Two perspectives on Transport Scotland’s public reporting on Scotland’s major transport projects

Transport Scotland and the Scottish Government have just been told by Audit Scotland that they must improve their public reporting on major projects. This is the conclusion of a review by the audit commissioners of five key transport infrastructure projects, costing – initially – a total of £3.8 billion to build.

It is instructive to compare what each of Audit Scotland and Transport Scotland has to say and how they say it. Below are the published communications from both bodies on this issue, with the key summaries from the Audit Scotland review.

The Audit Scotland press statement

An Audit Scotland report published today [Ed: Friday 21st June], Scotland key transport infrastructure projects, reviews the progress of the Forth Replacement Crossing; Aberdeen bypass project; Edinburgh-Glasgow rail improvement project; M8 bundle’ of motorway improvements; and Borders Railway.

The report says Transport Scotland expects to deliver all five projects within their current budgets and to complete four on time.

Transport Scotland is managing the risks to each project well but cannot eliminate them completely.

Transport Scotland and the Scottish Government must improve their public reporting; the full public sector financial commitment for these projects has not been reported until now.

The projects are expected to commit £7.5 billion of public money over 30 years. The Scottish Government considers this affordable in the long-term but has not fully demonstrated the reliability of its analysis.

Auditor General for Scotland Caroline Gardner said: ‘The five key transport projects we report on are central to the Scottish Government’s aim of strengthening Scotland’s economy and recovery. It is encouraging that all are currently on track to be built within budget and four are on time.’

Transport Scotland and the Scottish Government need to improve their reporting on major projects to the public and to the Scottish Parliament. The estimated full public spending commitment for these five projects has not been reported until now; and the forecast buildingcosts for some have been incompletely or inconsistently reported.

‘These projects will cost an estimated £3.8 billion to build and will tie up about £7.5 billion of public money over 30 years. It is important for the Scottish Government to demonstrate that this spending is affordable.’

The report also recommends Transport Scotland improve its processes for developing and updating business cases for major projects. Good business cases are vital for project scrutiny, decision-making and transparency.

However, for the Borders Railway and EGIP projects, Transport Scotland did not ensure that business cases were complete and up-to-date at all stages. Consequently, at certain decision points, it had not fully demonstrated the viability, value for money and affordability of these projects.

Notes to editors

1. The current forecast completion dates and estimated capital (building) costs for the projects are:

  • Forth Replacement Crossing: October 2016; £1.46 billion
  • Aberdeen Western Peripheral Route and Balmedie to Tipperty: March 2018; £745 million
  • Edinburgh-Glasgow rail improvement project (EGIP): March 2019 – phase one; £650 million
  • M8 bundle (M8/M73/M74 improvements): April 2017; £588 million
  • Borders Railway: September 2015; £353 million.

2. EGIP is the project currently expected to be completed over two years later than originally planned. It is now being delivered in phases, with the initial phase delivering a reduced scope of work over a longer time.

Ministers will confirm a revised target date for the initial phase completion in the summer.

3.There have been changes to the approved scope, timescales or costs – in some cases reductions – for all five projects over time.

Key messages in Audit Scotland review

All the projects are at different stages. Transport Scotland expects to deliver all five within their current budgets and to complete four on time. It has adjusted the scope of the Edinburgh-Glasgow Improvement Programme to reduce costs. Consequently, the timescale for its completion has increased by over two years. Transport Scotland is managing the risks to each project well but cannot eliminate them completely due to the projects’ size and complexity.

  • EGIP is currently forecast to be complete by March 2019, compared with an original date of December 2016.
  • The current capital cost estimates for four projects appear reasonable if assumptions hold. The cost estimate for EGIP is more uncertain.
  • All five projects are live and have inherent risks owing to their scale and complexity (see paragraphs 14-35 and 61-78 in the main report).

The five projects will cost a combined £3.8 billion to build but the estimated combined budget commitment over 30 years, reflecting building, financing and operating costs, is £7.5 billion. The Scottish Government considers this spending is affordable in the long term, but it has not fully demonstrated the reliability of its analysis in this area.

  • Transport Scotland will pay for the Forth Replacement Crossing from its capital budget. It will pay for the other four projects mainly from annual revenue budgets.
  • The Scottish Government estimates that the future cost of all revenue-financed investment will be within its control target of five per cent of the estimated future DEL budget. However, it did not provide enough information to allow us to confirm that this analysis was reliable. (see paragraphs 11-13 and 89-96 in the main report).

Transport Scotland and the Scottish Government need to improve their public reporting of infrastructure projects. Except for the Forth Replacement Crossing, they have not informed the public or the Scottish Parliament of the combined estimated financial commitment arising from these projects. Reporting of the building cost estimates for three projects has also been incomplete or inconsistently presented.

  • The estimated £5.1 billion long-term public spending commitment for the four revenue-financed projects has not previously been reported in public.
  • The FRC and EGIP building cost estimates have been accurately reported in public. However, the full building cost estimates for the three other projects have been reported inconsistently (see paragraphs 97-103 in the main report).

