Q31 Stephen Barclay: But an objective?
Sharon White: It may be part of a broader piece, but the issue of delivery is more important than specifying an IAAP that may feel quite micro and very easy to bypass for a particular Permanent Secretary.
Q32 Chair: I will go to James and then Austin. Come back in very quickly, Mr Pitchford.
David Pitchford: I will try to do this quickly. One of the things I would suggest is that, having been a Permanent Secretary in Australia, where I ended up with 73 objectives in one year, it becomes very difficult. I would like to respond by saying that the process I would recommend is that my organisation should get together with these Permanent Secretaries to talk about how important IAAPs could be in meeting their overall delivery responsibilities. If you look at it from the point of view of the power of the management tool, that would be a much more productive way of doing it. Having talked to Sir Bob about my role in helping to implement the overall reform plan, that is the thrust of our approach. I think that will be productive. We are not going to let it go, but we are going to come at it from a sort of collaborative approach.
Q33 James Wharton: Mr Pitchford, Dr Van Grondelle indicated that in the commercial sector he would expect assurance measures to be about 0.2% to 0.5%) of the capital cost. I am just looking at what you are trying to do. You are looking after projects of £376 billion-205 different major projects that you have to worry about. I have done a quick calculation, which is broadly right, that 0.2% of that-the very lower end-would be about £750 million, yet your budget is about £6.3 million this year, which is less than 1% of the 0.2%) of the capital costs, which was seen to be the lower end in the commercial sector.
Chair: If your arithmetic is right, James-the new GCE.
James Wharton: Absolutely. Are you spread too thinly? Do you need more resources to do the job properly?
David Pitchford: It does put your place in the universe at question, doesn't it? It is not so much a question of being spread too thinly, but where the Government find themselves and my Department finds itself is what we are going to have to deal with. The situation in terms of the resource allocation is not up to me, but it is up to me to try to deal with what I am required to use.
I have heard Marc before-I came across him when he was at Shell-and these companies have got massive resource capabilities. The reality of it is that this Government in this situation are trying to arrive at a strong forward way in relation to the way they do their major projects. We simply do not have the luxury of being able to allocate the numbers of staff and resource that these huge corporations do. If I may just continue a little, the percentage of people allocated to the task cannot be the way that we need to go about this. Simply on the MOD alone-I said to Mr Bacon, when I was here last time, that we could actually dwell on the MOD just by itself. That is not because the MOD is not very good at what it does; it is just the size of the piece. If you look at-in your Report, I think it is on page 22-the size of the obligation that the MOD has, the only way that we can be centrally aware of all of it would be to change the way we go about it.
Madam Chair, we have talked about this before, and I said we would have to prioritise to do what we can do and during the space we can do it. It would be dreamland to have anywhere near the access to that level of staff.
Q34 James Wharton: Absolutely. I accept that you are not going to get up to that sort of level, but at a more base level, could you do with more? Do you think, given that we are effectively investing to save the Government are spending money so you can stop projects running out of control that will cost us money in the long run-that we are spending enough to get the maximum benefits out of the work that you do, or should you have a department that, without putting a figure on it, is significantly larger but can do more and might save more in the long run?
David Pitchford: Because of what I have said before, we have had to come up with a different way of attacking this. The way to attack it is to teach, educate and expose people to how they can become much better at their jobs, rather than put a whole heap of more people into the assurance base. This is where the Major Projects Leadership Academy will pay off in the mid to long term. We will actually show people how to become much better at this, to make strong impacts into their Departments and therefore require less resource generation into the MPA, because we will have a whole bunch of disciples, if you like-it is probably not the right word-in Departments, rolling this out in a cascade that we think will give us a much longer-term and better outcome.
Q35 James Wharton: I have one final question and, if that is all right, I am going to ask a double-barrelled question to get it in. You are talking in the future sense, Mr Pitchford, and I understand that you are saying, "This is where we want to get to", but what about today and doing the assurance work today? Again, just to come back to the question I asked previously: do you have the resources you need to effectively do that today, not to prepare it for the future?
The second part of my question is: given the resource constraints that you have and the focus that, because of their size and political significance, you have to put on certain big projects, is there a danger that you are missing out on some of the smaller projects where problems may arise, and that you are unable to assess future problems that could be coming along the track because you are focused in certain areas and are not perhaps as attuned to picking them up as you might be?
David Pitchford: That is fair. Because of the nature, complexity and cost of the projects that we have to deal with, we need to dwell on the high-risk, high-value and high-reputational-damage-potential end of the spectrum. In the MPA, we have to think about what we call the pyramid of priority. At the top are the projects that we see are within those three areas of priority, and below are ones that are currently not of the risk and value. I agree with you: just because they are medium-to-low risk does not necessarily mean that they are well run, but the focus for us has got to be to dwell on the more high-risk end.
Q36 Meg Hillier: I want to push on that particular point a bit more. You talked about reputational risk and financial risk. I can see that as a Minister or a Permanent Secretary of a Department, you might have a lot of pressure for reputational damage. But you are looking at the public pound. Perhaps this is a bit for Sharon as well. Which one would trump? I am sure that you are not going to give me a definite answer, but I can see that the reputational damage to any Government is going to be a big driver, whatever the financial situation. How do you resist that when it is more important to look at the money?
David Pitchford: It is really applied through a joint approach between the Treasury and the Department to come up with the portfolio priority itself. Briefly, how this works is, when we set the MPA up, the Treasury spending teams, my organisation and the departmental management team agreed what would be the priorities within the Departments from the perspective of those three things. We were also looking not only from the perspective of Secretaries of State and Ministers in terms of reputation, but in terms of the bottom lines and reputation of Departments as well. That is how we structured them.
I think the numbers are roughly these, but I will check. If I give you the wrong ones, I will correct them. We use the DFT as a sort of target in how to set the portfolio up. My recollection was there were roughly 200 or so major projects under our definition of, "If your project is outside your departmental expenditure limit and you require a spending approval from the Treasury, then you are on the portfolio." We would work together to establish which were the priority projects. We did that with those roughly 200 projects. I think there are 15 projects within DFT that we concentrate on and prioritise.
Q37 Chair: Can we just stick to resources for a minute? I know that Amyas wants to come in. How many full-time people do you have?
David Pitchford: If I can get them to stand still long enough, we have 38.
Q38 Chair: How many did you have last week, then?
David Pitchford: We have 38, but I have a whole lot of other resources that we use across Whitehall that we have marshalled through other means, which I could talk about if you want me to.
Q39 Chair: They are in the Report. There is a difference between having someone working within the project and having external assurance.
David Pitchford: That is true, but we are also recruiting and using interventionists across Whitehall, not just reviewers. These are people who can come in and be used to, if you like, parachute commercial or contract management capability into failing project teams. It is much broader than just reviewers.
Q40 Chair: James asked the question in one way. I would put it to you in another way. With only 38 full-time equivalents, accepting that you are training up people and running projects to do it better, and accepting that you can get your interventionists from elsewhere, it almost feels that you have been set up to fail. That is what it feels like. The impact that you can have with such a small unit is so minimal. You may well rescue and manage universal benefit, but given the enormity of the challenge facing the public sector and the failures that Richard has watched over the past 10 to 12 years, with 38 full-time equivalents and a little bit here and there, you are set up to fail.
David Pitchford: I am probably going to have to let you observe that, I am afraid.