Public Administration and Constitutional Affairs Committee
Oral evidence: The Government's management of Major Projects, HC 1631
Tuesday 11 June 2019
Ordered by the House of Commons to be published on 11 June 2019.
Members present: Sir Bernard Jenkin (Chair); Ronnie Cowan; Dame Cheryl Gillan; Kelvin Hopkins; Dr Rupa Huq; Mr David Jones; and Eleanor Smith.
Questions 173-286
Witnesses
I: Nick Davies, Programme Director, Institute for Government.
II: Professor Denise Bower, Executive Director, Major Projects Association.
Written evidence from witnesses:
Witness: Nick Davies, Programme Director, Institute for Government.
Q173 Chair: Welcome to this session on the management of major projects—the inquiry that PACAC is pursuing at the moment. I welcome our first witness. Please introduce yourself for the record.
Nick Davies: My name is Nick Davies and I am a programme director at the Institute for Government.
Q174 Chair: Thank you for being with us. We will ask some short questions. If you could avoid giving too long answers, we would be very grateful. If I think you are going on a bit too long, I may have to pull you up.
You have written that decisions about infrastructure are “beset by politically motivated short-termism”, and you stress that a longer-term approach is needed. How do you think that can be achieved, when the reality is that the Government of the day will always want to decide their infrastructure priorities and be subject to political pressures?
Nick Davies: That’s quite right. These decisions will always, ultimately, be political, and it would not be possible or desirable to take the politics out of these decisions. It is ultimately about spending billions of pounds on the priorities of the day. Of course politicians should make the final decision. However, this is about how you can take a more long-term approach and, particularly on the biggest projects, preferably a cross-party approach, because only when they are cross-party are these projects likely to last.
In recent years there have been some very positive developments along those lines. For example, we have been very supportive of the creation of the National Infrastructure Commission and its role in undertaking an independent, evidence-led and expert assessment of the nation’s infrastructure needs, and making recommendations, but then leaving it to the Government of the day to make the final decision.
However, we think there are some things the Government could do to strengthen the role of the National Infrastructure Commission. For example, it has been set up as an executive agency of the Treasury, but more properly, its form should follow its function. Other independent advisory bodies, such as the Committee on Climate Change or the OBR, are set up as non-departmental public bodies in statute. In terms of the longevity of the NIC, that would be much better.
Similarly, although all of the commissioners are experts in their own right, overall the group of commissioners is quite London-centric. Given that, particularly with major projects, there is a question about the distribution of spending, it would probably be better if there were greater representation from the regions and from other areas. Finally, we think that the National Infrastructure Commission’s remit for the next national infrastructure assessment should be expanded to include housing. I think the NIC has shown, for example with the Cambridge-Milton Keynes-Oxford corridor, that it can make sensible recommendations about transport and housing, while leaving the decisions to politicians.
Q175 Chair: Those are very interesting recommendations—about setting it up as a statutory NDBP, and about representation. To what extent do you think infrastructure is a UK question, rather than a question of England, Wales, Scotland and Northern Ireland?
Nick Davies: I certainly think that some of the largest projects need to be done at the national level, but it is also the case that decision making around infrastructure is too centralised at the moment, and the realisation of a lot of the benefits of the biggest projects—HS2, for example—will be very dependent on the capability and actions of more local parts of government, be that combined authorities, local authorities, etc.
Q176 Kelvin Hopkins: My feeling about this is that it is too close to the Treasury and central Government, and that the Government will not appoint likely gainsayers for big projects because they do not want to be embarrassed. Even the National Infrastructure Commission is a little bit under the thumb of Government. Is that fair?
Nick Davies: Certainly its first chair was very independently minded, which I think was probably beneficial in its early days. Generally, I do not think it has been too cowed by Government; it has made the recommendations that it wants to make. However, I absolutely think that the impression of independence is almost as important as actual independence, which is one of the reasons why we think it should be set up in a more independent way as a non-departmental public body.
As with all independent bodies, its effectiveness is partly dependent on how influential it is with Government. It was set up by a former Chancellor, who was very supportive of it, and by all accounts the current Chancellor is quite supportive, but you do not know how future Administrations will be. Setting it up in statute and for the long term would therefore be preferable.
Q177 Dame Cheryl Gillan: Don’t you also have to be very careful how you staff the National Infrastructure Commission? For example, when Lord Adonis was heading it up, he had a complete conflict of interest because he also set up HS2. How could he then make objective recommendations to Government?
Nick Davies: I certainly think that Government needs to be really careful when it is picking the commissioners. Avoiding conflicts of interest is very important. Certainly Sir John Armitt does not have the same kind of conflicts; I think he is broadly well respected across the field.
Q178 Dame Cheryl Gillan: But of course when Lord Adonis was heading the NIC, it was a very critical time for making decisions over HS2. You could say that the advice that Government received could not possibly have been objective or beneficial at that critical time.
Nick Davies: Obviously a clear part of the NIC’s remit is that it is not really meant to comment on existing projects, or on policy decisions that have already been made. With its first set of reports, a huge number of decisions had already been made about various projects, including those like HS2. Over time, as the NIC becomes more established, there will be fewer decisions that have been made without it having had a say before the project has been initialised, as in the case of HS2.
Q179 Ronnie Cowan: How does the national infrastructure assessment feed into Government priorities?
Nick Davies: That is a really critical question. In terms of the success of the NIC, it is too early to judge, because part of the answer will be how the Government responds to the national infrastructure assessment. We previously called for the Government’s response to be in the form of a national infrastructure strategy, and we are really pleased that the Government has now committed to doing that, but it is fair to say that some Government strategies are more strategic than others. Some strategies end up being effectively just a laundry list of policies that have already been agreed.
In order to be effective, the Government needs to think very carefully about how the recommendations that it is accepting from the NIA will interact with existing policies from Departments. For example, how will the NIA interact with the plans under the industrial strategy? What about national policy statements? Indeed, we think that, in future, national policy statements should flow from and help to implement the decisions made in the national infrastructure strategy.
Q180 Ronnie Cowan: Are the headlines of the assessment not covering areas that should already be covered by Government Departments? Low-carbon energy and digital technology are the top two. Should they not already be taken care of?
Nick Davies: Clearly the NIC is looking much further ahead than, in general, Government Departments perhaps have the bandwidth to do. I think it is a question of how the NIC’s longer-term recommendations will interact with the shorter-term priorities that individual Departments have.
At the end of the day, the national infrastructure strategy should be a document that can be used to prioritise between different projects. At the moment, we have eight Departments and 26 Ministers, all of whom have responsibility for some aspects of economic infrastructure. Historically, there has been very little co-ordination between those Departments, even though—particularly for the biggest projects—it will be the interaction of the work between Departments and with local government that sees the benefits of those projects realised.
Q181 Ronnie Cowan: How do you interact with the devolved Parliaments?
Nick Davies: Clearly, where there are devolved competencies, the NIC, when making its recommendations, should be taking on board the plans that are already in place and thinking about how those can fit across a whole-UK strategy.
Q182 Ronnie Cowan: Do you advise the devolved Parliaments? Do you advise the Scottish Parliament?
Nick Davies: I certainly think that the devolved Governments, as with local authorities and combined authorities, should all be feeding in their thoughts to the NIC as part of the national infrastructure assessment process, and should consider carefully the recommendations that have been made by the NIC. Obviously, where the competencies have been devolved, the decisions should ultimately lie with those devolved authorities.
Q183 Ronnie Cowan: The competencies have been devolved, but if you look at UK infrastructure, some projects will necessarily cut across borders. Who do you talk to?
Nick Davies: In terms of who the NIC should talk to, they should talk to everyone. In general, from the people whom we have had discussions with, the sense is that the NIC has been pretty good at reaching out to important institutional stakeholders, whether that is Departments, authorities or devolved authorities. The NIC has generally done a reasonably good job of stakeholder engagement. Where they have been less good, which is perfectly reasonable, given how young they are and what their existing capacity is, they have probably done a bit less of the public engagement than they could have done, but I think they have plans in place to do more of that for the next national infrastructure assessment when they have more of a run in to it.
Q184 Ronnie Cowan: What should Ministers be making of it now?
Nick Davies: Clearly, the national infrastructure strategy is being co-ordinated by the Treasury, which is the right thing to do. I hope there are cross-Government discussions going on about how that strategy can be put together and how it can be a guide for the work of individual Departments, so that the response that comes out provides a clear vision of what the Government plans to do, rather than being just a laundry list of existing policies.
The national infrastructure strategy should provide that prioritisation. I hope that the strategy will also include plans about how they are going to upskill and increase the capacity of sub-national bodies to deliver projects themselves. Clearly, that is something that will happen with time. It is a bit chicken and egg: they do not want to devolve powers before they have the capability, but it is difficult to build capability before they have the powers to do anything with them. I hope there is a Government plan in place in the strategy.
Chair: You hope there is.
Nick Davies: I hope there is, yes.
Q185 Chair: What would that plan look like?
Nick Davies: For example, it might say that we know that part of the benefit of major rail projects is that new conurbations and housing developments can be developed as part of that. Clearly, a lot of that work is going to be overseen by local authorities, combined authorities, LEPs and so on. Currently, we do not think they have the capacity to properly plan around those major projects. We think that, for example, staff teams in Government Departments, as a starting point, might perhaps be helpfully transferred on a temporary basis over to those sub-national bodies to increase their capacity. Over time, they might plan to devolve funding, revenue-raising powers and so on to those bodies so they can build their capacity.
Q186 Chair: It is highly ironic that you should be making that suggestion at the moment when neighbouring MPs and I are grappling with a road-rail crossing at Manningtree in my constituency, which is a choke point of great significance for the railways and the roads. It is a very expensive and large project to do, but it is of incidental significance to Network Rail, Highways England, or even the county council. How practically would the district council avail itself of this plan to make that happen—or two district councils working together, because it is at a county border?
