13 The natural tendency for organisations and individuals to be over-optimistic when considering investment in major projects underlines the need for effective independent challenge of decision-makers and the importance of clear personal accountability for the decisions made. Optimism bias, and the desire to show success, may lead decision-makers to push on and deliver something even if the outcome is likely to be materially different from, and inferior to, that originally intended.
14 Incentives to be over-optimistic are very strong, and disincentives relatively weak. Decision-makers seek short-term recognition and rewards, and are often not in the same role when the project is under way and issues emerge. Similarly, accountability of contractors for their behaviour is weak, and contractual penalties for producing over-optimistic tenders are low compared to potential profits involved.
15 We see many projects where no one person has overall responsibility for its delivery and, most importantly, the ability to take action. The Committee of Public Accounts has observed that "Senior Responsible Officers only have oversight, and not the authority and information they need, to manage the delivery of the project for which they are accountable".20 Turnover can exacerbate this issue; for example, Senior Responsible Owners for major defence projects have typically moved post every two to three years, eroding the extent to which they can be held to account and encouraging short-term gain.
16 Organisations that actively invite external scrutiny and learn and apply lessons from other projects demonstrate higher levels of success. The introduction of non-executive directors on departmental boards is potentially key. They are independent and well placed to provide an objective view; to reinforce the importance of objectivity in analysis and to provide a means of challenging plans at a time when it can make a difference and genuinely influence decisions.
In our work on Online Tax returns by HM Revenue & Customs, we found that governance of the expansion programme followed good practice. This included having a Senior Responsible Owner accountable for its success, clear roles and responsibilities for those involved, and board meetings at programme development and operational levels. Board meetings, attended by key personnel, were held as scheduled and reported on achievements, risks and issues. As a result, HMRC was able to increase take-up rates, within expected timescales and within budget.21 In the case of the re-franchising of the West Coast mainline, the Laidlaw Report commented on its 'limited ownership and ineffective oversight'. We found that roles and responsibilities were unclear and assurance processes were inadequate.22 |
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20 Committee of Public Accounts, The Major Projects Report 2010, Twenty-third Report of Session 2010-11, 15 February 2011, Committee of Public Accounts, Management of the Typhoon Project, Thirtieth Report of Session 2010-2012, 4 April 2011.
21 Comptroller and Auditor General, HM Revenue & Customs: The expansion of online filing of tax returns, Session 2010-2012, HC 1457, National Audit Office, November 2011.
22 Comptroller and Auditor General, Department for Transport: Lessons from cancelling the InterCity West Coast franchise competition, Session 2012-13, HC 796, National Audit Office, December 2012.