National Audit Office: Lessons from welfare reform programmes, 25th feb

Governance in public sector projects 1
25 February 2015
Governance in public sector projects
Lessons from welfare reform programmes
Max Tse, National Audit Office
APM Governance SIG presentation

About us
Yvonne Gallagher
 Digital expert
 Former CIO in two
govt. departments
 Expert in IT, cyber,
business change
Max Tse
 Director (VFM)
 Work & pensions
 Former consultant
and economist
Geraldine Barker
 Director, Project
Delivery
 Programme expert
 Recently VFM
audit director for
transport
Alison Hood
 Audit Manager
 Programme lead
 Expert in project
and programme
management
Some of the (many) people in the NAO interested in governance and programmes

Today’s discussion
 Why welfare reform?
 Learning lessons from welfare reform programmes
 Wider NAO work on programme management and governance

Welfare reform has had some challenges…
Source: NAO, Universal Credit: progress update, December 2014
 Combining 6 benefits
into 1 payment
 Originally aimed to
complete by 2017
 Agile approach
aimed to tackle past
programme failings
 Reset in early 2013
 Currently twin track
roll-out with revised
completion date

…experienced costly delays…
Source: NAO, Personal Independence Payment: early progress, February 2014
 Replacing Disability Living Allowance
with greater assessment of needs
 2 contractors (Atos and Capita)
 Early development of backlogs
 Initial expectation of large savings,
but delays to roll-out and savings
 Currently recovering from backlogs
and slowly expanding roll-out

…and exposed failings in contracts
Source: NAO, Contract management of medical services, October 2012
 Replacing Incapacity Benefit
with work capability
assessment
 Problems with backlogs,
then quality led to Atos
exiting contract
 Savings not achieved as
expected

On the other hand some things have gone better
Source: NAO, Child maintenance 2012 scheme: early progress, June 2014
 Long history of troubled CM
systems (1993, 2003)
 Phased reform with new
system and then introduction
of charging and case closure
 Early performance of phase
1 encouraging

Governance has been a focus in welfare reform…
Source: NAO, Child maintenance 2012 scheme: early progress, June 2014, Appendix Three
Comparison of aspects of governance of welfare reforms

…echoing many existing principles of governance
APM’s Directing Change principles

So what have we learnt from recent experience?
NAO work in progress notice

Lessons from implementing welfare reform
The irreducible obligation to
be informed
The centrality of an operating
model perspective
The illusion of control over
specification
The elusive capacity question
The (apparent) paradox of
time
Phasing and learning: redux
The gradualist reactive default
Management information: the
poor cousin
Some lessons from welfare reform (preliminary)

Lesson 1: The irreducible obligation to
be informed
Programme aims need to take account of wider departmental responsibilities and trade-offs. Trying to define
aims too narrowly can lead to unanticipated consequential costs and issues in defining performance criteria.
Directing Change principles include clear differentiation between project and non-project activities (1) and
clearly defined roles, responsibilities and performance criteria for governing the project (3).

Lesson 2: The centrality of an
operating model perspective
Departments must align transformation with overall view of business model, including how people will use
the service, and how sustainable internal processes will be in supporting the service.
Directing Change principles include the need for a coherent relationship between overall business strategy
and portfolio (5).
Universal Credit, predicted channel use Child maintenance, cost sensitivities

Lesson 3: The illusion of control over
specification
Departments are limited in their ability to specify how services will work. They need to understand end users
and delivery partners, as well as the constraints they face in serving wider public objectives.
Directing Change principles include need for engagement with stakeholders to foster trust (12) and clear
relationship with business policies on ethics and sustainability (5).
Changes in minimum service standards
on the Work Programme
Housing Benefit fraud and error
The Department has had to change its
approach to maintaining minimum levels of
service…The Department originally allowed
contractors to set their own minimum service
standards. Contractors set 212 standards and
the Department could not monitor these
effectively…
NAO, The Work Programme, July 2014

Lesson 4: The elusive capacity
question
With programme vacancies, and limited information about portfolio capacity and risk, programmes are
particularly dependent on a small number of senior programme leaders for direction and oversight.
Directing Change principles include need for disciplined governance arrangements and a project sponsor
for each project (4).
High turnover in Universal Credit Stable leadership in child maintenance
 SROs since 2010: 6
 Programme directors since 2010: 6
 Multiple changes in CIO/CTO

Lesson 5: The (apparent) paradox of
time
Programmes struggle with setting specific (but not certain) timetables and being clear about the trade-offs
involved. Departments need to judge risk and make decisions openly throughout a programme.
Directing Change principles include frank internal disclosure of information and progress (11), and relevant
and realistic information supporting decisions (8).
Shift in Universal Credit caseload projections Planned acceleration of PIP savings

Lesson 6: Phasing and learning: redux
Lessons about avoiding ‘big bang’ are widely accepted, but the detail of how to phase implementation or
manage agile development is still challenging, as is the need to recognise learning curves in early stages.
Directing Change principles clear criteria for escalating concerns and risks (10) and realistic information for
authorising decisions (8).
Original phasing profile in PIP Learning curves in the Work Programme

Lesson 7: The gradualist reactive
default
Departments can often react well to shocks in core businesses, and some programmes may be most
comfortable introducing change in a similar reactive or gradualist way. Risks arise in new approaches.
Directing Change principles include need for governance arrangements to be supported by appropriate
cultures (4) and matching competence and resources to delegated authorities (7).
Adjusting FTEs in jobcentres in downturn Impact assessments in Housing Benefit

Lesson 8: Management information:
the poor cousin
Programmes often treat management information as a dimension of flexibility when under pressure, or fail to
set clear requirements for information that is needed. This is compounded by lack of end-to-end oversight.
Directing Change principles include relevant and realistic information (8), clearly defined criteria for reporting
project status and escalating risks (10).
Limited MI at the start of PIP… …and the Work Programme
Management information at the start of the
programme was limited. The Department did not
complete initial work on its new management
information tool in April 2013, as planned,
despite discussing this risk regularly since
January 2013. The Department now expects to
complete all work by the end of 2014. It has
adopted an interim solution …
NAO, Personal Independence Payment:
early progress, February 2014
The IT project to support the Programme was
not fully functional when the Work Programme
was launched…The Department will also not be
able to use its IT support to generate
management information on how many job and
sustainment outcomes the Work Programme, or
individual providers, are delivering until
September 2012 at the earliest.
NAO, The Work Programme, July 2014

We are developing wider work on project and
programme management

Thank you
Max Tse
Max.Tse@nao.gsi.gov.uk
For all reports mentioned
www.nao.org.uk

This presentation was delivered
at an APM event
To find out more about
upcoming events please visit our
website www.apm.org.uk/events

National Audit Office: Lessons from welfare reform programmes, 25th feb

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National Audit Office: Lessons from welfare reform programmes, 25th feb