Nick Davies: I obviously do not know that specific example in detail. Clearly there is a question, with all these decisions, about the appropriate level for the decision to be made at, in terms of the wider benefits and the local significance. In general, I think that too many of those decisions are still the responsibility of central Government; broadly, more local tiers of government should be given that power. I am not quite sure what the specific answer is in that case.
For bigger projects than that, such as trams in Manchester, if you speak to the leadership in Manchester, they will say that it is crazy that they need to get approval from DFT or the Treasury for these projects, given that they are entirely within Greater Manchester. Even with a project on that scale, you could give far more power to local bodies.
Chair: That is very interesting. Are there any other comments on that?
Q187 Ronnie Cowan: Can I just drag you back to something? I have had a quick look at my notes. The Infrastructure Commission for Scotland is working on a 30-year infrastructure project. Has it been included or approached?
Nick Davies: I would assume so, but I honestly do not know the answer to that.
Q188 Dame Cheryl Gillan: There’s a saying that any fool can spend money. When Government money is being spent, there always seems to be a blank spot as to what the benefits are. How robust do you think the scrutiny is of the anticipated benefits of major projects?
Nick Davies: I think that benefits are, in many ways, even harder to forecast than costs. That is particularly the case for the biggest projects. For projects undertaken on a regular basis, you can reference the costs and benefits against other similar projects. However, with the biggest projects, there are very few similar projects, and it might be the first time that that has happened, certainly within the UK and perhaps even internationally. It can be very difficult to forecast for those projects.
The other thing with the biggest projects is that they are said to have, or can have, transformational impacts on the wider economy, and traditional cost-benefit analysis is not designed to try to measure those. Although Departments, particularly DFT, have done quite a lot of work to see how they can include dynamic effects on the economy into their forecasts, the science on how to do that well is still fairly young, and there is no single right answer.
A lot of the consultancies, for example, which have their own models about how you would determine the potential of those transformational benefits, can come up with slightly different answers. Clearly, to a certain extent, if your winning business is dependent on coming up with a fairly big number, there could be some perverse incentives there. Some of their models are also black box models, and at some points, it is unclear how much understanding individual Departments have of the model that is being used.
Q189 Dame Cheryl Gillan: So basically you are saying that the scrutiny of these major projects is not robust, but is very variable and not an exact science.
Nick Davies: Yes; it’s really difficult to do it well. I don’t think we should pretend that there is an easy way to do this that they are not doing—it’s just hard. However, I think you are absolutely right that these transformational, dynamic impacts on the economy are sometimes considered as part of the strategic case for projects, and aren’t submitted to the same kind of scrutiny that the rest of the economic case for projects is.
Q190 Dame Cheryl Gillan: Who should be accountable for scrutiny of major projects? Where would I find that accountability?
Nick Davies: The scrutiny will take place at different points within the process. For example, within the Department for Transport, I think there is a separate unit that does some of the assessment, so that it is taken out of the responsibility of individual teams.
More widely, there is clearly a role for the Infrastructure and Projects Authority to properly assess the case being made on the biggest projects. We have previously called for the economics capability of the IPA to be increased, so that it can play that role more effectively. Clearly, there is a role for the Treasury as a whole as well. Ultimately, it will be the responsibility of the Minister involved, but also the accounting officer within a Department and the SRO.
Dame Cheryl Gillan: But isn’t it impossible for Government to scrutinise these projects with any degree of expertise? For example, HS2 is the largest infrastructure project in Europe, yet it is the responsibility of a junior Minister in the Department for Transport, who has other responsibilities. This is no reflection on the junior Minister, who is an excellent Minister, but surely that accountability, and Government carrying out that scrutiny, is impossible when you’ve got an arm’s length body like HS2 Ltd.
Nick Davies: I think there is a question about scrutiny of arm’s length bodies versus projects that are run in-house. Certainly the NAO has said that it has subjected HS2 Ltd to just as much scrutiny as if it were being run within a Department. The NAO has picked up issues, for example around salaries, and people in the senior leadership of HS2 have subsequently moved on.
It is difficult, though. Clearly a project of this size will have many moving parts and many thousands of people involved. It can be difficult to hold any single person to account, no matter what the development structure is.
Q191 Dame Cheryl Gillan: So basically they get a life of their own, and end up being too big or too complex to fail.
Nick Davies: I think even some very complex projects have failed, or at least have not realised the benefits that were expected of them. They can build their own momentum. Once certain decisions have been made, it can be difficult to cancel a project. Individual ministerial careers can be bound up in getting projects through; sometimes you do not want to be the person who has rocked the boat. HS2 has actually had quite a lot of cross-party support historically, even if that is potentially no longer the case.
Q192 Dame Cheryl Gillan: I can’t help but add that that is because it did not affect their constituencies; obviously I declare an interest: it badly affects mine.
You have talked about the lack of consistency across Government Departments, and about the Department for Transport trying to develop its own formula. How consistent is practice across Departments, in fact? Are there Departments that are really not very good at this at all, and that need to improve? What is the impact of that inconsistency across Government when deciding what projects to invest in?
Nick Davies: There is probably more consistency in how the monetary benefits of projects are assessed, but less when you are looking to monetise non-monetary benefits. The Department for Transport has done a lot of work on standardising things like travel time, while DEFRA has done a lot of work on standardising environmental impacts. Departments that are doing similar projects very regularly are fairly consistent, but the bigger question is about Departments that are not undertaking those types of projects regularly; I think it is questionable whether they are learning from the best practice of the Departments that do it more regularly.
Q193 Dame Cheryl Gillan: Would there be an argument for setting up an area of expertise—in the Cabinet Office, for example—that could work across all Departments?
Nick Davies: Potentially. One of the things that individual Departments can say when a central unit is set up in the Cabinet Office or the Treasury is, “They’re very well-meaning, but they’re quite a small team and they’re not involved in day-to-day questions in the way that we in the Departments are. Actually, we have far more expertise than they do.”
While it is helpful to get intelligent challenge, sometimes that is not what we get from these understaffed units. If you were to do that, you would need to think very carefully about how you would give them sufficient expertise to do that.
Q194 Dame Cheryl Gillan: But it is not something that you would rule out as a way of dealing with the inconsistency across Government Departments and enabling a resource to be available to Government for scrutinising.
Nick Davies: No. As I said, we think that there would be value in increasing the economic capability of the IPA, for example, so that it was better placed to scrutinise the economic cases put forward for major projects.
Q195 Eleanor Smith: I have a supplementary question. You have talked about the economic benefits, but who actually saves and how is that sold? You also talked about the combined authorities; how much buy-in do those groups have?
Nick Davies: The economic case is just one of the five cases that are made for individual projects. Actually, although it is often put forward as the main deciding factor as to why a project has gone ahead—because in some ways, for example, it is easy to say that for every £1 we will invest, we will get £4 back—in most cases it is the strategic or political case that is the main justification for projects that go ahead. That is perfectly reasonable. As I said, these are ultimately questions of politics.
Cost-benefit analysis gets quite a bad name, however. It is generally invoked as, “This is the single number that justifies why we should go ahead with this project,” or you hear the complete reverse, which is, “If we justified all our decisions based on cost-benefit analysis, we’d never do anything,” neither of which is particularly fair. At the end of the day, it is a useful tool that politicians can and should make use of, and which, if anything, is currently under-utilised in the decision-making process.
Q196 Chair: I want to pick up on that, because on the basis of cost-benefit analysis, you would never build any railways. You would build only roads.
Nick Davies: It depends. Some projects can have reasonably high BCRs, some will have lower than roads or, indeed, you might invest more in cycling or walking infrastructure and so on. As I say, it is one tool that can be used, but we should not blame cost-benefit analysis. For example, some people blame it for under-investment in parts of the north, but actually, I do not think that it has been a driving force behind that at all. That is largely a political decision, because there are some individual projects in parts of the north that have been under-invested in that actually had quite high BCRs.
Q197 Chair: Some of us in the home counties think that we suffer from under-investment because we are very prosperous already and we do not need the investment, but the result is that the infrastructure is very under-invested in. Take the Jubilee line extension, which is my favourite, because any cost-benefit analysis said that that was not worth it, but we cannot imagine life without it now. Why are cost-benefit analyses so hopeless at assessing what real value is?
Nick Davies: I am not an expert, but my understanding is that there are some questions around—for example, the Jubilee line is meant to have helped the redevelopment of the docklands and so on, but there are other arguments that it was actually the DLR and some of the other policy making processes around that. It is quite difficult to disaggregate the impact that the Jubilee line itself had. The other question is obviously not, “Was it overall a positive thing and do we enjoy using that infrastructure?”, but, “Would the however-many-billions the Jubilee line extension cost have been used more effectively and brought more benefits if we had used them for another project?”.
Q198 Eleanor Smith: To come back to HS2, which happens to be at the northern end, it feels that—I am sure this is not the case—Crossrail has had lots of money poured into it, and I do not know whether many people were against it, but HS2 seems to be getting quite a lot of stick. I just wondered—I do not want to put any political view on you—how you see it. As somebody from the midlands, it feels as though any time money is spent in the midlands, it suddenly feels like the wrong decision, but when it is spent in the south, it is okay.
Nick Davies: Our question about HS2 was always that the decision to invest in it seemed to have been made outside of a broader transport strategy, never mind a broader strategy for investment in infrastructure full stop. Clearly it is a huge amount of money and clearly there will be benefits of building capacity on that line, but the question is whether that money could have been better spent elsewhere—for example on intra-city transport links, rather than inter. We do not know, because I do not think the Government truly considered all the alternative options.
Chair: Very interesting.
Q199 Mr Jones: To continue the same theme, the cumulative monetised benefit of the GMPP’s transformation and service delivery projects is claimed to be £330 billion from a cumulative cost of £83 billion. How much weight should we put on those figures?
