26 Organisations can face pressures from the outset to try and find programme savings, sometimes known as 'efficiencies', particularly when the government wants to make a programme more affordable alongside other spending commitments. It is good practice to identify potential savings and aim to work as efficiently as possible throughout a programme's delivery. However, we often see examples of poor practice, including savings targets set with no solid basis and no detailed plan for how they will be achieved. As a result, it is rare for bodies to realise savings as planned.
27 When the potential for savings does exist, bodies do not put enough effort into developing the actions necessary to realise them. We see bodies assuming that savings will arise from adopting a particular approach to delivering a programme, a high-risk solution such as a technological change, or assuming that industry will develop initial ideas further without an explicit instruction to do so. They may also include savings in cost forecasts even when the true likelihood of realising them is low, resulting in cost increases later on when the savings do not materialise.
28 On High Speed Two, HS2 Ltd included £4.9 billion of savings within its April 2017 estimate, such as efficiencies, changes to the design and scope of the programme and price estimate reductions. These savings included those based on the benchmarking approach it used to cost the programme, such as the assumption that it could reduce administrative costs by encouraging UK industry to work closer together, as is common in European countries. When we reported on the programme in 2016, HS2 Ltd had identified where these savings might be found but did not develop them further into a programme of activity to achieve them.7 As a result, these savings were not delivered, and elements that had the most assumed savings saw significant cost increases within HS2 Ltd's 2020 cost estimate.8
29 Without sponsor and delivery bodies developing concrete plans for how savings will be realised in practice, the likelihood of their being achieved will continue to be low. Identifying the source of a particular opportunity is only the first step, and on its own does not set out who will be responsible for delivering them, how progress will be reported and when mitigating actions might be needed where savings become at risk.
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7 Comptroller and Auditor General, Progress with preparations for High Speed Two, National Audit Office, HC 235, Session 2016-17, June 2016.
8 Comptroller and Auditor General, High Speed Two: A progress update, National Audit Office, HC 40, Session 2019-20, January 2020.