Section 23 Report: Response
“Review of major capital projects in Scotland—How government works”
We have the accountable officer's response to the Auditor General's report.
We have made some progress, and I welcome John Elvidge's commitment to provide a progress report in the new year, but I still have concerns. It is a bit like our earlier discussion about the NHS. There are still weaknesses in the information, and we are talking about huge sums of money.
One issue that has come out consistently in our deliberations is how much reliable and quality information ministers are given when they make decisions. There are perhaps still weaknesses on early-life issues and on whole-life costings. We posed a question to the Auditor General about whether we can do anything to ensure that improvements are made, but I do not think that we reached a conclusion on that. Are there any questions or comments from members?
We cannot run the Scottish civil service, but we can encourage best practice and point out faults and failings—that is what the committee is all about. We are fortunate to have Audit Scotland to give us detailed back-up and information on which we can base judgments. Our job is to encourage best practice in the Government machine, not to run it.
I agree entirely. Perhaps we can produce a short report with some specific comments. As Andrew Welsh says, we do not want to interfere in the management or running of the service, but we could put down markers about how the service should be improved and how civil servants can support ministers better.
We have always encouraged best business practice. One of the great strengths of Audit Scotland is that it promotes good common sense and sound and solid management. Where that approach has been adopted by those reported on, there has been an immediate positive effect. We can make recommendations and encourage good governance.
I was sorry to miss the meeting at which Sir John Elvidge gave evidence—I hope that we will have him again some time.
I find some of the replies in Sir John's letter astonishing and I would like to know whether other members feel the same. We asked about cost overruns. Okay, some of them were minor, but we asked when he was advised about the overrun on the Stirling-Alloa-Kincardine railway project, which was not minor. At the top of the second last page—they are not numbered—he states:
"I believe I was first advised of potential cost overruns on the Stirling-Alloa-Kincardine rail project in the Autumn of 2007, in conversation with the Director General Economy."
That would be a strange way to run a sweetie shoppie, let alone a Government. He says that he believes that he was first advised at that time, so he is not absolutely sure. Are there no records? Also, nothing was put in writing—it was just a conversation—yet there was a major cost overrun.
Further down the page, the letter states:
"However Ministers do not routinely receive a summary of progress on all capital projects because we have not identified a need for routine reporting of this kind."
If I were a minister, I would immediately have identified such a need and asked for a report on cost overruns, because of the embarrassment and difficulties that they would cause and the changes that might have to be made. Do other members not find those remarks a bit strange?
Members will recall that, during the question-and-answer session with Sir John Elvidge, we questioned the way in which information was provided. We were somewhat alarmed that, as you mention, information was often obtained in conversation. The point was raised specifically. That is one reason why it would be useful for us to produce a short report on the issue. It is clear that weaknesses still exist and that improvements should be made. You are absolutely right that, given the value of some of the projects, identifying problems in conversations is frankly a poor way in which to run a business.
From the evidence session on 8 October, we know that that was clearly not the only time that concerns were raised in conversation. There seems to be neither a record of senior managers reflecting their worries about emerging problems in writing to the permanent secretary, nor a chain of referral from the permanent secretary or those senior managers to ministers. That might explain why we get into so many problems in so many projects.
My suggestion is that we should reflect on some of the weaknesses that we perceive and, as we discussed earlier, state specifically our concerns and where we think that improvements can be made.
I am glad that you think that, convener. We are talking about major capital projects, and we have the head of the civil service in Scotland hearing about them in a conversation.
I think that Sir John Elvidge is getting fed up with me—although I can tell him that it is going to get worse—because I have been asking questions about what he does with his time. I would have thought that one of the most important things for the head of the civil service in Scotland would be to ensure that capital projects and overruns were monitored and that ministers were told about them. That does not seem to be happening. What else is he supposed to do other than run the Government efficiently? He is not supposed to be going to receptions and dinners.
It came out clearly in our discussions that there is no written record of concerns about capital projects. More often than not, such concerns are raised in conversation. I wonder whether that happens just when someone bumps into someone else at a reception and says, "By the way, the project is £30 million over budget", or do they ask for a meeting to say that the project is over budget, and if so, is a minute taken? The system seems fairly haphazard.
I have reread the response from John Elvidge, and it says clearly:
"Individual Directorates and agencies ensure that Portfolio Ministers are kept abreast of progress with major projects".
They are informed, and it further says that the cabinet secretary takes a keen interest, so I am not sure what the difference of opinion or issue is.
I want to pick up on one issue that has been raised in committee over the piece—post-project evaluation. Members may recall that there were weaknesses in that. Sir John gives a clear commitment in the paragraph just above the other one—
Which paragraph are we on?
It is hard to say, George, as they are not numbered. It is the first bulleted paragraph response on the second last page.
It might be more efficient if Sir John numbered his pages and paragraphs.
The paragraph heading is:
"How does the Scottish Government gather and use evidence from post project evaluations".
I am encouraged that there is an instruction to ensure that post-project evaluations are carried out. Members felt that that was a key to informing future planning.
Sir John Elvidge also strengthens the point in the first response about how the Government ensures that estimation is accurate at an early stage. He refers to the "Construction Procurement Manual" and the "Scottish Public Finance Manual", and the guidelines clearly have to be followed. The assurance is given that they will strengthen project estimation at an early stage. I am encouraged by some of the responses.
I note what Willie Coffey said about the reports and alerting ministers, but Sir John Elvidge also says:
"I expect Directors General … to ensure that they receive systematic reports on capital projects".
He also says that it is their responsibility
"to take the necessary action … and to alert Ministers, and me"
when there is a significant risk. The problem is that there is no great detail on how that happens. Having an expectation is one thing; ensuring that it is met is something entirely different. That is one point on which it could be useful to suggest that we expect more rigorous procedures and not just reliance on expectations.
The chief civil servant is not a project manager. He cannot be expected to wander around every project in welly boots. We are talking about an early-warning mechanism and data and information gathering regarding progress—or, more important, lack of progress—in projects. It is about how the Government and ministers are alerted so that action can be taken.
Sir John Elvidge wrote:
"I believe I was first advised of potential cost overruns on the Stirling-Alloa-Kincardine rail project in the Autumn of 2007, in conversation with the Director General Economy. I satisfied myself that the relevant Director General … and the Chief Executive of Transport Scotland were taking the necessary action to manage these risks, in concert with the Project Board."
It all comes down to how he satisfied himself, as he puts it. That could well have been in writing, or other methods could have been used. He has been entirely honest with us in his answer. Our real question is how good and efficient the early-warning mechanism for projects is, and how it can go wrong.
That is what we need to consider. We should ensure that the procedures and processes are robust and rigorous. Nothing should be left to chance. As Andrew Welsh said earlier, we cannot interfere in day-to-day management, nor should ministers be that closely involved in management procedures. They should have sufficient information to be able to make the political decisions.
There has been some progress, but there are still some weaknesses. I suggest that we have a short report, focusing on some of the key concerns. Is that agreed?
Members indicated agreement.
We move on to item 5, which we agreed earlier to take in private.
Meeting continued in private until 12:16.