Nick Davies: Clearly that is quite a high benefit-cost ratio. The Treasury’s guidance in the Green Book is always that BCR should be given in a range, rather than a single figure, so I would be interested in what the answer is if you added up the lower ends of the ranges, versus if you added up all the mid points of the ranges, which is how I suspect they have got that number. The bigger question, though, is that I would ask to see the evidence. Can they show that similar projects have delivered similar benefits historically?
The problem is that the Government are simply not collecting the data necessary to make those decisions. They are not systematically collecting even basic data like out-turn spending versus estimates, about actual time taken versus estimated time taken, and aggregating that and using it to inform future decisions. Indeed, for the biggest projects, it is not systematically undertaking full evaluations of where their expected benefits were realised.
Q200 Mr Jones: These benefits are particularly startling—they are effectively fourfold. Do I take it from your answer that you are sceptical, or would that be putting words into your mouth?
Nick Davies: I’m certainly always sceptical where a claim is made without evidence and I don’t think there is strong evidence to support that based on the benefits that were realised from previous similar projects. I may be wrong—maybe the IPA has that data—but as far as I understand it, they do not have the data, even though I think the IPA does recognise the importance of data.
Q201 Kelvin Hopkins: A very simple question: why do projects often cost so much more than originally planned?
Nick Davies: I think there are a few reasons. The first is strategic misrepresentation—that people who are involved in the individual projects might have a stake in them going ahead and it can sometimes be tempting to understate potential risks.
The second is optimism bias. Generally, we think that projects are always going to take less time, cost less and deliver more than they generally will. That is a broader human failing, as much as anything else.
The third is anchoring and adjustment. Often, Ministers will identify that a project will cost a particular amount and take a particular time very early in the policy development process, before many of the risks are fully understood. Once that anchor is set, it can be very difficult to adjust those estimates, even as information becomes available at a later date.
Q202 Kelvin Hopkins: You have anticipated my next question. Is there not a high degree of Government deception? When they want something, they are just going to go ahead with it. There is the political will. They will play a figure, years ahead. For HS2, the £50 billion is clearly nonsense. Anybody with half an iota of brain will know that it is going to cost well over £100 billion, if it is ever built, and some people, even inside the project, secretly leak out that it is going to cost £200 billion—for a project that is, in many people’s view, a complete waste of money, but that the Government are determined to go ahead with at this stage. Is Government deception not something that we need to deal with?
Nick Davies: In general, I think the deception tends to be unintentional—most people genuinely believe—but I certainly think it is true that Ministers do not do justice to the uncertainty of big projects at early stages, and therefore make unrealistic promises about how much they are going to cost and how long they are likely to take. Even when the Ministers may have changed and the SROs may have changed, they are still stuck with those original numbers, and it can be very difficult to shift from those.
Q203 Chair: When you’ve got a project like Crossrail that becomes praised for being on time and on budget, over a long period, and then we find that it is not on time and it is not on budget and all the new trains are sitting in the sidings, and there is a sort of great shame attached to the failure of the budget and the timeline, what should the people accountable for the governance of that project have been doing, not to avoid the overspend or the extension of the project, which may have been unavoidable, but to anticipate it, so that it happened more gently? What has gone wrong in the governance of the project?
Nick Davies: Clearly there has been a major communications breakdown of some sort. I think it is a little unclear, at least to me, whether that is a breakdown between the frontline and middle management within HS2, between middle management and senior leadership within HS2, or between the senior leadership of HS2 and their departmental sponsors. Clearly at some point—maybe at several points in that process—information that should have been passed up has not been passed up.
Q204 Chair: So what stifles the flow of information, and what needs to change, so that a Minister accountable for a project or a project delivery authority can ensure that the information flows?
Nick Davies: It is really difficult, because it is partly about a culture in which bad news is welcomed rather than criticised. If you think that your future career progression is going to depend on hitting certain milestones, you will work very hard to hit those milestones. Even if you might not quite have hit them, you might try to present the story as if you were. That is a classic human failing.
Q205 Chair: So Ministers, Parliament and the Public Accounts Committee have to get used to welcoming bad news.
Nick Davies: I certainly think there is a way of being open and honest about bad news, which means that it can be not only recognised as the bad news that it is, but taken on internally, so that lessons can be learned from it and changes made as a result of it. That is the key thing: it is not just the bad news, but learning from it.
Q206 Kelvin Hopkins: Based on what you have been saying—again this relates to some of my questions—I suggest that we live in a more authoritarian society, in that people who have critical views will often ruin their careers by expressing those critical views publicly. They are terrified, so they take the money, move on and hope that someone else will take the flak when it all goes badly wrong. Isn’t that what is happening?
Nick Davies: I certainly think that may be the case for big projects. I can think of a few—not just Crossrail—where the project has gone wrong, and then the relevant Minister and SRO have gone on to bigger and better things. Clearly, there is a role for Select Committees there in calling back Ministers, SROs and permanent secretaries who have moved on.
It is partly about ensuring that people are in place for longer. For example, universal credit had particular problems in the early days, because it went through five SROs in under a year. It also went through five project directors in a few years. Since we have had a consistent SRO, since 2013, some of the initial problems are being ironed out, but there are clearly some residual issues from those early days that are difficult to resolve. Consistency of staff is a good way of resolving those issues.
Q207 Kelvin Hopkins: Inside big projects such as HS2, because people are being paid such vast sums of money and are benefiting considerably, isn’t there a culture where they know that that will continue, as long as they tell the Government that everything is okay, that it is all going to work out well and that the costs are okay, and they will continue to take their £500,000 a year or whatever? If they ever get to a point where they are fearful that it might all go wrong, they move on. There is a conspiracy inside organisations to feed out misleading information about costs.
Nick Davies: I don’t know the extent to which that is the case, but if it were the case, it would be the responsibility of Ministers. If Ministers are giving the impression that the passing on of any bad news will leave that executive to be hung out to dry, of course that will influence the behaviour of that executive.
Q208 Kelvin Hopkins: Sometimes, Ministers in the House have to defend what has been decided by someone else, whether the Prime Minister or the Department. The Minister has to carry on and stand there, sometimes defending the indefensible. We have all seen that, as Members, when Governments send up a Minister to defend the indefensible.
Nick Davies: That is why we would like much more openness at the beginning of projects about the uncertainty that is associated, particularly with these big projects. There are aspects of these big projects that simply cannot be predicted in advance and Ministers should acknowledge that. Benefit-cost ratios, cost ranges and time ranges should all be given as a range, rather than saying, “This project will cost £50 billion on the nose and we will be done on 1 April 2026.”
Q209 Kelvin Hopkins: We have already covered how cost-benefit analysis is seen as a hurdle rather than a useful tool, but how can processes be changed to promote genuinely honest discussions about the costs, benefits and risks of projects, without condemning people who make critical comments to outer darkness and the end of their career?
Nick Davies: We have called for better separation within Departments between project teams and teams that are assessing the potential benefits of those suggested projects. Similarly, we have suggested beefing up the capacity of the IPA so that it can provide greater scrutiny.
There is a role for Ministers as well. If you do not have an economics background, trying to understand the ins and outs of a cost-benefit analysis can be extremely complicated, but it is the Minister’s responsibility to be curious and to scrutinise the claims that are being made to them by civil servants. Similarly, they should be welcoming civil servants coming to them and saying, “Minister, based on our analysis, we do not think that this project is going to be successful.” If the Minister, perfectly reasonably, then decides, “But we want to go ahead for other reasons,” that is great, but they need to be open and honest about what the reasoning for the project is. Currently, I just do not think that there is sufficient transparency about the decision-making process for how projects go ahead.
Q210 Kelvin Hopkins: To finish my questions, can I give you just one example about the dishonesty involved in all these major projects, specifically HS2? Apparently, we are going to have 18 trains an hour in the first phase of HS2, each of which will be like a Eurostar train with 20 carriages carrying potentially over 1,000 people. That means at least 20,000 train seats going each way to and from Birmingham in an hour and perhaps 150,000 a day. You are talking about a substantial proportion of the population of Birmingham. It is complete and total nonsense, but that is what it is being claimed that they are going to do. Friends of mine who recently travelled on the train back from Birmingham said that there was hardly anybody on it. The capacity problem is not there.
Nick Davies: Clearly it is easier to predict whether the technology will allow you to run a certain number of trains than to predict how many people will actually be on them. Certainly for previous developments such as HS1 or Eurostar, demand projections were significantly higher than the real figures. That contributed to the difficulties that the original finances got into. Yes, that is quite difficult.
Q211 Kelvin Hopkins: There are some projects, are there not, that are still important historically, even if the costs are high and the benefits are not as claimed? With the channel tunnel, I would have thought that if we can put millions of pounds’ worth of freight through it, as well as the passengers, it would start to pay for itself.
Nick Davies: Yes. Again, as with the Jubilee line extension, the question is whether that money might have delivered more benefits if spent elsewhere, even if we are enjoying it and finding it valuable and it works well in its current incarnation.
Chair: We will move on. David Jones.
Mr Jones: The Government have announced the end of PFI and PF2—[Interruption.]
Chair: Sorry—Rupa Huq. I beg your pardon.
Q212 Dr Huq: Sorry, but I have been holding my tongue a long time. I have HS2 running through my constituency, I have Crossrail and I have Heathrow, so I have a lot to say on these things.
I want to ask you about alternative models of funding, not just the standard public purse. I want to ask first about PFI and then move on to charitable ways of funding major projects. Your institute, the IFG, has reported that incentives are skewed in favour of private finance for major projects. What are the implications of that?
Nick Davies: Yes, we have argued that there are a number of reasons why private finance might be favoured: first because of our fairly narrow fiscal targets and the approach to accountancy that we take; secondly because the evidence base is pretty poor and there is no consistent way of assessing between public and private finance options; and thirdly because of budgeting demand. All those factors slightly favour private finance.