Transport Scotland has good corporate governance structures for major investment projects. It has well-established governance in place for two projects, and it is revising it for the other three to take account of recent changes to them. This is appropriate but it now needs to develop aspects of its monitoring and reporting for these three projects as soon as possible.

  • Transport Scotland is revising governance for Aberdeen Western Peripheral Route/ Balmedie to Tipperty, Borders Railway and EGIP projects because of recent changes to them (see paragraphs 36-38, 46-52 and 79-88 in the main report).Good-quality business cases are vital for project scrutiny, decision-making and transparency. However, for the Borders Railway and EGIP projects, Transport Scotland did not ensure that business cases were complete and up to date at all stages. Consequently, at certain decision points, it had not fully demonstrated their viability, value for money and affordability. Since its inception in 2010, the Scottish Government’s Infrastructure Investment Board has strengthened scrutiny of high-value projects. However, it was set up after the five projects started and was unable to scrutinise them at an early stage.
  • Although Transport Scotland did not have up-to-date business cases for two projects at certain decision points, it provided ministers with briefings on the preferred options for both and is confident that they will provide value for money.
  • The Infrastructure Investment Board was established in 2010 to oversee and promote effective governance for major investment projects and to assist scrutiny. It would be appropriate to refine and develop a detailed plan or schedule for its scrutiny work to help ensure this is fully integrated with individual major investment decisions (see paragraphs 36-45 and 53-60 in the main report).

Key recommendations of Audit Scotland review

To improve its control and decision-making, Transport Scotland should:

  • review and update by December 2013 its current business case development and assurance processes to ensure these align with wider processes for planning and decision-making for all projects, including rail investment
  • establish by December 2013 a standard approach to presenting cost estimates and financial monitoring reports for high-value projects, costing more than £20 million.

To help develop its scrutiny of major projects, the Scottish Government should:

  • refine and develop by December 2013 its plan for scrutinising, challenging and monitoring major investment projects. This plan should aim to promote closer integration of the major decision-making, scrutiny and assurance stages throughout the lifecycle of all projects.

To improve openness and public accountability, the Scottish Government should:

  • consult with the Public Audit, Finance and Infrastructure and Capital Investment Committees on a threshold value for routine public reporting of all major infrastructure investment projects  hat ministers have approved for procurement. It should then set a threshold for public reporting
  • improve the quality of information about major projects that it provides in its six-monthly updates to the Public Audit Committee, by December 2013
  • provide improved information on individual capital investment projects to other parliamentary committees as appropriate.

The Transport Scotland press statement

Commenting on the Audit Scotland report into key transport infrastructure projects, Transport Minister Keith Brown said:

“No government since devolution has embarked on such an ambitious programme of investment to transform our transport infrastructure. We are making record investment in roads, railways and bridges that will improve links and boost economic recovery.

“We very much welcome this report which confirms that all five of the major projects underway in Scotland are being well managed with sound governance structures in place to manage the risks involved in what are technically challenging and complex projects.

“The centrepiece of our infrastructure investment is the Forth Replacement Crossing, as the biggest single transport project in a generation. We welcome Audit Scotland’s endorsement of the project’s sound management and recognition that construction remains on budget and on target.

“We also note the conclusion that the reasons for changing the scope of EGIP are ‘clear and reasonable’. By revising the scope we will save taxpayers money through a reduction of £350 million in construction costs. Work on delivering the programme is well underway and already delivering benefits for passengers. The core Edinburgh Glasgow via Falkirk route will be fully electrified by December 2016.

“We continuously look to improve our processes. Whilst this report provides us with useful assurance around our governance and risk management procedures, we will take forward the recommendations to see where further improvements can be made and I look forward to leading a debate in the Scottish Parliament on major transport projects later in the year.

“While Audit Scotland acknowledge in the report that four out of five of these projects are still in procurement and therefore much of this information is commercially sensitive and cannot be disclosed on a project by project basis at this stage, we are committed to improving the presentation of cost estimates moving forward. The Scottish Government has already set out the overall annual revenue costs associated with the NPD programme as a whole, and our intention is to publish the costs for each individual project once they are in construction and when the information would no longer be considered commercially sensitive.

“We agree good quality business cases and up to date advice are an essential part of good governance and decision making, and Transport Scotland has well established procedures for business cases based on Treasury and OGC guidelines.

“The report echoes recent comments from the Civil Engineering Construction Association who highlighted the FRC and Borders Railway as being crucial in terms of supporting the construction sector during tough economic times. There is also confidence this will be further boosted by the forthcoming procurement of the M8 Bundle, Aberdeen Western Peripheral Route (AWPR) and other projects. Most of this year’s transport budget was invested back into the private sector, supporting a quarter of civil engineering contracts in Scotland and 12,000 jobs.

“Ministers have introduced a limit on how much of future budgets (total DEL) should be committed to capital investment now, and Audit Scotland has itself shown that the five transport projects are affordable within this limit. We rely on a mixture of funding mechanisms to deliver the largest ever investment in transport infrastructure and without the NPD Model to counter cuts by the UK Government, many of these projects wouldn’t be proceeding.”

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