MPs lament BBC IT project failures

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MPs have criticised a BBC IT project carried out with Siemens after it failed to deliver the savings it was supposed to.

The Digital Media Initiative was expected to cost £81.7 million and provide benefits of £99.6 million, but the costs are now forecast to hit £133.6 million and provide boons of just £95.4 million.

The Commons Committee of Public Accounts report released today also criticised the BBC for not opening the contract up to competition.

“With hindsight, the BBC should not have let the contract for its Digital Media Initiative to Siemens without testing the contractor against other suppliers, especially as there was a high degree of innovation involved,” said Margaret Hodge MP, chair of the Committee of Public Accounts.

“We welcome the Trust's assurance that it would now take a more challenging approach when considering procurements.”

The Digital Media Initiative, otherwise known as the Programme, was set up to help BBC workers share content with greater ease, thanks to a technology implementation designed to make handling material more efficient.

Siemens was awarded the project in February 2008 with a contract covering the delivery of IT services until March 2015.

The technology was not delivered, however, leading the BBC and Siemens to agree a "no-fault termination" of the contract with effect from July 2009.

The BBC suggested Siemens had not understood the scale of the task and did not have “in-depth knowledge” of the broadcaster’s operations, according to the report.

The broadcaster, meanwhile, had "limited knowledge of Siemens's design and development work."

The BBC decided to take the contract in house, but by then it had suffered two years of delays and lost £26 million in benefits, the report found.

Furthermore, the BBC decided to undertake the project internally “without testing the value for money of this approach,” the committee said.

The BBC felt pressured to carry out operations in house due to the broadcaster’s move to Salford in May. Procuring a new contractor could have taken six to nine months.

MPs also questioned how the BBC managed to find efficiencies within its own business to cover the £26 million costs and an extra £24.5 million of savings from the Siemens contract.

“We are concerned with the ease with which the BBC found over £50 million in savings to make up for the losses it suffered through late delivery of the project and its own increased delivery costs,” Hodge added.

“This suggests the need for a more vigilant approach to value for money.”

Despite the range of failures in the Programme, the BBC is set to complete the initiative by mid 2011 and within a revised budget of £133.6 million.

“When it brought the Programme in-house, the BBC adopted a more iterative 'agile' approach to delivery,” the report read.

“This involved breaking down technology development into smaller steps and getting quick feedback from users to improve products. The BBC attributed the successful delivery so far both to adopting this 'agile' approach and to having a strong supplier management team.”

At the time of publication, Siemens had not responded to a request for comment on the report.

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