That said, it should obviously be noted that the number of PFI and PF2 projects has shrunk to a trickle, and the Government have subsequently said that they will not be doing any more of them. Certainly, historically that has been the case, but we have also been told that a number of permanent secretaries in key Departments have said they will not do any more PFI projects because, historically, they have been so problematic.
We are not against PFI; our main problem is that Government have shown a shocking lack of curiosity about whether it delivers benefits. There is some evidence that PFI projects are more likely to be delivered on time and on budget, but it is questionable whether that is due to private finance tending to be agreed much later in the project development process, when costs and time are better known and there is less uncertainty. Most of those benefits appear to come from passing the risk on to the construction firms responsible.
The bigger question is: what is the lifetime cost of private finance versus public finance? We do not really have a good idea, because that would require setting up comparator projects—some public and some private finance—but we did not do that in the late ’90s and early 2000s, when a large number of PFI projects were signed off. Subsequently, I understand that DFE has done a bit of that with its recent school building programme, but ultimately we do not have a clear idea of whether the supposed benefits of private finance outweigh the additional financing costs that come with it.
Q213 Ronnie Cowan: There was a clear example where the Scottish Government scrapped PFI to take on a different financing model. There are clear comparisons of how much benefit there can be from moving away from PFI.
Nick Davies: I am aware of the different model used in Scotland, but I must say that is not something we have looked into in great detail.
Q214 Dr Huq: Do you have a rule of thumb for when it is appropriate to use private finance for a major infrastructure project and when it is not?
Nick Davies: I suppose the first thing to say is that PFI is, obviously, private financing of publicly funded—taxpayer-funded—projects. A large amount of infrastructure is privately financed with less concern, such as the privatised utilities. For example, most energy infrastructure planned will be privately financed, but that is corporate finance as opposed to a PFI model. Generally, there is less concern about its use there. In general, financing decisions should be based on what will produce the lowest lifetime cost for the taxpayer or service user, depending on how it is ultimately funded.
Q215 Dr Huq: Okay. I want to move on to the mixed model, and the largely charitable donations through which the garden bridge was financed. It seems to be a new Labour idea to prime something with Treasury funds at the beginning, and in the end it will pay for itself. The bridge was going to sustain itself with events on the bridge, although from an engineering point of view it did not balance with the stuff built on it. The bulk of the £43 million of public money spent on it was lost in an arm’s length charitable vehicle, the Garden Bridge Trust.
I wondered if you had any ideas on making those kinds of things more accountable, to protect taxpayers’ money. The initial DFT thing has all been swallowed up, and the charitable trust is untouchable. Nobody wants to admit responsibility. I think this model can work; Coin Street market came out of that scheme, and there are major projects on the cards: Crystal Palace park, the holocaust memorial centre just over the road and the London Centre of Music. How can we avoid those mistakes?
Nick Davies: The Charity Commission said rather unfairly that there was a systematic failure of the charitable sector. I think it was a systematic failure showing how Government often can be beguiled by high-profile people pitching high-profile projects. I think the failure is much more similar to the failure that happened with Kids Company, where there were a number of high-profile backers and not enough scrutiny was given to the potential business model. It sounds like there were some failures by the trustees, but I think the bigger failure was by DFT and TfL in signing off the money without a clear idea of how it would be spent or whether the project would be delivered.
Q216 Dr Huq: The thing Dame Cheryl was suggesting—having an overall catch-all thing that could scrutinise it all—would be a good idea in this case.
Nick Davies: Certainly, I think more scrutiny should have been given to the proposals there.
Q217 Dr Huq: It seems like a huge buck-passing. DFT says it is TfL says it is the Mayor of London. It is going to disappear soon; the charitable trust winds up this month, and then it will be impossible to do anything about it.
Nick Davies: In general, with that type of funding, and with capital funding full stop for charitable projects, the question is whether it is realistic to expect ongoing charitable donations to fund the revenue costs of maintaining those assets, and that goes for not just infrastructure like that; for example, many local authorities have handed over library services to groups of volunteers. In one way, that is a great idea, because volunteers already play a big role in the library service, but if they are not realistically going to be able to raise the funds to run that, it does not matter whether it is run by the state or the voluntary sector. It needs the revenue funding to deliver.
Q218 Chair: It also goes back to the question of who is accountable for a project. It seems to me that there needs to be clarity about accountability right from the outset. On the other question about the Scottish equivalent of the private finance initiative, is that something you could give some study to, given your expertise in looking at PFI in the England and Wales context, to give us some analysis about?
Nick Davies: Yes, we could certainly try to send you some thoughts on that.
Chair: That would be very useful, thank you. We will see what we can learn from that.
Q219 Mr Jones: The Government has announced the end of PFI and PF2. What impact do you think that will have on the private funding of projects, and what should be put in their place?
Nick Davies: Clearly, the Government needs to think about where the private finance that it had earmarked to come from PFI and PF2 will come from instead. There are a variety of other options; there are different private finance models that can be used that are not PFI or PF2, and there is also public financing, of course. The Government also needs to think about how it is going to replace some of the finance that has been provided by the European Investment Bank. Certainly, the Government has a lot to think about there, and I do not think, to date, it has set out sufficiently clear plans for how that gap is going to be filled.
Q220 Mr Jones: Have you any thoughts as to how the gap could be filled privately?
Nick Davies: We have not given that a huge amount of thought, to be honest.
Mr Jones: Okay. Thank you.
Q221 Chair: Can you explain what is wrong with funding infrastructure from Government borrowing, given that the Government can borrow at less than 1% over 10 years?
Kelvin Hopkins: Indeed.
Nick Davies: I think it is important to distinguish between funding, by which we tend to mean who ultimately pays for it, and that is usually the taxpayer or service users through bills, and who then finances it, whether that is, again, the taxpayer, or whether it is privately financed. Certainly, the Government is always going to pay a lower rate on its borrowing than a private vehicle will do for its borrowing.
The arguments that have historically been made for private finance are that it can bring in expertise that does not sit within the Government and is more likely to deliver services on time and in budget, and that by financially incentivising those companies and wrapping up the financing with the construction, design and build, you can find efficiencies. There are logical reasons why you would think that private finance might deliver some benefits. The question is whether those benefits are going to outweigh the additional cost of the public borrowing. As I said before, we simply do not have the data to judge whether the whole-life costs of those privately financed projects have been lower or higher.
Q222 Chair: But why is it not possible for the privately led, designed and delivered projects to use the public sector as the bank, instead of a private bank? The public sector as a bank can lend much more cheaply. Hinkley Point would not be charging such an enormous amount for electricity if it had been funded by Government debt as opposed to private debt, which is 300 basis points more expensive.
Nick Davies: Yes, absolutely. Historically, one of the reasons for that is because Governments have wanted to keep projects off the balance sheet, which is not a good reason. Clearly, while they do not show up on the balance sheet, they still show up as liabilities on the whole of Government accounts, and there is little practical difference between having to make regular payments on Government borrowing versus having to make regular payments to a PFI project. I do not think that the accounting rules or our fiscal targets are a good reason for using private finance.
Q223 Chair: What should we be recommending in our report as a consequence of all that?
Nick Davies: That where private finance is used, it should be assessed in terms of its impact on liabilities across the whole of Government accounts, and that comparisons should be made on that basis with publicly financed projects.
Chair: Thank you; that is very helpful.
Q224 Dame Cheryl Gillan: Can I return to my theme of having somewhere that really examines these projects and learns from them in central Government? From your remarks about HS1 and what we know now about Crossrail being over budget, not delivered on time and failing in so many ways, where should the evaluation of the delivery of those projects lie in Government?
Nick Davies: There is a question, on the one hand, of who should have responsibility for undertaking the evaluation, and on the other hand, who should have responsibility for analysing and aggregating all the evaluations that are done in order to produce better reference forecasts, for example. Certainly, I think it would make sense for the Departments themselves to take lead responsibility for evaluating projects, but ideally there should probably be some sort of central recommendations—as indeed, there already are—about the best ways of going about that, so that it is done in a consistent manner.
In terms of the collection, collation and analysis of that data, in many cases that might be better done by someone like the IPA, so that they could then use that to inform future assessments.
Q225 Dame Cheryl Gillan: Do you think that at the moment, lessons are learned well from former projects?
Nick Davies: Some parts of Government do this quite well. We have previously given the example of Highways England and POPE, which is the post-project evaluation framework that they have used. Using that, they have managed to reduce significantly the variance between their estimates and what has actually been delivered. Clearly, in many ways that is easier for Highways England, because they deliver a large volume of very similar projects, and therefore it is easier to develop that consistency over time. It is less easy with one-off mega-projects, for which there are fewer comparators.
Q226 Dame Cheryl Gillan: What about energy?
Nick Davies: I do not have any examples off the top of my head. That doesn’t mean there aren’t any, though.
Q227 Dame Cheryl Gillan: When you return to the IFG, if you have any examples in the energy sector, it would be particularly interesting to see that, because of the current debate around the future of the energy industry and the costings of, for example, nuclear build, which have escalated and caused issues.
Nick Davies: Yes. Obviously with nuclear, where you are using a design that has been built or is attempting to be built elsewhere, there are lessons that can be learned from that. Obviously, some of the designs are new generation designs and have not been used before, and indeed even where they have been used before, those projects have not necessarily finished yet. However, clearly, we could potentially learn from those international examples where they exist.
Q228 Dame Cheryl Gillan: Moving on to what information you gather, to what extent does inadequate data collection restrict the Government’s ability to learn, and to improve its delivery of major projects? It would seem to me that there is a gap in data collection.
Nick Davies: Yes, entirely. We think it is a huge failing of Government that it does not systematically collect, collate and use data from previous projects to inform decisions about future projects.
Q229 Dame Cheryl Gillan: Who is responsible for that failure, or who is responsible for ensuring there is adequate information available to you?
Nick Davies: Individual Departments, but we also think there is a role for the centre. The Treasury in particular is very good at controlling spending; it has historically been less interested in potential benefits, and in tracking those over time.
