The Conduct of Long-term Projects in Britain

How do we define a national “long-term project” (or programme)”?  Answer: by its duration, cost and benefit for the whole nation.  For many purposes, in Britain and other countries, a duration of around 20-25 years matches many mortgages on real estate, a major factor in infrastructure, a minimum cost of £25 billion or £1 billion per year on average is about the past cost of a thousand miles of motorway, or coastal protection.  To be worthwhile for the nation, the calculated benefit needs to be at least twice the cost after completion of the project.

The last completed British long-term infrastructure programmes

Arguably the last civil LTP of this magnitude, updated to current prices, was the nuclear-powered electricity programme, which ran from the early 1950s[1] to 1994, when the first pressurised water reactor was brought on line in 1995 at Sizewell in Suffolk.  This programme of Magnox Advanced Gas-cooled (AGR) and Pressurised Water reactors (PWR) was carried on uncontroversially by six governments, both Labour and Conservative, until its project management team under the late Walter Marshall[2] was disbanded as a predictable byproduct of the Thatcher government’s breaking up of the Central Electricity Generating Board in 1989 as the central part of its electricity privatisation programme.

Arguably the second last LTP was building the main motorway network which, apart from minor piece-meal additions over the last 25 years, ended with the (not quite completed M42 under the Thatcher government[3] in the late 1980s[4].

It is entirely typical of British misgovernment that the long-term profitable part of the nuclear power programme, (the AGR and PWR)[5] was vested in British Energy after the breakup of CEGB, then sold at a song to the French State Enterprise EdF, while the soon-to-be decommissioned part – the ten ageing Magnox stations – were ultimately transferred to an outfit called “Energy Solutions” headquartered in Salt Lake City.  Through the “Nuclear Decommissioning Authority” the British taxpayer is contracted to pay Energy Solutions to do the decommissioning.  One might think that Britain could do its own decommissioning, particularly as the sums involved are huge – in the region of £10 billion over 14 years.

A further twist is that Energy Solutions has mounted a legal challenge to the Nuclear Decommissioning Authority for not following “UK’s Public Procurement Regulations” in awarding a further contract (of £7 billion) to a rival consortium made up of Cavendish Nuclear (a British company founded in 2013[6]) and Fluor Inc – a US engineering contractor.  Only a British government could get itself in such a legal tangle.

Chaos reigns in the IT sector

Information Technology (IT) procurement is arguably the only area in which the British government currently has long-term programmes of a sort, the chief homes for these disasters being: the National Health Service (Jeremy Hunt MP), HM Revenue and Customs (Ms Lin Homer, ex Transport Department Undersecretary, ex Border Controls Director), the Home Office and the Border Agency (Mrs Teresa May MP), and the Universal Credit Scheme (Iain Duncan-Smith MP[7]).

In the National Health Service case, the Cameron-Clegg government (2010- ) decided to cancel the huge over-complicated and costly patient records scheme placed with a Japanese company, Fujitsu, by the Labour government, in such a way that it left the government open to being sued by Fujitsu for the whole balance of the contract.  This Fujitsu has now done and after an arbitration decided entirely in its favour has walked off with £700 million – virtually the whole £738 million left on the contract.  There are more such disasters to be revealed as the Fujitsu contract was only a 6% part of the £11 billion programme to computerise the NHS.

As a member of the House of Commons Public Accounts Committee (PAC) Richard Bacon, MP for South Norfolk, observed: “These contracts were let in an enormous hurry with huge confidentiality clauses, and it was only after they were all signed, quite soon after – that people became aware that the contracts would not deliver what was required”.

Another giant failure looming is in the Tax Collector, HMRC, £7.9 billion Aspire computer contract with Cap Gemini S A, a French consultancy company headquartered in Paris.  Just like the pending contract with Electricité de France at Hinkley Point, Cap Gemini’s contract provides them with a hugely generous profit margin – in this case 16% – or £1.2 billion.

An Alternative to the Mismanagement of Britain’s Infrastructure Needs

Why do these disasters keep coming?  The short answer is incompetence and naivety on the part of the civil servants and government ministers involved.  By incompetence, we mean absence of experience needed to do the job in hand in the same way that this writer is incompetent to conduct a symphony orchestra.

