Auditors criticise RCUK as budget for shared services project balloons

The research councils might never recoup the money they have spent on the troubled Shared Services Centre, the National Audit Office has warned in a critical report.

October 21, 2011

The NAO report, Shared Services in the Research Councils, published today, recounts a litany of failings in the design, governance and oversight of the project. This culminated in the Shared Services Centre being delivered 65 per cent over budget and 15 months late.

The centre was commissioned in 2006 to merge the research councils’ systems for human resources, finance, ICT, procurement and grants allocation. It was estimated that it would save the councils nearly £400 million in its first 10 years.

However, according to the report, complex governance arrangements led to a lack of clarity about specifications and a falling out with original IT contractor, Fujitsu, the termination of whose contract cost £13 million.

The project was due to be completed by December 2009 at a cost of £79 million. But, in reality, it was not completed until March 2011, at a cost £130 million.

“With available evidence showing delivered savings already adrift of the business plan estimate by at least £73 million, implementation of this project does not represent good value for money,” the report says.

It also warns the councils’ latest estimate that the centre will repay its set-up costs by the end of the 2013-14 financial year were “based on a number of unsound assumptions”.

“The uncertainty of the targeted savings means there is a risk that, without tight management, the councils may not recover their investment,” the report adds.

Amyas Morse, head of the NAO, said: “This is yet another example of a project embarked upon without the necessary planning. Once it did start to go wrong, proper governance or intervention from the Department [for Business, Innovation and Skills] should have rectified the problems, but this did not happen until a great deal of taxpayers’ money had been spent.”

A spokeswoman for Research Councils UK, said that part of the NAO’s financial doubts were due to accounting issues, but that the councils were still “very confident” the centre would pay for itself by the end of the current spending period – a feat she described as “phenomenal”.

“The NAO isn’t saying it has been a failure and a waste of time. It says the centre has ‘significant scope for further savings’. It is our job now to realise those – on top of what we have already said we will be achieving,” she said.

She added that the research community would also benefit from harmonisation between the research councils.

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