Q230 Dame Cheryl Gillan: Do you think there would be an alternative to the Treasury? The Treasury always seems to accrue power to itself. Would there be room for a unit like that within the Cabinet Office, for example?
Nick Davies: I think the IPA is a reasonably good model. It is shared across both the Treasury and the Cabinet Office. Ultimately, the centre of Government seems as sensible a place as any to put these decisions. Ultimately, the Treasury will be taking many of the decisions. It has responsibility for responding to the National Infrastructure Commission. It clearly has responsibility for allocating funding to individual Departments. I think it makes sense to recognise that power already lies there, and to try to make the system work as well as possible, given that.
Q231 Dame Cheryl Gillan: Where you have evaluations such as the IPA’s RAG—red, amber and green—ratings, to what extent do you think those are helpful, and are they based on reliable and robust information?
Nick Davies: The process for deciding those RAG ratings is quite opaque. As an external viewer, they are not hugely informative, given that by the time we see them in the annual report, they are already a number of months old. Clearly, the IPA has more detailed and up-to-date information. It may be the case that those RAG ratings are changing more regularly and effecting behaviour internally, but externally they could be a more useful scrutiny tool.
Q232 Dame Cheryl Gillan: Do you think there is ever justification for withholding those RAG ratings from, say, Parliament or the general public? Surely it would helpful and of great assistance to see what those ratings are.
Nick Davies: In general, we are broadly in favour of far greater transparency. Clearly, there can be a need, in some cases, to provide a space for internal discussions, etc. As we have discussed, scrutiny is not always positive, in terms of welcoming bad news. In general, there are a huge number of experts, in academia and elsewhere, who could make use of some of that data.
To be fair to the IPA, it has a project called Project X, which provides some of the data from its major projects to academics. That is done on a private basis, so that it will not be shared. They can draw on that expertise to help with analysis, without it being public. That is a positive model, but I think it could go further and make it more public.
Q233 Dame Cheryl Gillan: Is it not true to say that if you fail to reveal red and red-amber warnings at an early stage, you run a much higher risk of that project having a catastrophic failure later on, rather than having the correct evaluation made of it, perhaps within the strategic model?
Nick Davies: Yes. If there are major projects that have gone wrong at an early stage and already appear to imperil the potential benefits that were claimed of them, the Government should be far more willing to cancel those projects, rather than worry about the money that has been sunk into them already. Absolutely, if a project is not going well, it should be ended, and the money that had been earmarked for it could probably be used more effectively elsewhere.
Q234 Chair: You described how private analysis is shared privately with academics in order to support the project managers. What is the justification for information and analysis being shared, processed and analysed in that private space?
Nick Davies: My understanding is that the data is used broadly to help IPA analysis. I am not sure about the extent to which the data is provided to assist with individual projects. It might be more cross-cutting data. Other witnesses might know more about that.
As to why it is kept private, I presume that there may be concerns about commercial confidentiality and providing the policy-making space that is necessary sometimes to change minds. I am not sure. The IPA would probably be able to give you a better answer on that. Certainly, we think that that data should be made more public.
Chair: We need to inquire more about that. Eleanor Smith.
Eleanor Smith: Oh, right.
Chair: I have done it again. Sorry, Rupa. I missed myself out, too.
Q235 Dr Huq: I have one question on the churn of senior officials and then two others related to the garden bridge project, which you mentioned before. Churn among senior responsible owners and other senior officials on projects is frequently highlighted as a problem. I was at a Crossrail meeting the other evening. That now has its umpteenth CEO since my time in this place and I have only been an MP since 2015. HS2 also goes through them. To what extent does that churn among senior staff impact the quality of the project management?
Nick Davies: Yes, it absolutely does. I cited the example of universal credit, where there was a huge amount of churn between 2012 and 2013. It is right to note that levels of churn have roughly halved recently. I think it was about 17% or 18% on a quarterly basis, and it is now down to more like 8%. Clearly, the Government have made some progress there and have been focusing on it.
Given the fact that Ministers often move in under two years, having the consistency there in terms of the civil service can be really important, particularly on these hugely complex projects, in order to ensure that there is some institutional memory there. It could probably be taken further. For example, there could be more targeted pay progression. We think that every Department should have its HR director on the board. You could also require permanent secretaries to publish key turnover data and to report on the steps that they are taking to reduce it, particularly in key positions such as SROs on major projects.
Dr Huq: To the general public, these people have salaries that look like telephone numbers, and they get rewarded for failure. Every time they move on, they get some bonus as well, when they have screwed up. On HS2 again, I have a whole area locally that is very affected. They feel very distant and uncaring. Their compensation schemes have been more friendly to people in rural communities. It is not even about whether you are in an urban community. The people in Euston have had a lot of mitigation because it is a site of historic value, but if you are in east Acton, it is neither here nor there. It is not a place of rural outstanding beauty and it is not a place of national significance. It is just forgotten. These people have been dumped in the middle of it. Part of it is that the CEOs at the top keep shifting on.
Chair: We need a question.
Q236 Dr Huq: I have a couple of questions that relate to the questions that are coming after. One of the issues revealed by the garden bridge debacle was that it was just one single public agency, Transport for London, that was asked to support and facilitate on the one hand but also to scrutinise and provide oversight of the Government funding on the other hand. Is that good practice? Should the same agency be invested with the delivery of the project and also tasked with providing financial oversight?
Nick Davies: It is possible to have some separation within individual agencies or Departments. You can have separate teams set against each other. I don’t necessarily think that the scrutiny needs to be external. Ideally, you would try to have both. You would have someone within the Department or within the agency that is not directly involved in the project delivery that scrutinises it, but you would also have another body, such as the IPA, scrutinising the benefits and so on that have been claimed.
Q237 Dr Huq: Again, it is judge and jury, and marking your own homework. To the general public, it stinks.
Finally, given the high-profile failures of TfL in relation to the garden bridge and Crossrail, should the Government be considering when and how TfL is put in control of central Government spending? Should there be a case that they are not allowed to do that anymore?
Nick Davies: I am not a huge expert on TfL, but it is notable when you go and talk to other local agencies, be that Transport for Greater Manchester or Transport for the North and so on, that everyone recognises that, of the sub-national bodies with responsibility for transport, TfL is by far the best equipped in terms of its capability, capacity and expertise. So even if there are improvements that could be made, it is still quite a long way ahead of any other similar bodies in other parts of the country.
Dr Huq: Okay. There is definitely room for improvement.
Q238 Eleanor Smith: Does the use of single-use entities for delivering major projects impact on knowledge, retention and management?
Nick Davies: I must say it is not something that we have looked at in a huge amount of detail, but even if there are single-use bodies delivering, it could clearly still be the responsibility of the parent Department to take more care to learn the lessons and transmit those to future individuals with responsibility for similar projects. There are ways of mitigating that.
Chair: Thank you very much indeed. Unless we have any further questions—
Q239 Kelvin Hopkins: I have one quick further question. You mentioned bad news about major projects. Bad news about major projects is now usually ignored, disparaged or suppressed. Would it not be more sensible to radically change procedures to accept bad news, and to abandon nonsensical projects but be bold about it?
Nick Davies: Yes.
Kelvin Hopkins: Good.
Chair: Thank you very much indeed for being with us.
Witness: Professor Denise Bower, Executive Director, Major Projects Association.
Q240 Chair: Welcome to our second witness. Thank you very much for being with us. I hope you have enjoyed the show so far.
Professor Bower: Absolutely.
Chair: Could you identify yourself for the record, please?
Professor Bower: I am Professor Denise Bower. I am the executive director of the Major Projects Association. I am also a professor at the University of Leeds, in the School of Civil Engineering.
Q241 Chair: Thank you very much. First of all, as a membership body, what is the Major Projects Association’s view generally of how the Government manages major projects?
Professor Bower: The Major Projects Association has been around for almost 40 years, with the sole purpose of encouraging our members to share their knowledge and experiences of things that have gone well in projects and things that have gone not so well in projects, so that future project initiation and delivery can be improved. Our view is that the Government in the UK is no better and no worse than Governments in other developed countries, and I think that resonates with evidence you have had from previous witnesses. Having said that, we think there are four ingredients for success when it comes to major projects. If I could set those out, I think that would set the tone for why I think Government does well or not.
Chair: As briefly as you can, please.
Professor Bower: Absolutely. The first is setting a clear vision, including a statement of the benefits being sought, and judging success according to that in a range, rather than as a single-point estimate that is derived before the scope is finalised. The second is making the right start: in our view, a project that starts badly never recovers. The third is having people responsible for projects with the capability to make sound judgments, and having a governance arrangement in place that supports that. The fourth is not underestimating the importance of behaviours and culture.
We believe that not enough time is taken at the start to achieve a consensus about the economic and societal benefits being sought and how success will really be judged, so those responsible are judged against moving goalposts in a way that, in the very complex environment of a major project, seems to us at times to be a little unfair.
Q242 Chair: How is the Government doing generally, on a scale of one to 10?
Professor Bower: Generally, they are on a par with Governments around the world. The evidence shows that around two thirds of major projects fail, which is not a fabulous record, but there are good reasons for that. That is according to data from universities such as Oxford. It is also true according to members of the Major Projects Association such as IPA Global, who have a huge database of industrial mega-projects. On the other hand, the Project Management Institute recently reported that 61% of high-impact, strategic projects yield the strategic benefits being sought and that, “Overall the UK’s approach is highly mature, using sophisticated and standardised methods.” It is a mixed picture. There is definitely room for improvement, but I do not think it is as simple as saying the UK is bad at major projects.
Q243 Ronnie Cowan: So why do so many major projects go over time and over budget and not deliver the promises that were made at the outset?
Professor Bower: The reasons for project failure are well rehearsed. Putting my academic hat on for a minute, there are many studies and reports that set out the reasons for major project failure. I can list some of them now, if that would be helpful, and then we could go into those in more detail.