Naivety because none of the people involved, to this writer’s knowledge, has first-hand experience of dealing with foreign-based suppliers of services.  What have the disasters in this list – and there are literally dozens more – got in common?  They are all foreign-based companies, who to a man and a boy see the UK public sector as “easy”[8].

The two largest departments in US companies are the legal and marketing departments.  British civil servants have no prior idea as to how hard-edged US and French companies are.  Outside the swanky restaurants they entertain their clients in, there is no give and take or easy-going bonhomie.  It’s all take unless they are absolutely nailed down by equally hard-edged British commercial lawyers – if any exist.

Neither the Fujitsu nor Cap Gemini contracts appear to have had break or non-performance clauses which the client (HM Government) can activate without incurring the breach of contract claim pursued by Fujitsu or indeed their legal costs, which it is thought may cost the British taxpayer another £50 million on top of the £31 million already spent[9].

Incompetence in executing and supervising long-term projects

Projects may be physical or organisational or both.  In national terms we are talking of energy, transport, health systems, industrial developments, towns and infrastructure fields.

Every international company management – oil, gas, nuclear, food, chemicals, aerospace, etc – recognises the different qualities and expertises needed for running an existing organisation and the qualities needed to design, build and commission (DBC) something new, all the more when this may involve £500 million plus over several years.

The British Civil Service

The British civil service is an administration machine, its senior ranks composed largely of arts graduates and economists without significant commercial experience.  This makes for difficulties in handling technical matters such as transport, electrical power generation and information technology procurement.  All the more do the delays, cancellations and over expenditures occur when foreign contractors are concerned as noted above, because project management, plus direct knowledge of the field involved, is at the core of DBC.  The fields mostly concerned are information technology (computers and systems) and engineering (civil, mechanical and electrical and their branches).

Government reaction to the problem

Inevitably the steps taken by this government are what politicians always do – they appoint the odd individual who has some of the requisite abilities and knowledge to “inject” these into the chosen civil service department.  Naturally these appointments are deeply resented by the higher ranks of the Civil Service all the way up to Permanent Undersecretary because they are direct criticisms of their own education and preparation for high office.  Here the famous Oxford essay – a discursive, disengaged appraisal of some subject arriving at no conclusion anyone can act on, is the exact opposite of what project management (PM) is about.  PM has to be engaged continually to achieve specific objects of execution time and cost, and performance[10].

The Major Projects Authority (MPA)

This has been set up by the present Coalition government to remedy this huge failure of British governance.  The name “Authority”, so beloved of bureaucrats and their political servants, is a dead give-away.  This isn’t something with authority to act and create, but is designed to push past local government planning procedures – themselves products of bureaucratic centralism – to obtain planning permission in order to start a project.

The first (and only) appointee to the post of MPA Director was David Pitchford, who had gained a reputation for sorting out Whitehall muddles.  His last assignment was to rescue from breakdown the IT system for implementing the Universal Credit Scheme.

When the first manager of the UCS project (who actually was a senior member of the British Computer Society) was removed as a scapegoat for the alleged slow progress, the opportunity was taken to advance the feminist agenda by appointing a female career civil servant with no knowledge of either IT systems or the UK Welfare Benefits system.  Mr Pitchford’s first remedial action was to remove the lady who, to anyone except an equally incompetent Permanent Secretary, was hopelessly out of her depth.

Tired of being a one-man trouble-shooter, Mr Pitchford resigned in September 2013 and returned to his native Australia, since when the MPA seems to have morphed into the Efficiency and Reform Group, located in the Cabinet Office, which sends senior civil servants to Business School in Oxford (of course) to learn from Power-point presentations and seminars, how to do project management, divorced from any particular field of engineering, health, or border controls for example.

France, by contrast, has benefitted from an elite caste of graduates of the Ecole Nationale d’Administration (énarques for short) which produces people of a wide range of complementary competences: analysis, engineering, finance, systems, management – exactly the opposite of the famous PPE course (Politics, Philosphy and Economics) at Oxford which 4 members of the Cabinet and 5 of the Shadow Cabinet have followed.

