Programme will deliver return on investment of £2.4bn over three decades
The permanent secretary of the Department for Work and Pensions has rubber-stamped the feasibility and value for money of the organisation’s 10-year £700m workplace transformation programme.
In a recently published accounting officer assessment – which is required for all new additions to the Government Major Projects Project – Peter Schofield revealed that the programme was “formally started in 2021”. A senior responsible owner was appointed in early 2022, and a business case was submitted in March – and subsequently signed off by HM Treasury.
The programme, which will be implemented over the course of the next decade, will involve “organisational, cultural, digital and estate changes [that] will alter how the department’s people interact with their workplace”.
“The Workplace Transformation Programme… is a ten-year programme which will reshape how, when and where the department’s people will work, resulting in the delivery of an estate that is ‘smaller, better, and greener,’ in line with Government’s aspirations for its core public estate,” Schofield said. “This will support the ongoing service modernisation and transformation work, while driving for efficiency with the implementation of a flexible workplace. The programme provides an opportunity to remove underutilised space whilst creating an estate that meets the department’s strategic needs.”
The perm sec assessment revealed the results of his review of the four key aspects on which new major government projects are assessed: regularity; propriety; value for money; and feasibility.
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He concluded that the regularity test is met “as the programme does not require any primary or secondary legislation… [and] HM Treasury approval for the programme business case” has already been provided. The propriety threshold has been passed as the project demonstrates “best use of commercial options to manage costs”, according to Schofield.
The perm sec revealed that the business case had set out planned spending on the programme of £693m – with a return on investment of almost £2.4bn over a period of 30 years. This equates to an overall “net present value – after discounting – of £776m”.
Schofield added: “The programme faces risks that all long-term capital investments endure due to macro environment changes. However, there is significant headroom in programme net present value for these changes to be mitigated and absorbed… [and] the value for money test is met.”
The last of the four tests is feasibility, an area in which the departmental chief acknowledged that “as with most major programmes, this programme is carrying a number of risks, primarily around supplier capacity and inflation”.
“The risk of insufficient supplier capacity due to high demand in the construction industry is mitigated through the use of multiple suppliers,” he said. “Supplier capacity will continue to be monitored by the programme to ensure that early warning signs are identified and acted upon. The programme also faces an inflationary risk given rising costs within the construction industry. Mitigation includes close monitoring to ensure that planned works continue to demonstrate value for money.
“With planned mitigation, the feasibility test is met.”
All four tests have been passed, in Schofield’s assessment, green-lighting the continued rollout of the project.
The permanent secretary said: “The implementation of more flexible ways of working, as smarter working is embedded and PAS3000 [BSI smart working] standards achieved, will improve the lives of the department’s people. The estate design, footprint and location will result in fewer, better-quality buildings, supporting Places for Growth and the Levelling Up agenda. Investment in the condition and future sustainability of the estate will support the greening government commitments and net zero carbon targets. The department occupies 20% of the government’s civil estate and, as such, is the fourth largest producer of greenhouse gasses within government.”