Lack of clear links between the project and the Department’s or the organisation’s key strategic priorities is the No. 1 stated reason why major projects fail. In other words, there is a lack of alignment right from the start about what we are trying to achieve.
Other reasons include a lack of clear senior management and ministerial ownership and leadership; a lack of effective engagement with stakeholders; a lack of capability in project and risk management; too little attention to breaking down the undertaking—this complex organisational endeavour—into manageable parts; evaluation being driven by price and based on single-point estimates rather than long-term benefits; a lack of understanding of the supply chain by the senior leadership; a lack of effective integration between clients and sponsors; and perhaps an underestimation of the amount of time to integrate this new asset into the ongoing system.
Q244 Ronnie Cowan: Why? Why all those problems after all these years? Why are we still getting it so horribly wrong?
Professor Bower: As I have said, these major projects are very complex undertakings. There is a lot of risk associated with them, and the capability required to manage them effectively is very sophisticated.
Q245 Ronnie Cowan: Okay. I will drag back my old career in IT consultancy. Rule No. 1: before you cut any code, understand the problem, because too often projects will in 90% of the time achieve 10% of the work. It is that last 10% that should take 90% of the time and effort, but of course we breenge on in at the beginning, writing code, trying to do things wonderfully and trying to get it in the timescales. If we get it wrong in the first few months, that has a knock-on effect, but we knew that, so we changed how we built the systems. Why is that not happening in major projects?
Professor Bower: There are a couple of elements here. One is that there is often a rush at the start, an enthusiasm, to just get on with it.
Q246 Ronnie Cowan: That is what I just said. Why not stop it? Why can we not educate people, and say, “Don’t rush in: stop, think, plan, organise”?
Professor Bower: Many people would concur with you. The World Bank did a study that looked at 1,000 projects and found that those that had been well prepared had an 80% chance of success. The lessons are there. We have looked across the reports from our members over the last 40 years and we have distilled out the importance of initiation, down even to headlines on a small postcard, just along the lines that you were saying: “Let’s learn those lessons, and let’s do them well.”
There are two things in terms of the nature of those who work on major projects. There is an element of the transitory and changing nature—the uniqueness of complex and major projects—that leads people to think that it is the first time that this has been done, and so they are unique and special and the lessons from other projects might not apply to them exactly. That is one challenge.
There is also an issue around “not invented here”—let’s have a go at trying something in this particular circumstance that we may not have tried before. I have to say that it is disappointing that when we know the importance of initiation, too many projects are still not properly prepared.
Q247 Ronnie Cowan: Okay, but I am still not understanding. What we are saying is that we know that we are doing it wrong but we are not doing anything to change that.
Professor Bower: We know that there is room for improvement, and many are trying to do things to change that, including the Infrastructure and Projects Authority. Work that they have done developing things like the project initiation route map and setting up the development pool of experts who can help with support and guidance are all moves to continue to improve that focus on the front end.
Q248 Ronnie Cowan: Is the pressure to crack on and get achievable things, or measurable things, achieved coming from the Government to companies, because the Government work with a very short timescale of maybe four or five years or, with this one, two or three months?
Professor Bower: Sometimes timeframes can be stated publicly when it would have been better to state a range rather than a date. That can lead to that focus on just getting on with things when, at times, it might have been better to take longer at the front end and work your way through the—
Q249 Ronnie Cowan: Does the pressure come from Government?
Professor Bower: The pressure comes from anywhere where publicly stated commitments are made about timeframes in association with a major project before the scope, and what we are really trying to achieve, has been agreed.
Q250 Dr Huq: The MPA has stressed the importance of early planning and assurance. Why is this so important?
Professor Bower: Why is it important to focus on the front end?
Dr Huq: Yes—why is pre-planning so important, would you say?
Professor Bower: I go back to what I was just setting out. There is an idea, which is held out by evidence from many organisations, including the World Bank, that a project that starts badly never recovers. It is incredibly important to focus on the front end, as I have just been articulating.
Q251 Dr Huq: I totally agree with you: it seems self-evident that of course you need to look before you leap. The Government have put in place a lot of scrutiny of project plans. In this session we have had horror stories about things that have not worked out. The garden bridge is my particular one: a lot of public money disappeared with nothing to show for it—not a single brick laid. Do you think that what is there is sufficient?
Professor Bower: There are two elements that I think our members would encourage. There is an element of support, and one of assurance. In both of those areas, developments have been made to make improvements. Focusing specifically on assurance—which is part of the governance arrangements, in my language—I think that every effort has been made to have independent assurance at all stages, almost from the first moment that a major project is conceived, going through its preparation into delivery. That assurance tends to be independent in many cases. There are mechanisms in place. You talked specifically about the garden bridge; with TFL, they have an independent assurance panel, chaired by an independent chair. Every effort is made to bring independent assurance and scrutiny to these major projects.
What I would say, though, is that many of the topics that people are asked to pass a view on are very complex. They are not simple yes/no or tick-box, checklist types of things that you can be assuring. We have been encouraging further use of independent experts, possibly people from the private sector for public sector projects, who have got a great deal of experience on really key topics, with the time to dig into them properly.
Q252 Dr Huq: Sometimes it can feel like box-ticking. Certainly, where there is no obvious place for the buck to stop, as with the garden bridge—the governance of that was so diffuse. What safeguards can we put in place? Could that happen again now? With the sports park, the music centre and so on, we need to have something in place so that public money does not disappear down the plug hole in the same way.
Professor Bower: I would hope that that could not happen again. As I say, there is really strong, independent assurance of all the major projects that I am familiar with. Where the shortcoming can be is in having sufficient time to really thoroughly investigate, at key points in the project life-cycle, the challenges that that project might be facing. We are asking people to exercise judgment on really difficult areas. We just need to make sure that we are not trying to rush those decisions through to suit these timeframes that have been set up, just to keep the rhythm of the project going—to go back to the earlier point.
Q253 Dr Huq: The last witness was saying that it was a celebrity bedazzling that happened. How can you stop that sort of thing happening, and has the delivery of major projects improved since the MPA?
Professor Bower: The IPA or the MPA?
Dr Huq: The Major Projects Association. What can we do to stop this happening again? Otherwise, it is going to happen again and again.
Professor Bower: Our role at the Major Projects Association is simply bringing our members together to share their learning and experiences. What we can do is illustrate to them where public confidence is sometimes lost around major projects. We hold seminars regularly where we talk about how to improve things going forward.
From an IPA perspective and also a central Government perspective—with assurance, which is different—I go back to the processes that are currently in place, which tend to have at least three lines of defence, and sometimes another independent project representative role from the sponsor. The processes are all there, but having the time and the expertise of people who are running those processes, who are responsible for making the judgments, is really important. That is where we are sometimes lacking.
Q254 Dr Huq: Before this thing ends in June, would there be any way to have some sort of inquiry? The Charity Commission said it has done its bit; everyone is saying that it is finished and gone.
Professor Bower: I am not sufficiently familiar with that example to say.
Q255 Ronnie Cowan: I am curious. We fairly recently finished building the South Queensferry crossing in Scotland—a beautiful bridge, absolutely stunning. Just driving across it is a joy. If we were to take that and build one across the Clyde, I like to think we would have the knowledge of how we did the other crossing and how it was financed, and we would learn from the mistakes we made the first time round, but of course, it might not be the same people building the same bridge. It would be, potentially, a different consultancy, a different construction company, different people and engineers, and so on. Is there not a case for saying that what is required to retain that knowledge and to learn from every major infrastructure project—whatever it is—is that there should be some sort of national infrastructure company that can retain that information and oversee and then feed into future builds?
Professor Bower: I am not sure that a national infrastructure company is required for retaining that knowledge. There is a great deal to be said for, where possible, keeping strong, high-performing teams together. However, sometimes, the nature of the work is such—the transport sector, defence and energy are so different in this major project environment, and the lifecycles are so long—that it would be difficult practically to work out how to keep those teams going, unless there was a huge amount of central planning of the pipeline of work that would enable that to be used effectively. Our members report that that is difficult enough within one organisation, so within Highways England or Network Rail, planning sufficiently detailed pipelines of work to keep things together, which they do try to do, but on a national scale, the practicality—
Q256 Ronnie Cowan: It is less about keeping the team together and more about keeping the knowledge together, and having a central repository, where information about how things were done can be picked up from and taken on by another team.
Professor Bower: The Major Projects Association has invested heavily in the Major Projects Knowledge Hub. That is available to members and non-members. We took a conscious decision to make it available to everybody. It is not just a repository, though we do have somebody responsible for the collation and curation of information. It’s an area where we allow people to exchange ideas about major projects. We have major projects live events in the hub, and we have digital scrapbooks. We try to engage public and private sector communities together around key thematic areas to encourage learning. Further than that, we have also invested in studies on why people, individually and organisationally, don’t learn the lessons in the way that we would hope.
Q257 Mr Jones: How adequate would you say the processes are by which project benefits are drawn up and assessed?
Professor Bower: We just heard from a previous witness how difficult it is to assess the benefits associated with major projects. Monetising the wider benefits—the socioeconomic benefits—is incredibly difficult.
To summarise our perspective, how difficult that is comes from a number of sources. First, there is no standard lexicon. If you look at estimating the costs associated with a major project, there are organisations that specialise in articulating different types of cost. Across the major projects world—so outwith one sector—there is no agreed lexicon to articulate what the benefits are. Then there is the modelling of the benefits, and the interdependence of those benefits with major projects, these projects of scale. Really, if they were not having an effect on the system, you would be asking why you were doing it. Then you have to be able to model that effectively. Again, there is no commonly agreed across-sector means of undertaking a modelling of the benefits.
Q258 Mr Jones: Why has it not been agreed? One would have thought that it would be a huge advantage if it could be agreed.
