Plans to improve HR, payroll and finance services at the Department for Transport (DfT) designed to save millions of pounds could end up costing £81m.
According to a report by the National Audit Office, changes to initial cost estimates, inadequate contract management and poor initial implementation of the shared-services project could cost the DfT £81m by March 2015, rather than saving £57m as originally expected.
The department attempted to build on existing processes and IT systems, estimating gross savings of £112m when it rolled out in April 2008.
“It is disappointing to see a programme which aimed to improve the efficiency and effectiveness of a department leaving it on current projections some £80m worse off,” said Tim Burr, head of the spending watchdog.
“Departments need to be realistic about the challenges of implementing shared services and to manage suppliers effectively.”
The report found that initial estimates were off target, and the department could not agree on a common set of business processes. Relations with suppliers were often frosty, and inadequate testing of the system led to an unstable IT system being introduced.
Edward Leigh, chairman of the parliamentary Committee of Public Accounts, said: “This project has been a classic case of act in haste, repent at leisure. The department must now put great effort into making sure that this programme actually starts delivering some benefits.”