UK FiReControl Project: A Case Study in Poor Project Planning and Implementation

[petagny]

The UK Parliament's Public Accounts Committee has today produced its report on the FiReControl Project. The project, intended to replace 46 local control centres with 9 regional centres and improve the efficiency and resilience of fire and rescue services, was a complete waste of at least £469 million ($ 736 million or euro 539 million). There is absolutely nothing to show for this expenditure except 8 deserted buildings with limited alternative uses for which the taxpayer will have to continue paying for the next 30 (?) years under PPP (PFI) arrangements. Only 5 of these buildings might be used in the future for Fire and Rescue Services.

Perhaps the most that can be salvaged from the wreckage is some lessons. Here are some key phrases from the press release:

'The project was flawed from the outset, as the Department attempted, without sufficient mandatory powers, to impose a single, national approach on locally accountable Fire and Rescue Services... rather than engaging with the Services to persuade them of the project’s merits, the Department excluded them from decisions about the design ...even though these decisions would leave local services with potential long-term costs and residual liabilities to which they had not agreed...

'The Department launched the project too quickly...it acted without applying basic project approval checks and balances – taking decisions  before a business case, project plan or procurement strategy had been developed and tested... The result was hugely unrealistic forecast costs and savings, naïve over-optimism on the deliverability of the IT solution and under- appreciation or mitigation of the risks. The Department demonstrated poor judgement in approving the project and failed to provide appropriate checks and challenge...

'The fundamentals of project management continued to be absent as the project proceeded...The project had convoluted governance arrangements, with a lack of clarity over roles and responsibilities...no individuals have been held accountable for the failure and waste associated with this project.

'The Department awarded the IT contract to a company with no direct experience of supplying the emergency services and who mostly relied on sub-contractors over which the Department had no visibility or control. The contract was poorly designed, lacking early milestones which would have enabled the Department to hold the contractor accountable for project delays...made worse by the Department's weak contract management and its failure to ensure the contractor followed the contracted approach.'

Now that the project has been cancelled, a further £84.8 million has been earmarked to meet the original objectives by a different means, but the Committee expressed concern '...that the Department could not tell us how it will ensure certainty of response in the event of a large scale incident, or whether the £84.8 million will provide value for money.'

I guess the only positive aspect of this is that it demonstrates that external scrutiny works reasonably well in the UK, although whether lessons will have been learnt is another question - the Committee's comments on the follow-up project suggest not.

[petagny]

The Committee's recommendations are applicable to any project. Here they are:

In the future the Department must secure the buying in of those expected to use and operate new systems and must involve them in both the decision and the delivery of projects.

For all future projects, the Department must follow proper business case approval procedures and ensure that an appropriate level of challenge is applied to the approval process. Accounting Officer Directions must be sought where officials believe proposed projects do not represent value for money.

For all future projects, the Department should follow proper project and programme management procedures and not take on projects without ensuring it has staff with the right business change, programme management and IT skills.

The Department should ensure that all its future contracts contain terms and conditions which clearly define responsibilities and outputs, including those requirements which, if not met, would constitute a breach of contracts. Rewards and incentives must reflect the balance of risk.

For future projects, the Department needs to clearly identify roles and responsibilities and to define clear lines of accountability. It should make sure that any such future projects are subject to robust challenge by its Board.

The Department should manage the new funding as a distinct programme, with defined outputs, clear criteria for approval, appropriate milestones and transparent delivery arrangements and accountabilities.

[petagny]

There is another important general lesson that can be deduced from this experience: it is important to be ready to put a stop to failing projects and avoid further losses. This at least was done, although perhaps rather late in the day, as the report on FiReControl by the National Audit Office (the UK's supreme audit institution) makes clear:

'The Department was justified in cancelling the project. The Department estimated that continuing with FiReControl would cost £390 million, but that delivery would be delayed by another year to May 2012. In comparison, cancelling the project and upgrading local control rooms would cost between £310 and £400 million. The uncertainty over delivery and associated additional costs of FiReControl were such that the Department decided that the contract should be terminated.'

[STONE]

Yes indeed this case study is applicable anywhere.  It does show the dangers of IT projects - the UK's experience is a poor one in this regard.

I do like the assessment that it was good to cancel the project, but I wonder whether the estimate of alternative costs of GBP 310- 400 million were made using the recommendations of the NAO if the upgrading is more IT then that may explain the uncertainty of future costs: it might be 310 million or it could be 90 million more....

[atseacliff]

There is another important general lesson that can be deduced from this experience: it is important to be ready to put a stop to failing projects and avoid further losses. This at least was done, although perhaps rather late in the day, as the report on FiReControl by the National Audit Office (the UK's supreme audit institution) makes clear:

This occurred under former Deputy PM John Prescott's watch - listening to him on the Today Programme this morning he argued he was accountable for the policy but not made aware of the subsequent implementation problems  - going on to state that the Permanent Secretary should have been called to the PAC to explain why alarm bells weren't raised at a ministerial level. Is it a case of "tone at the top"  or have others thoughts on mechanisms which have been put in place to ensure Ministers are kept informed "by exception" when things start to go off the rails?   

[Martin Johnson]

Thanks to Petagny for posting this. The general lesson is certainly key (when you are in a hole, then stop digging). And the transparency demonstrated by the UK public scrutiny role is an extremely positive feature of the UK system. What amazes me, however, is the apparently complete failure of accountability. This was a project that did not follow proper business case approval procedures. It had a flawed design that appears to have ignored the key stakeholders. Appropriate roles and responsibilities were not defined and clear outputs were not specified. The department concerned proceeded without sufficient capacity and experience in key skill areas ….. and so on …

And no one has been held accountable for this …. ?

The long list of management failures certainly seems to suggest a dereliction of duty at a management level. The project can only have proceeded with management at some level having taken decisions for it to go ahead without ensuring appropriate pre-requisites were in place (none of which are groundbreaking or novel).

The extent of the failure with regard to some of the very basics of management noted in this case does surprise me. Which makes me wonder to what extent sensible management was overridden by political directive. I note atseacliffe’s observation that Mr Prescott declared himself responsible for the policy and not the implementation (so that’s alright then … ). If sensible management were indeed to have been overridden by political directive, then Mr Prescott’s statement would not hold true (and it would also mean that senior public servants had not formally documented their disagreement with political directive when confronted with the prospect of being required to deliver a fatally flawed project).

Either way, as a UK taxpayer (as well as an interested PFM practitioner) I am deeply concerned with the failure of the UK external scrutiny process in ensuring the delivery of accountability in a case as stark as this. I wonder what Reg would have to say about it?

[petagny]

I wonder whether this is not an example of decentralised decision-making gone too far?

20 years ago such a project would have been subject to much closer scrutiny by the Treasury (UK finance minisitry). At least that's my experience working as a consultant to the Department of Transport and the Overseas Development Administration. Economists in these organisations were demanding of their consultants because they knew that they would have to persuade the Treasury of the value of the project. Skepticism seemed to be the default position of the Treasury!