Every international company management recognises the different qualities and expertises needed for running an existing plant and for designing, building and commissioning something new.  To carry out the DBC is the job of project managers and engineers.

What should be established in Britain

Repeated failure to build and maintain adequate infrastructure is unnecessary and demeaning.  There is an urgent necessity for the creation of a specific Project Management Group (PMG), separate from the Civil Service.  This Group would undertake long-term multi-billion pound projects and report annually, through a “Major Projects” Select Committee directly to Parliament. Over time it would create a cadre of qualified people with a career structure and ready interchange with the private sector.  There is a precedent for this in the Royal Corps of Naval Constructors[11], formed in 1888, specifically to ensure we had a new fleet of battleships needed to take on the Kaiser’s.

What should be done immediately: IT Projects

Hire some British IT engineers.  Large-scale IT systems projects depend not just on hardware and software, but a close analysis of the customer’s needs on the basis of long-term experience.  This should be explicitly written into any contract with the requirement that any bidder should show exactly how they were going to obtain this information.  It is extremely unlikely that any US or French or Japanese IT systems consultancy company could possibly meet this condition satisfactorily.

Two Urgent Engineering Cases: Nuclear Energy and Flood Protection

Both of these are of critical importance for the country’s being able to function properly.  In the usual amateurish fashion, both are being tackled in bits and pieces, and suffer from the usual confusion of motives and objectives.  Both need long-term (i.e. 30 years) commitment of finance (around £45 billion each) and the proposed PMG to carry them out.

End Notes

[1]  The world’s first civil nuclear power station, opened by the Queen in 1956 at Calder Hall in Cumbria.

[2]  Physicist, formerly Director of Harwell Atomic Energy Research Establishment.

[3]  Originally the M42 was to go all 85 miles from the M5 south of Birmingham to the M1 near Nottingham.  But in typical, shortsighted UK Treasury fashion, it was stopped 15 miles short.

[4]  London’s Cross-rail project, first costed at £300 million in the 1970s, and actually started on 15th May 2009, hardly meets the “national” criterion, nor even at its present projected cost of £15.9 billion does it meet the minimum of £25 billion. However, its meticulous planning and resulting engineering success is a credit to its project managers, some of whom are the sort needed in the Project Management Group (PMG) proposed in this article.

[5]  I.e. the 7 Advanced Gas-cooled Reactors (AGR) and the one Pressurised-Water Reactor at Sizewell.

[6]  A wholly owned subsidiary of Babcock International Group plc, bizarrely headquartered in Southwark, London SE1.

[7]  Hilary Reynolds was fired, after only 4 months in her job as IT Project director for Universal Credit.  Reynolds replaced British Computer Society Fellow Malcolm Whitehouse.  Her own IT experience was apparently limited to that of an occasional laptop user.

[8]  Not just foreign companies either.  Virgin Railways’ first contract, to run the West Coast line, was a no-risk deal for the company, recalled Patrick McCall its executive co-chairman (Sunday Telegraph, Business, 10th August 2014).

[9]  Commercial lawyers also see the UK government as completely “soft”.

[10]  Richard Bacon and Christopher Hope came to a similar conclusion in their recent book “Conundrum” (2013), Biteback publishing, London.

[11]  The first test of the Corps’s expertise was in the building of the battleship HMS Dreadnought, first of its class, with a wide range of technological innovations.  The keel was laid on October 2nd, 1905 and the sea trials of the completed 20,000 ton vessel started on October 3rd 1906.

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One Response to “The Conduct of Long-term Projects in Britain”

  1. Ageing Albion says:

    The great American physicist Richard Feynman castigated NASA after the Challenger disaster for the inability of the senior management to understand the evidence before their eyes about the safety of the shuttle. “Reality must take precedence over public relations” he wrote, “for nature cannot be fooled”. He pointed out that if that meant fewer flights, a reduction in funding, and a shift to less glamourous projects, so be it.

    Perhaps the day that a politician turns on a light switch and nothing happens, or finds there is no fuel for his government car, we might get some proper action on energy consumption in this country.

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