Professor Bower: It would be. Going back to my university, the University of Leeds, there has been a lot of work done there and across academia with the Treasury and other bodies to try to develop means of modelling interdependence, funded by research councils and so on. We are moving closer to it, but historically that has not been there, so it is not well established.
Q259 Mr Jones: One might have thought that it would be in the interest of Government to try to achieve that.
Professor Bower: I would absolutely agree, and I know it is also something that the National Infrastructure Commission are working on, and have been working on historically.
Q260 Mr Jones: Is it fair to say that, at the moment, a lot of these processes are speculative?
Professor Bower: They are not speculative, but they tend to be tailored to the particular undertaking that is trying to make its case in a convincing manner.
Mr Jones: Thank you.
Chair: I feel a recommendation coming on.
Q261 Kelvin Hopkins: You spoke a lot about the complexity and difficulty of making these comparisons, but some things are not that difficult, and I would have thought that, in your position, you could draw attention to them. I will give one example that you may know about: railway electrification. A recent report contrasting the costs of electrifying the east coast main line 30 years ago, and modern electrification schemes—most of which have been abandoned—showed a real-terms cost increase over that time of seven times. The cost has not just doubled; it has gone up by seven times in real terms, stripping out inflation. That is an incredible cost increase. Can we not look back to what was done in previous times, when things were right and worked, and bring that forward?
The other example is a modern thing: Hinkley Point. If ever there was a big project, that is one. I understand that even the French cannot get their new technology to work, and there is a real possibility that the whole thing might not work anyway. Costs of nuclear power often do not include the cost of decommissioning, or what you do with the waste, which lasts for thousands of years. All those things are right in your area—they are quite simple. Is it not possible to say to the Government, “You got it wrong”?
Professor Bower: I am not sure that any of those things are simple. By definition, a major project is complex. That complexity and the interaction between different areas of uncertainty leads to the requirement to be constantly reflecting and learning lessons. I agree that looking back is helpful, which is why we have always kept a record of our seminars, reports and learning over almost 40 years. We encourage our members regularly to say, “How did we do this well previously? What lessons were to be learned from that, and what can we take forward?”.
You ask about the cost associated with electrification. Seven times higher does seem much higher, although I am not an expert on cost estimating. I would say, however, that the complexity of the delivery environment in which major schemes are being delivered has also changed. One thing that we notice and encourage our members to do is think about the delivery environment around the major project and investment with which they are involved, and to understand it thoroughly and use tools and techniques such as those that the National Audit Office and the IPA have developed. They must understand the delivery environment and try to recreate it in the shape that is needed, so that the project can be as efficient as possible, if we are thinking about that project as the relatively straightforward delivery of the asset within that context.
Q262 Kelvin Hopkins: Is it within your purview to look at projects like Hinkley Point, and at what has happened in the past, and also to look at alternatives? Many of my associates in this industry say that if we invested the same amount of money in wind, solar, tidal, insulation and other renewables, it would be infinitely cheaper, in terms of cost per unit of energy, and it would never need to be decommissioned. It would also be safer and beneficial to the world in general.
Professor Bower: We would be fully behind investment in renewable energy, but there are also technology challenges due to the times when the sun isn’t shining and the wind isn’t blowing. Our commitment to driving harder towards more sustainable outcomes in major projects is demonstrated by two of our big upcoming events. We have a Prestige lecture with a focus on using innovation to drive sustainability in our major city developments, and an annual conference on the subject of driving harder and faster to achieve sustainable outcomes in major projects. We are absolutely committed. My understanding is that we need an energy mix, and that requires investment in nuclear, as well as in renewables.
Q263 Kelvin Hopkins: I don’t want to get into a debate about that, although I would like to go on about it. If you find that something the Government are behind is not sensible, and the alternatives are very sensible, isn’t it your job to tell the Government that they have got it wrong, and that they have to change?
Professor Bower: The Major Projects Association isn’t a lobbying organisation. We don’t see it as our job to tell the Government. Rather, we have the IPA as members of the Major Projects Association, and Government Departments such as the Department for Transport, and so on, and we encourage them, as member organisations, to join in a debate. We have, on average, a seminar a month, in which we unpick either a case study of a major project, or some aspect that is common across major projects engaging with stakeholders, and so on, and we engage in a debate on that topic.
Q264 Kelvin Hopkins: If it is not your job to do that, should we not have an institution whose job it is to tell the Government when they have got it wrong, to look at major projects without being be fearful of incurring the wrath of the Government and people in the industry, and to tell the truth? “Speaking truth to power” is a phrase that we use a lot. Somebody, somewhere, on behalf of the general population—the world, indeed—ought to be able to say to the Government, “You have got this badly wrong for these reasons.” We need a high-status organisation to do that.
Professor Bower: We perhaps have to reflect on the timeframes in which that would be happening. It is the role of the National Infrastructure Commission to look forward 30 years and set out the national needs assessment. It is the role of the Infrastructure and Projects Authority, within the bounds of the Treasury, to respond to that with the national infrastructure strategy. I would be wholeheartedly behind a national infrastructure development plan, so we knew what that boiled down to on a day-to-day basis.
When the projects are actually going through initiation—from policy into delivery—that is another point in time at which reflection is needed. That is probably the role of the Infrastructure and Projects Authority, working with Treasury colleagues and the Departments. When they are in delivery, again I think there are points of reflection built into that through the gateway process. Are you are looking for something in addition to that?
Kelvin Hopkins: You mentioned the National Infrastructure Commission—
Chair: I think we must move on.
Q265 Kelvin Hopkins: Just one more question. The reality is that these organisations are nervous of being critical of the Government. Indeed, Lord Adonis, who was recently chair of the NIC, was involved in a project, so he is not going to take an objective view. How do we get away from this problem of people in all sorts of institutions being under the thumb of Government, indirectly or directly, or nervous of offending the Government?
Professor Bower: To go back to one of my earlier answers, there are a number of elements of independent review associated with major projects. I really don’t get the sense that the people who are part of those review teams feel as though they are, as you just phrased it, under the thumb of Government. That is not my experience.
Kelvin Hopkins: I have made my point. Thank you.
Chair: Let us move on. That is a very interesting set of questions.
Q266 Dr Huq: To what extent does inadequate data collection restrict the Government’s ability to learn from and improve its delivery of major projects?
Professor Bower: The idea of inadequate data is an interesting one. Data and information about major projects take many different forms, and there is a vast amount of both qualitative and quantitative data available about major projects.
From a benchmarking point of view for delivery, some of our member organisations have databases—cost databases and performance databases. That includes both our academic and non-academic members. All that is accessible. In terms of qualitative data, I have already mentioned our investment in the Major Projects Knowledge Hub, where we have put a huge amount of effort into gathering information, analysis and insights about major projects going back many, many years. It is being created live as projects are being developed and delivered. The challenge is more about why those people and organisations involved with major projects don’t always learn those lessons, and don’t always access the data that is available to them.
Q267 Dr Huq: If it is available from all these different sources—if it is academic, non-academic, here, there—who is ultimately responsible for ensuring that there is adequate information to equip decision makers with?
Professor Bower: I think there are various channels. There are processes that can be built into the project lifecycle recommendations, which would refer people to appropriate data sources. That is already in place. Whether people choose to follow the guidance is a different matter—it is a bit like a doctor telling you that you need to take some medicine, and you don’t agree that it is the right medicine so you potentially choose not to take it at times—but the guidance is there, and the signposting to it is appropriate.
Then there is the people having the right capability to know how to use all the information that they are presented with. Again, investment in initiatives such as the Major Projects Leadership Academy has helped to equip those involved in major projects much better than they were previously. But still, these are really complex undertakings that we ask people to be responsible for, and so it is not as though there is one book that someone can read and, if they understand that and the information that goes alongside it, they will be successful. That might be the case with the more simple projects, but in these really complex undertakings, there are huge amounts of information to assimilate and really difficult judgments to be made. There is a lot of guidance there to help people now.
Q268 Dr Huq: A lot of significance is attached to the traffic-light system. To what extent are the IPA’s red, amber and green ratings based on robust and reliable information?
Professor Bower: The delivery confidence assessments that are made and published in the IPA annual reports—those are the red, amber and green assessments you are referring to—can be helpful. As with anything in a complex environment, they have their limitations too, but the premise of looking at whether or not the budget is likely to remain achievable, or whether the timeframe or the scope set out is achievable, and doing that within an agreed framework that is published and available, which sets out a number of parameters—eight different ones—against which those confidence levels are assessed—
Q269 Dr Huq: So the data that inform them are published—
Professor Bower: Yes. Well, the process by which they are derived is available, absolutely. To go back to one of my earlier answers, there is a reliance on the judgment of those making the assessment, and the amount of time and information—
Q270 Dr Huq: The logic of inclusion of what stays in, what stays out—that is questionable, isn’t it?
Professor Bower: It is. The overall rating—sorry, I will take a step back. There are eight different factors and each of those factors is rated red, amber or green, or a little bit in between for both—red/amber and amber/green. So each of the individual factors is rated, and then an overall rating is made, but the overall rating is not an averaging of the rest; it is, “Having thought about all these different areas, what overall rating will we give?”, and then that is what is published in the IPA’s annual report.
A couple of areas could be strengthened there—in terms of the eight different factors. For example, funding certainty is not currently one of the factors and, in my experience of major projects, funding uncertainty can certainly cause challenges. There is also a question around achievability—the recent problems at Crossrail with the systems integration have been widely reported, but that particular area of achievability of delivery is not included in the ratings either.
Q271 Eleanor Smith: How can we tell whether a project should be ended before completion?
Professor Bower: To go back to the conceiving of major projects as complex endeavours that take place over many years, saying that a project should be stopped goes back to a position of implying that it should be possible to derive a single-point estimate of budgets, time and specifications, and that if one or all of those premises will be breached, then we say, “Okay, let’s stop.” Actually, what we are trying to do with these major projects is to deliver significant benefits for the country, so when that assessment of achievability is made I think you are implying it is likely to be during the development or delivery phases, when the actual benefits are not coming on stream sometimes many years after the project has been finished. So I do not think it is as simple as to say, “Should we stop more projects?”
