'Optimism bias' hampers transformation projects, says NAO chief

Written by Beckie Smith on 13 November 2018 in News

Amyas Morse claims best-case scenario is often presented as likely outcome

Government departments should ease off on their pursuit of “world-leading” reforms in favour of more modest projects that are "just good enough to deliver the required benefits", the head of the National Audit Office has said, in a bid to reduce the number of over-ambitious major projects that fail to deliver their objectives.
Amyas Morse also called on Treasury teams responsible for assessing spending proposals to be more proactive in questioning whether they will deliver the benefits they promise.
Giving evidence to the Public Administration and Constitutional Affairs Committee on the government’s management of major projects, Morse said he was “sceptical” about whether the Government Major Projects Portfolio was able to deliver the level of economic benefit that the Infrastructure and Projects Authority, the body that oversees the portfolio, has claimed. The portfolio contains 29 ICT projects worth a total of £10bn, as well as other technology-centric investments, such as the rollout of the Emergency Services Network.
The IPA says the portfolio is set to deliver £330bn in benefits from £83bn in investment, but Morse said these figures were calculated based on predicted benefits, which “often diminish” towards the end of projects. He reiterated the NAO’s call, set out in a report last month, for greater scrutiny of the extent to which major projects actually meet their objectives.
He said one reason that projects fall short is an “optimism bias” on the part of officials, who present “what might happen if everything goes right [as] the most probable result, and that’s really not helpful”.
He said too often, these claims had been taken at face value and had not faced a “sufficiently hard-nosed challenge”.

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“This is something I’d like to see the Treasury spending teams doing more of,” he said. “They’re very focused on spending and they do that very well, but I’d like them to get more involved in challenging the benefits of projects.”

He also said government departments should be more realistic about the scale of reforms they are able to deliver.
“I see a lot of projects which I think are trying to be world-beating, best in class, and being just good enough to deliver the required benefits would be rather preferable," he said.
Instead, he said departments should learn from businesses where “people aren’t always trying to show off when they start a project; they’re actually trying to get the job done."
One example he gave was the Home Office’s electronic borders programme set up in 2003, which the NAO’s report last year said did not represent value for money because it had not yet delivered its objectives. “If a less visionary and breakthrough process had been used at the start I think we would have been a lot further forward now,” Morse said.
The same was true of Universal Credit, he said, which has been beset by delays and concern that it could push benefit claimants into financial hardship. He said the Department for Work and Pensions had taken a “very ambitious approach of trying to do everything on a very agile basis, which clearly didn’t work very well and I think the department had great difficulty executing”.
This situation could be avoided with better accountability early on to prevent major projects getting out of hand, Morse suggested. He told the committee he had “explicitly personally inserted” comments into the NAO’s July report into Universal Credit, saying that it was too late to go back on the welfare reform, even though it may never represent value for money.
Shortage of digital skills
Morse also said he was concerned about the impact Brexit had had on the workloads of civil servants, who were already coping with a "very overloaded programme" of major projects. The additional funds the Treasury had given government departments to prepare "can’t be commensurate" with the level of skills needed to deliver their Brexit projects, he said.
He said better cross-government prioritisation of major projects was needed, endorsing comments made by civil service chief John Manzoni in 2016 that, faced with Brexit, the civil service was “doing 30% too much to do it all well”.
“I don’t know where that figure comes from but the sentiment is definitely correct,” Morse told the committee.
“We probably take on too much and too ambitiously,” he said. “If we were a bit more modest about these things we’d probably have a much better success rate to be honest. I think we’re always over-burdening the machine.”
The civil service already faces a shortage of commercial, digital and project delivery skills, Morse said, which he added could be worsened as demand for these skills increases with an “awful lot of people [in both the public and private sectors] fishing in that same pond”.
About the author

Beckie Smith is a reporter for PublicTechnology sister publication Civil Service World. She tweets as @Beckie__Smith.

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