The cancellation of the west coast rail franchise competition - a case study in poor governance of project management

The catastrophic failure of the competition to let the West Coast Rail Franchise was the subject of a special meeting on Wednesday the 13th February 2013. The Association for Project Management (APM) Governance Specific Interest Group (SIG) hosted the meeting attended by 40 delegates from public sector and private, a mix of rail industry professionals and project and change management specialists.

The objective was to take a close look at the governance lessons to be learned from the cancellation of the competition - a fiasco which will cost the taxpayer over £40m initially (and possibly much more in knock-on effects). The conclusion of the meeting was that the root causes were the subjugation of good project management and change governance practices to the immediate, short-term target of going through the motions of the procurement processes. Out of the four official reports published in the last two months, only the National Audit Office (NAO) report properly recognizes the primacy of business change management over the process of procurement.

Welcome and Introduction

Delegates arrived at 5:30pm to enjoy sandwiches and coffee and an opportunity to network at the excellent facilities at the ETC conference centre, which is tucked away behind the canal at the back of London Paddington station.

Martin Samphire - APM Governance SIG Chair welcomes delegates to the meeting

Martin Samphire opened the meeting with a short overview of the activities of the APM Governance SIG and its objective towards:

Achieving Change Successfully with Confidence and Control

 

Martin then gave an outline of the successful SIG publications (Sponsoring Change and Co-Directing Change, and the second edition of the influential Directing Change which was to provide the analytical framework for the workshop session later in the evening. 

Key APM Governance SIG Publications

Martin outlined the objectives of the evening as:

- To review the governance aspects of the West Coast Mainline Re-franchising programme

- To share and learn lessons

- To create governance insights

Four reports issued to date - only the NAO report recognises the importance of business change governance

then took the floor to give a 15 minute briefing to the delegates on the four reports that have been published to date, and to give his take on their analysis and recommendations.

In short, Brian argued that only the report by the National Audit Office recognises the importance of the Governance Aspects and the importance of placing the procurement tasks within a project management framework, rather than the other way round. 

Brian Wernham - Consultant and Author

Brian concluded that the reports commissioned by the Department for Transport, (which were written by industry insiders Sam Laidlaw of Centrica and Richard Brown of Eurostar) focussed on procurement processes, rather than the bigger picture. The final report, by the House of Commons Transport Committee followed on with this line of thinking.

The full text of Brian's talk is available here:

More on the NAO Report

Peter Deary then gave more detail on the analysis of the NAO report and its conclusions and recommendations, and outlined some examples of where the report's findings cross-referenced and reinforced the principles stated in Directing Change.

For example, the NAO found that the refranchising of InterCity West Coast was a major endeavour, with considerable complexity and uncertainty and a range of overlapping issues. Many problems were related to the lack of recognition of the importance of explicitly differentiating between project and non-project activities - Principle 2 of "Directing Change".

Workshop Session

SIG Committee members Andy Murray and Andrew Spiers joined with Martin, Brian and Peter to facilitate the workshop session as the delegates broke into 5 groups.

Andy Murray and Andrew Spiers facilitate the workshop session:

The objective was to discuss the lessons learned from the West Coast case study using a workshop hand-out of materials extracted from the reports and each of the four governance components identified in "Directing Change", and an additional group to sweep up any other issues:

<p\>- Portfolio direction and alignment

 

- Project sponsorship

- Project management capability

Disclosure and reporting

- Other areas

Workshop Outputs - Lessons Learned

Brian finds his vocation as a flipchart holder

Group 1: Portfolio direction and alignment

Problems found

Constrained by artificial procurement dates rather than what was really needed for effective change management and development of a 'fit for purpose' business model

- Did not identify what constituted a successful outcome

Lack of portfolio leadership/strategy direction

- Lack of clear roles/responsibilities

- Lessons from previous endeavours not imported and warnings signs ignored

- Procurement process not subjected to project management governance and disciplines

Recommendations:

- Clarify roles/responsibilities – and have a single, not multiple sponsor / SRO

- Clear/consistent leadership

- Earlier and more effective supplier engagement

-

- Subject major procurements to good project management governance and disciplines

Group 2: Project sponsorship

Problems found

- Unclear outcome and requirements shifted throughout

- SRO role was confused – unclear accountabilities

- Lessons not effectively learned from other projects / procurements re: having a single SRO, e.g. Olympics

- Not enough SRO level challenge, setting agenda or management of risk

- SRO and DfT team did not have the expertise to manage/resolve issues – not enough use of external challenge

 

- Greater clarity of objectives

- Stronger governance of project management and strong single SRO role

- Senior oversight from outside the delivery dept.

- Assurance activities need to be early, frequent, strong and sceptical

Project management capability

Problems found (references in brackets to Directing Change component)

- “Perfect storm” of unclear vision, 3 permanent secretaries involved, unclear project, programme, portfolio structure (PM1)

- Policy making competence is in DfT, but PM delivery competence was needed and resided elsewhere – relatively immature re: CMMI (PM2)

- Roles for breadth of project management not understood or undertaken. Unclear where decisions needed to be made (PM5)

- Lessons from previous experience not researched or learned

- Over-reliance on internal audit process (no substitute for good governance and management)

Recommendations

- Deploy good PM governance and management AS WELL as independent assurance

- Educate and train all project management ‘players’ in their role – not just project managers, but sponsors, functional; managers, suppliers, etc.

- Have a structured lessons learned session at project kick-off – bring in those experienced from elsewhere to share lessons with new team

Disclosure and reporting

Problems found

- Organisational responsibility lacking

- Board Members did not own the project / portfolio

- Critical drivers for focus not in place

-

- Audit not a 'live' audit – conducted after the event

- Audit of governance raised some significant issues but these were overlooked.

Recommendations

- The culture of the organisation will also play a role – needs to be driven from the top e.g. culture in the banking industry was acceptable to senior management.

- Important to understand why people might not raise issues – and emphasise support for truthful feedback

- Ultimately controls were not in place for 'Directing Change' components 'DR1' through to 'DR12' to be implemented effectively

Other areas

Problems found

- Organisational responsibility lacking

- Vision unclear

- Economic outcomes from the 15 year franchise letting unclear for UK plc.

- Have previous franchises delivered? - lessons learned not transparent and not applied effectively

- The needs of four major stakeholder groups were not reconciled: Passengers, Government, Train Operators and National Rail

- DfT did not have capability to handle such complicated Terms and Conditions

- The longer term of the franchise drastically increased the sensitivity of the financial model to various assumptions (c.f. chaos theory)

Recommendations

Have model audited by an independent expert to ensure no silly mistakes

Apply PM disciplines to major procurements – including stakeholder engagement and management

Use external expertise where the Dept lacks specialism

Conclusion

The meeting reconvened and each group nominated a speaker to give feedback which was summarised by Martin. The SIG committee will consider the outputs from the meeting and consider developing and issuing a 'White Paper'. Delegates were asked to contact a committee member if they wished to be involved in the editing committee for such a 'White Paper'.

The APM Governance SIG event on May 21st in London will focus on collaborative governance and will be relevant to these lessons.

Special Thanks

'Hearts up' to other committee members in attendance Obi Ozonzeadi (photos) and Suzanne Davison (additional facilitation and good cheer).