Select Committee on Public Accounts Sixtieth Report


1  Managing the delivery and operation of large scientific facilities

1. Since 2000 the Department has allocated over £860 million for the construction of 10 new large scientific facilities and has earmarked a further £270 million for five more facilities. The projects range in size from the construction of the Diamond Synchrotron in Oxfordshire (£383 million for phases I and II)[2] to the construction of a new light source for studying matter, the Energy Recovery Linac Prototype (£21.3 million). A list of the first ten projects is at Annex A.[3]

2. The Office of Science and Innovation, part of the Department of Innovation, Universities and Skills, in consultation with the Research Councils, is responsible for overall science policy. The Research Councils are the main public investors in civil research in the UK. Each Research Council is responsible for deciding the research priorities and for overseeing the provision of the large facilities within their remit. By July 2007 there were eight research councils: the Biotechnology and Biological Sciences Research Council, the Economic and Social Research Council, the Engineering and Physical Sciences Research Council, the Medical Research Council, the Natural Environment Research Council, the Public Accounts Facilities Council, and the Arts and Humanities Research Council.

3. The Office and the Research Councils aim to strengthen the UK's science base, and maximise its contribution to UK economic development. The Office has created a Large Facilities Capital Fund to meet part of the cost of funding new facilities; and the Government has established a Public Accounts Facilities Council, partly to create a more integrated approach to providing large facilities.[4] The Council was formed from the merger of two previous Research Councils, the Central Laboratory of the Research Councils and the Particle Physics and Astronomy Research Council.

4. There has been evidence of some good project management in the delivery of large facilities but signs of slippage amongst some projects yet to be delivered. The RRS James Cook was delivered within three months of the original target date and within its original budget. Three projects, however, which were at the build stage or were finalising their procurement strategy, were running a year behind schedule and for five the latest forecast capital cost exceeded the initial budget (Tables 1 and 2). The Diamond Synchrotron (Phase 1) had cost £10 million more than its business case budget, which had however included no element for contingencies. The Public Accounts Facilities Council reported that in general the cost increases had reflected changes in the scope of individual projects.[5]

Table 1: Project progress against planned delivery dates



Project

Year project approved

Planned completion date
Actual or forecast date of completion as at March 2007

Number of months delayed
Diamond Phase I
2001
Sept 2006
Jan 2007
4
RRS James Cook
2002
May 2006
August 2006
3
ISIS second target station with first suite of instruments
2003
Sept 2008
Oct 2008
1
Energy Recovery Linac Prototype (Note 1)
2003
March 2006
Oct 2007
19
Halley VI operational
2003
Antarctic summer 2008-09
Antarctic summer 2009-10
12
HECToR
2004
Dec 2006
Sept 2007
9
Muon Ionisation Cooling Experiment Phase 1
2004
End of 2006-07
Nov 2007
8
Laboratory of Molecule Biology
2005
June 2009
May 2011
23
Institute for Animal Health
2006
Nov 2009
Dec 2009
1
Research Complex
2006
March 2009
June 2009
3

Source: National Audit Office


Table 2: Project progress against approved capital budgets




Project


Stage of completion at March 2007


Approved budget £ million (see note)
Latest reported forecast of capital spend as at March 2007 £ million


% change
Diamond Phase I Operational
253.2
263.2
4
Diamond Phase II Being built
100.0
120.0
20
RRS James Cook Operational
40.0
40.0
0
ISIS second target station with first suite of instruments Being built
133.1
145.6
9
Energy Recovery Linac Prototype Being built
12.9
21.3
65
Halley VI Investment decision taken and construction due to start in December 2007
34.0
38.0
12
HECToR Being built
65.0
59.4
-9
Muon Ionisation Cooling Experiment Phase 1 Being built
9.7
9.7
0
Laboratory of Molecule Biology Preparing procurement strategy
155.0
164.0
6
Institute for Animal Health Prepared procurement strategy and preparing for investment decision
121.0
121.0
0
Research Complex (excluding infrastructure) Prepared procurement strategy and now preparing for investment decision
26.4
26.4
0
Total
950.3
1008.6
6

Note: Budgets and estimates are on a consistent cost basis for individual projects. There are, however, differences in cost bases used between projects.

Source: National Audit Office analysis of Research Council data

5. The Research Councils are forecasting significant increases in operating costs for five of the six most mature projects, for two of them more than 80% over the figure appearing in the original business case (Table 3). The Public Accounts Facilities Council will bear most of the impact totalling about £27 million per year. The Research Councils will have to bear the cost of any increased spending. The Department believed that where facilities had been built to date, Research Councils had the resources to operate them. But if there were a shortfall in resources for operating new facilities, Research Councils might have to make serious choices about using them.[6]

6. The Department accepted that the estimation of likely operating costs had not been satisfactory and there should be better benchmarks to predict costs. In the defence field, for example, such calculations were more sophisticated.[7] Project teams had to abide by the Treasury's Green Book on Project Appraisal and Evaluation and follow best practice.[8]


Table 3: Changes in estimated annual operating costs since project approval


Project

Expected life years
Estimate in approved business case £ million (see note)

Estimate at March 2007

% change
Diamond Phase I and II
25
24.4
46.1
89
RRS James Cook
25
2.8
3.5
25
ISIS second target station
15
5.4
9.9
83
HECToR
6
5.4
8.2
52
Muon Ionisation Cooling Experiment
3
1.6
1.8
12

Note: Estimates are at 2006-07 prices and exclude depreciation and capital charges;

Source: National Audit Office

7. Some project teams have encountered difficulties in recruiting people with the right project management expertise. For the RRS James Cook, for example, the team employed a consultant at a cost of £1 million to help manage the design and delivery phases because it needed specialist project management skills for this project. The Research Councils were trying, however, to move away from hiring one-off project managers for each project. The Public Accounts Facilities Council intends to establish and maintain a cadre of experienced people to provide the generic project management skills required. The cadre will also be tasked with capturing and sharing best practice across the Research Councils.[9]

8. The Wellcome Trust is contributing £53.6 million to the cost of the Diamond Synchrotron but, in general, the taxpayer rather than the private sector is meeting most of the capital cost of these facilities, even though the Research Councils expect them to benefit the economy at large. Taking the example of the Synchrotron, the Public Accounts Facilities Council believed that its economic benefits would be too far into the future for industrial companies to take an immediate interest. But industry could buy into the facility, and the team managing this project had earmarked around 5% of its initial capacity for industrial companies willing to pay, rising to 10% at a later stage.[10]


2   This figure includes £53.6 million from The Wellcome Trust Back

3   C&AG's Report, Figures 1 & 2 Back

4   C&AG's Report, paras 1.2, 1.5 Back

5   Qq 21, 22; C&AG's Report, Figures 7 & 9 Back

6   Qq 8, 24, 25; C&AG's Report, Figure 8 Back

7   Qq 1, 23 Back

8   The Green Book: Appraisal and Evaluation in Central Government - HM Treasury Guidance 2003 Back

9   Qq 10, 11, 21, 56; C&AG's Report, para 2.6 Back

10   Qq 3, 6, 31 Back


 
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Prepared 13 November 2007