Improved processes for the management and control of projects introduced
Many major transport projects have cost substantially more and taken longer to complete than expected, hampering the delivery of the Assembly Government's wider transport objectives, says a report out today by the Auditor General.
The report shows that the cost of 18 major transport projects completed between late 2004 and early 2010 increased by 61 per cent, from early estimates totalling £366 million to £592 million.
Just under two thirds of the total cost increase occurred before the start of the main construction work. While some projects also experienced significant cost increases and delays during construction, others have been delivered to time and cost during the construction phase. Overall, the performance of individual projects varied significantly.
Projects cost more and took longer to complete for a variety of reasons, although construction price inflation and deferral because of budget constraints have been significant factors. Other reasons have included environmental mitigation; poor weather; unforeseen work, including utilities work; protracted negotiations, for example over land costs and compensation; design changes; and the time taken to complete statutory processes.
The report recognises that the Assembly Government has strengthened its processes for managing trunk road projects, which are under its direct control, but the full impact of its improved processes is, as yet, unclear. For example, the Assembly Government has:
• sought to improve the management of project risk, including the provision of more realistic cost and time estimates;
• moved towards Early Contractor Involvement as its preferred approach for contracts worth more than £18 million;
• taken action to improve project performance during the construction phase; and
• introduced new Welsh Transport Planning and Appraisal Guidance which, alongside Office of Government Commerce gateway review processes, should improve project evaluation.
The Assembly Government has also exercised greater control over the local authority managed transport projects it funds. Before 2009-10 the Assembly Government had exercised only limited control over these Transport Grant funded projects despite carrying most of the financial risk. The Assembly Government is also introducing revised funding and management arrangements to provide more effective control over delivery of projects identified in the new regional transport plans.
The report makes seven recommendations to support further improvements in respect of:
• the Assembly Government's information systems and processes for reviewing and evaluating project and contractor performance;
• developing common guidance to support the delivery of all major transport projects, whether managed by the Assembly Government or by local authorities;
• relationships between the Assembly Government and/or local authorities and utility companies, to help mitigate the risk of cost increases and delays due to utilities work; and
• the Assembly Government's oversight of local authority managed transport projects that it funds.
Auditor General for Wales, Huw Vaughan Thomas, said today:
"Cost increases and delays in major transport projects are by no means unique to Wales, but there has been an inevitable knock-on impact in terms of the Assembly Government's ability to deliver its wider transport programmes. The action taken to try and improve the management of individual projects is important, but the Assembly Government also needs to be realistic about what it can deliver within future transport budgets based on robust estimates of likely project costs and timescales."
Notes to Editors:
• The Assembly Government funds major road and rail improvement projects through three main programmes of work; the Trunk Road Forward Programme, the Transport Grant Programme, and the Rail Forward Programme. Between April 2002 and March 2009 the Assembly Government committed £986 million of capital expenditure across these three programmes.
• The report's analysis of project performance focuses on the delivery of 18 major road and rail infrastructure projects completed since 2004, of which 10 projects were the subject of more detailed review. The report also includes information and case studies relating to other ongoing projects
• Other recent reviews in other parts of the United Kingdom have highlighted similar concerns about the delivery of major transport projects in line with early cost and time estimates. These reviews are summarised briefly and referenced in Box 9 at Appendix 1 of the report.
• The Wales Audit Office is independent of government and is responsible for the annual audit of some £20 billion of annual public expenditure. Its mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identify and spreading good practice across the Welsh public sector.