5 We reviewed the decision to cancel the Bicester accommodation centre against the terms of reference below which are described more fully in Appendix 1. Our main findings are as follows.
i Whether the decision to pilot accommodation centres was taken after due consideration of the need for the centres, their expected cost and benefits, and the cost and benefits of other available options to speed up the processing of asylum applications and remove unsuccessful applicants.
6 The primary driver for the accommodation centres, as set out in Secure Borders, Safe Haven, was the need to improve the handling of an unprecedented level of asylum applications. The original plans and cost estimates for Bicester did not anticipate the degree of opposition and consequent elongation of the planning process and delay to the centre's inception. Costs increased due to the delay. The Home Office had already experienced delay and increased costs in the face of strong public opposition on other controversial projects, for instance the aborted Silverlands residential sex offender treatment centre and the location of new probation and drug treatment hostels. By the time the scheme was cancelled, the start of work on site had slipped by some 14 months. A more prudent approach would have been for the Home Office to model costs under a wider range of scenarios, to get a clearer appreciation of risk. It is not clear whether this would have led to the earlier cessation of the project, particularly given the wider policy context, the changing level of asylum applications and the rapidly evolving policy response.
ii Whether the Bicester business case and the benefit realisation exercises were soundly based and reasonable.
7 The quantification of benefits was based on best estimates by the Home Office and other government departments and agencies using data drawn from current models, such as the asylum intake reduction model. The method of calculation was reasonable, as modelling using such forecasts is recognised to be difficult. It is considered, however, that the nature and timing of the anticipated benefits was probably unrealistic given other measures in hand to speed up the 'end to end' asylum process and a steady decline in the number of applicants seeking asylum. The realisable benefits expected from the Bicester accommodation centre did not equal or exceed its expected cost and this was acknowledged in the business case from the outset.
iii Whether key decisions with cost implications were taken at the right time and took full account of the risks to value for money; and
iv Whether the Home Office acted soon enough to reduce costs and terminate the project when it became clear that asylum numbers were falling and that the Bicester centre would not be needed.
8 The number of asylum applications rose sharply from 1999 but had begun to decline by 2002 (Figure 1 refers). The business case and benefits realisation exercise completed in May 2004, just before the contract for Bicester was signed, did not fully reflect asylum policy developments and an improvement in processing asylum applications in the existing system. The Home Office Gateway 3 Review3 in December 2003 clearly identified the need for the Bicester business case to be updated for policy developments and performance improvement measures introduced since the accommodation centre project was first announced, so that decisions about Bicester could be informed by the effect that it would have on the rest of the asylum system.
9 The business case referred to the need for 'successful operational handshakes' with the key elements of the end-to-end asylum process but did not refer to the steadily falling number of asylum applications or to the progress being made on processing asylum applications more quickly. The sensitivity of the value for money of the project to changes elsewhere and benefits could have been forecast over a number of possible scenarios, ranging from the full system of ten centres to none, which would have highlighted the interrelationships. The decision not to proceed with Bicester was taken shortly after the wider policy decision not to proceed with the rest of the accommodation centre programme.
10 In summary, there were two main risks to this project which needed to have been managed well. Firstly, a policy risk in that the accommodation centre concept could be overtaken by events in other parts of the asylum system (as pointed out by the Gateway Reviews3) and therefore undermined. Secondly, project management risks lay in delay, rising costs (both actual and forecast) and falling potential benefits. In the event, both of these risks emerged and combined. Falling asylum numbers, rising costs and reducing benefits made Bicester as a whole not good value for money. Some of this could have potentially been foreseen and costs reduced had the Home Office worked in a more coordinated and joined up way. There was, however, clearly a very dynamic external and policy context.
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3 Gateway Reviews are carried out on major IT-enabled construction and procurement programmes and projects. These can be reviewed at six stages of the procurement lifecycle. In the case of the Bicester project, Gateway Reviews took place at Gateways 2 and 2a (Procurement Strategy) and Gateway 3 (Investment Decision).