The public finance watchdog NAO said the government’s project management of northern rail wasted £190 million because of changes to the scope of the plans.
Most of the project’s £1 billion cost arose since 2020 as construction work started. But plans that are not needed cost about one fifth of that total. In fact, the government only agreed the full scope of its Integrated Rail Plan last year. It will cost between £9 billion and £11.5 billion on current estimates and will be completed a decade late – sometime between 2030 and 2033.
Since 2017, the Department for Transport “repeatedly” altered project plans because of differing ministerial priorities, the NAO said. This happened despite a “fundamental need” for the original plan to remain unaltered.
While the project has implemented better governance processes and learnt lessons from other large-scale projects, it faces challenges. For example, the government has yet to commit to improved rolling stock. Without this commitment, potential benefits from the upgrade may not materialise. In addition, the Department of Transport and Network Rail have no concrete plans to manage cost inflation. Labour shortages also threaten to impact the plans.
“Network Rail may have to deal with increased costs because of inflation by delaying work on the programme, or by delaying or de-scoping other rail programmes,” NAO said.
Finally, Network Rail and the government have not developed metrics that enable them to measure the success of all aspects of the project. “[They] have yet to agree with other stakeholders, including other government departments, local government and train companies, who is accountable for delivering and measuring the benefits,” it said.
Vinay Shrivasta’s feature in Enterprise Risk, Summer 2022, spelt out nine steps for succeeding in risk managing large-scale projects.
1 Ensure that you have the right person in the right role
2 Use a structured, interrogable database for risks
3 Publish “bottom-up” driven insight in concise reports
4 Adopt a portfolio risk management approach – is this the “right” project?
5 Declare, assess and review assumptions
6 Hold dedicated opportunity workshops
7 Embrace the language of uncertainty
8 Ensure that your risk management process is scaled to your needs
9 Tell stories to improve risk management culture.