to phase the implementation of thisthe process into medium-risk
projects which, clearly, will have a lower score within this project
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 thisand
I pick this out at randomthere 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.
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.
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
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
processI dobut 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 somethingI
do not knowmaybe 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 arrangementsthere 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
(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.