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£3bn overspend in DfT

15 Mar 2007 - JG

Who are these people in Government who simply can not make a decent estimate? It seems every single Government major investment project runs vastly over budget. Where on Earth do they find them - it's not like it's one department or the odd project, but every single department and every single project. If this was the private sector these goons would have been sacked years ago. The latest piece of Government over spend has been revealed by the National Audit Office to be from the Department for Transport's road schemes - 200 of them! You'd have thought after the first 50 or so they might be able to spot a trend and start making better estimates.

For example, a new lane on the M5 between junctions 19 and 20 which was budgeted to cost £6m. Final cost: £17m. A crossroads on the A14, budgeted at £5m. Final cost: £13.4m. The statistics show that the costs of the remaining 67 motorway and trunk road schemes are 27% above initial estimates. 20 out of 81 local road schemes had been completed at 18% above estimate. According to local authority forecasts, the remaining 61 are likely to be around 31% more than estimated. We're not talking about stretching budgets with the odd over spend, we're talking complete and utter mis-calculations. It also suggests that the Government is really not getting value for money if the schemes they want to build cost them double or triple what they seem to think it should cost.

All in all it is costing us, the tax payer, £3bn in overruns. This is not acceptible and certainly no way to run a business or government. You would hope that the Treasury would do something about this. You would hope that they would drive through the efficiency savings that were needed to get better value for money on these projects. You would expect them to ensure departments were giving accurate estimates on the projects they are going to engage on. You would hope that departments would have a more effective procurement process and far better project managers to ensure costs are kept down. The Treasury's response is to introduce revised rules to give more pessimistic estimates for existing schemes after the average cost overrun hits 40%. Solving what exactly?

Organisations: UK DfT

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