Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Acknowledged
The Department may be over-optimistic in its assessment of project costs.
Conclusion
The Department may be over-optimistic in its assessment of project costs. The Department’s Cost Assurance and Analysis Service estimates that project costs could be between £5.2 billion and £14 billion higher than those in the Plan. The Department told us that the latter figure was a worst-case scenario and that the different cost calculations are a matter of professional judgement.42 The National Audit Office report highlighted the need for the Department to consider project risks more fully, including reflecting these independent project costings in its own forecasts.43
Government Response Summary
The government agrees with the committee's recommendation and will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 4.2 Forecasting across ten-years is inherently uncertain. In a complex plan with many large programmes, forecasts change as delivery schedules and cost estimates mature. Improving forecasting can help to reduce this risk, but the department’s plans need to be flexible to adapt to change. 4.3 The equipment plan report includes an upper and lower cost estimate for the ten-year plan based on uncertainty in key variables such as savings and efficiencies assumptions. To inform the costing ranges, the department carries out a rigorous annual process to review and challenge delivery teams’ costings through an independent assessment by the Cost Assurance and Analysis Service. 4.4 In the next update to the committee, the department will provide an assessment of the key sources of uncertainty and risk in the forward plan.