Having said that, if we look at projects while they are still in the preparation phase, if during the assessments there are policy changes that make it unlikely that the benefits will be in line with policy that the Government are trying to achieve, then projects should be stopped. I think in the last three years of annual reports from the IPA, on the GMPP, eight projects were reported as being stopped because of policy changes and the benefits originally expected no longer accruing. The closer you get to the delivery phase and the preparation work being done for delivery—especially where there is a physical asset or a change in customer service is being planned, and lots of preparation has been made for that—it becomes increasingly difficult to be sure that stopping the project because of short-term cost reasons, which is what people would usually say, is the right decision to make, rather than sticking with it and achieving the longer term benefits. That is a very difficult assessment, and it goes back to my point about judgment and those responsible for major projects having the capability to exercise good judgment within an appropriate system of governance.
Q272 Mr Jones: In general, to what extent would you say that the Government have a sufficient understanding of the markets in which they are contracting?
Professor Bower: The relationship between the Government and the market has a number of different elements to it. Government need to have an understanding of market appetite for some of the undertakings that they want to go ahead with. That depends on the Government being able to, say, carve up a major project, or certainly segment a major project, into chunks or packages that the market would feel capable of bidding for. That has converse implications of creating interfaces at which there is usually risk, so it is a tricky balancing act. The extent of Government understanding about how best to do that, because there is not a blueprint, could be further developed commercially.
Another element of the Government’s relationship with the market is around helping to build confidence such that the market then invests in skills and new technologies that drive innovation and improve productivity. At the moment, productivity levels in the construction sector specifically have not improved for many years.
There is also the element of balancing risk and reward and incentivising without driving perverse behaviours. That goes back to one of my earlier points about the importance of understanding behaviour and culture. We would always encourage, in any major project, thinking about the benefits that we are trying to achieve, translating those into outcomes and outputs, and aligning the supply chain around the same line of sight by which ultimately, those responsible for the projects are being judged.
Q273 Mr Jones: How good are the Government at doing that?
Professor Bower: The Government are challenged in doing that in construction because the construction sector is very fragmented. Going back, there are two reports that I can think of. In the late 1960s, Banwell reported the problems associated with the fragmentation of the construction industry. There is a philosophical understanding of the challenge. The practicalities are very difficult to overcome, and many in the world of infrastructure—as opposed to my broader world of major projects—are now trying to achieve a greater focus on alignment across the supply chain and on payment by outcomes rather than by outputs.
Q274 Mr Jones: That is the sort of thing that the Government could be doing. It is apparent from what you are saying that the Government are not doing that at the moment.
Professor Bower: It could be further encouraging that, I would say.
Q275 Mr Jones: What effect is that having on the successful delivery of major projects?
Professor Bower: I am a member of the Infrastructure Client Group, which is a supporter of something called Project 13. As I say this, I am aware that you have already heard about Project X and now I am introducing Project 13.
Mr Jones: It all sounds very sinister.
Professor Bower: I know! The remit of Project 13, and what we are trying to do as a group of infrastructure providers around the table, is to move from transactions to enterprises, to a more aligned approach where that is appropriate—there is no one-size-fits-all—and really trying to drive through those benefits of long-term working and relational contracting.
Q276 Mr Jones: To what extent does ministerial churn have an adverse effect on the delivery of major projects? It has already been pointed out that Ministers tend not to stay in post very long.
Professor Bower: Our members would report that one of the greatest challenges around that as being an inertia that comes from change at times. While new people are brought up to speed, are familiarised, and become confident in the information they are presented with and are taking on responsibility for it, a kind of inertia can sometimes come about. We started off with these questions about the drive in a major project environment to get on and do things and start to develop, and I think there is a certain potential for frustration and loss of productivity associated with that.
Where we would like to see more change would be in improving the gender balance in major projects. You have talked about churning and have heard from the Institute for Government about the challenges of that. One of the initiatives the Major Projects Association has been running for about five years now is to try to improve gender balance in major projects because we also think there is a challenge that comes from that. I really hope that your Committee will consider the many, many reports now that say that more diverse teams are more successful, creative and innovative. A flipside to the churn—if there is going to be churn, and to some extent the civil service encourages it—would be to try to get more women and more people from different backgrounds into this world of major projects.
Q277 Ronnie Cowan: As an aside to that, I did notice that if you look at the top 25 people involved in the National Infrastructure Commission, there are 13 women and 12 men.
Professor Bower: Yes, and my own board at the Major Projects Association is 50:50 gender balanced, so it is possible.
Q278 Dr Huq: What, if anything, has been the effect of the Major Projects Leadership Academy on civil service project management capability?
Professor Bower: As the chair of engineering project management, I am a great supporter of education associated with major projects, as you would imagine. I was absolutely delighted when the MPLA was established. It is great that it has been going for a long time and has educated a huge number of people in the world of major projects. The evidence of its making a change has, I think, yet to be found. There is anecdotal evidence. People report about drawing on the expertise of others they have met, about how they now have the same vocabulary, understand theoretically the constructs of major projects and complex systems, and understand some of the challenges they are likely to have to navigate. But I am not aware of actual evidence of impact of the MPLA on the world of project success or failure. It might be available and I am not aware of it, but I have not seen actual evidence of impact of a change.
Q279 Dr Huq: That is interesting—no discernible improvement to the Government management model. It has been an interesting acronym but there has been no change?
Professor Bower: As I said, the evidence I am familiar with is from people talking about major projects in a different way and being more likely to anticipate the obstacles and hurdles they might have to navigate, as opposed to—I am not going to say Project X or Project 13 now—project A would have been a failure had it not been for attendance on this particular programme. Again, I go back to how these major projects are undertakings with quite long timeframes, so at what point we would be judging the likelihood of improvement I am not quite sure.
Q280 Dr Huq: Are there enough like you—a practitioner, an engineer, and not just a grey suit? You know what I mean, the mandarin who has been in the civil service too long—
Ronnie Cowan: You’re wearing a grey suit.
Dr Huq: Okay, sorry, we are all in grey suits. Fair enough. But do you know what I mean?
Professor Bower: I think that those responsible for leading major projects need knowledge, skills and attributes that are varied, hence my commentary about trying to encourage greater diversity. I absolutely think we need to encourage greater diversity among those with responsibility for major projects.
Q281 Chair: Coming back to the problem of churn among senior responsible owners, which has improved—
Professor Bower: It has improved, yes.
Q282 Chair: How do you see that affecting major projects?
Professor Bower: Going back to my point about inertia, a major project might have taken some time in helping their senior responsible owner, who will often have only a relatively small amount of their time dedicated to any particular major undertaking. The team will have taken time helping that person understand the importance of stating ranges—ranges of dates, not just a point in time but a range of dates and a range of budgets—and understanding the benefits of the project, the wider benefits as well as the immediate ones. Where there is churn, it certainly does take time and energy of the senior leadership to have to bring the next person to the same level of understanding, and then there is a risk that we revert to these single-point statements of likely cost, likely time for delivery date and so on, and messages can become quite mixed.
Q283 Eleanor Smith: Does the use of the single-use entries for delivering major projects impact on the knowledge retention and management?
Professor Bower: Sorry, which single—
Eleanor Smith: Single-use entities, sorry
Chair: Things like delivery authorities.
Dr Huq: Like TfL being solely responsible for the garden bridge and nobody owning up to it.
Professor Bower: Yes, sorry. Again, there is no one-size-fits-all in relation to major projects. They are complex systems, and we have recently undertaken three studies into how to go about developing an appropriate client model—as I would call it in my language—for a major undertaking. That is quite different, whether it is a pop-up—a one-off, like an HS2, a Crossrail or a Tideway—or whether it is an ongoing business like a TfL, a Highways England or a Network Rail, for example.
Within those different environments, what we found is that there is a risk that people resort to the way you usually do things, tradition, and fashion. Partly because they do want to just get on with a project, they resort to what they know, as opposed to stepping back and thinking about “How would we really design this entity for the undertaking that we are now faced with? If we were to hold a mirror up and say, ‘I want to run a marathon in world-class time. How fit do I have to be to do that?’ versus ‘I want to do a 10K next week in the park’, what does that require?’” People just tend to go with either fashion or tradition.
Our studies are helping our member organisations take that step back and think about “How should I be shaped in order to best navigate this challenge ahead?” I would be advocating for people to take the time to put as much effort into designing the entity with responsibility for delivery as they do into the technical aspect, which is often what gets a lot of major project people excited.
Q284 Chair: Thank you very much indeed. This has been very useful, and I am sure we will draw some things. Is there any particular thing you would like to add at the end, in terms of what you really hope our report will recommend?
Professor Bower: What I would really hope is that point about trying to gain a consensus at the start about the broader economic and societal benefits that are being sought, and then using that as the measure of success for everything, would be incredibly helpful.
Q285 Chair: This does not augur well for HS2, does it? The objective of HS2 keeps moving. First it was “instead of a runway at Heathrow”, then it was “to reduce journey times”, and then it was “to improve capacity”.
Professor Bower: Now it is connectivity.
Q286 Chair: Now it is connectivity. If there is not stability about the fundamental, underlying objective of the project, it is not going to get much consent, is it?
Professor Bower: It is very difficult to achieve consent, absolutely. Going back to your original questions around this focus at the start, let us just take more time at the front to get that consensus. Everything else then flows from that: the level of capability required, the narrative, the engagement with the public—you know, the public feel like major infrastructure is done to them, rather than for them, at the moment. We really have to shift that, so taking that time to be really clear at the start is the most important thing that we could do to improve the likely success of major projects.
Chair: Thank you very much indeed, and we will stay in touch. If you have anything to add, please let us know.