The role of assurance is to provide information to those that sponsor, govern and manage a project to help them make better informed decisions which reduce the causes of project failure, promote the conditions for success and deliver improved outcomes. Central government's high risk projects are frequently large scale, innovative and reliant on complex relationships between diverse stakeholders. Such projects frequently present a level of risk that no commercial organisation would consider taking on. Our previous work indicates that government's projects can fail to deliver as planned to time, cost and quality.
Independent assurance1 is valued by stakeholders and, while difficult to quantify, there is strong evidence that such assurance has been beneficial to individual projects. We estimate that the total cost to government of assurance for high risk projects is £8.3 million which is minimal compared to the £10.5 billion of annual expenditure on the 42 projects tracked within the Major Projects Portfolio (MPP). If assurance helps prevent just one of government's high risk projects from a serious cost overrun, the size of the potential saving more than justifies the investment. For example, we estimate, using information from the Comptroller and Auditor General's report, Ministry of Defence: Major Projects Report2, that if assurance contributed to just a 10 per cent reduction in the current projected cost overrun this would yield a saving of approximately £500 million.
Government has improved the assurance for high risk projects but the lack of an integrated system is limiting its ability to leverage further improvements. There are two broad areas of most concern:
● The lack of a clearly stated and enforceable mandate for assurance across government and consequences for non-compliance.
● The design of the system, particularly the lack of integration across the individual mechanisms and the reliance on point in time assurance.
This is the NAO's assessment of independent assurance to government projects but it is important to apply the same assurance disciplines to other major areas of ongoing expenditure. It is a baseline assessment against which current successes are acknowledged, opportunities to improve are highlighted and the realisation of these opportunities can be measured. Our intention is to continue to work with the key stakeholders in assurance and project delivery to help drive lasting improvement in the provision of public services.
Part 1 of the report is an assessment of the current system of assurance, a description of the main elements and our key findings on their effectiveness. Part 2 contains the high level principles and describes the core elements expected of an effective system of assurance. Appendix A provides further detail on each of the core elements including a gap analysis against the current position and a set of suggested priority actions.
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1 We define independent assurance as those assurance activities which are independent of the project or the delivery body's own arrangements. For the purpose of this report only independent assurance is in scope and we will refer to this as 'assurance'. We believe that many of the principles are equally applicable to all assurance activity. The focus of our work has been five elements of independent assurance currently co-ordinated by OGC. Gateway™ Reviews (a trademark of the Office of Government Commerce); Major Projects Review Group (MPRG); Starting Gate; Assurance of Action Plans and the Major Projects Portfolio Report (MPP).
2 Ministry of Defence: Major Projects Report 2009, HC 85-I Session 2009-10.