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NAO says BBC Spend Careless 2010-02-26

Posted by clype in Articles of Interest, Glasgow, Humanities, Money, Scotland.
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‘The National Audit Office’ (‘The NAO’) today criticised the BBC for spending 2 000 million GBP on three major building projects, including the redevelopment of its ‘Broadcasting House‘ HQ in London, without ‘clear assessments of the intended benefits’ in terms of value for money.

Initial budgets for two of the three projects, ‘Broadcasting House‘ and the ‘Pacific Quay development’ in Glasgow, were revised upwards, leading to a total overspend of 117 million GBP.

Redeveloping Broadcasting House took four years longer than planned and cost 55 million GBP  more than expected, a total of 105o million GBP, ‘The NAO’ said.

The BBC’s ‘Pacific Quay development’ in Glasgow, the headquarters of BBC Scotland, was also delayed and over budget, costing 188 million GBP compared with an original prediction of 126 million GBP.

But ‘The Salford Quays development‘, which will house five BBC departments including ‘BBC Radio 5 Live’ and ‘BBC Sport’, is expected to come in at 76 million GBP less than forecast at 877 million GBP when it is completed by the end of 2011.

The construction costs of the Salford site are being borne by the developer, with the main BBC expenditure being the cost of renting and staffing the studio facilities over 20 years, put at 233 million GBP. Another 90 million GBP is being spent on relocating departments including ‘Radio 5 Live’, sport and children’s to the new ‘BBC North’ HQ.

‘The NAO’ said the BBC had failed to outline the intended benefits of any of the three projects at their outset, adding that the corporation had not identified the skills required to deliver the projects, or put aside a sufficient financial contingency for the Broadcasting House project.

‘The BBC is not well placed to demonstrate value for money from the 2 000 million GBP it has committed to spending on the three projects over their life,” said ‘The NAO’ report.

‘The absence of clear assessments of intended benefits at the outset of the projects means there is no baseline against which to measure achievements.

‘For future major projects the BBC needs to make sure that: investment decisions are based on a full assessment of the scope and cost of the project; there are clear baselines so that performance can be measured and project teams held to account; and proposals submitted by management are reliable and subject to effective challenge by the BBC Trust.’

The BBC Trust, in its response, said it agreed there were “significant failings” in the first stage of the ‘Broadcasting House‘ project and said its predecessor, the BBC board of governors, had taken “direct” action to get it back on track.

‘This report confirms our own findings that since the BBC governors, and subsequently the trust, first intervened directly to bring the “Broadcasting House” development back on track the BBC has significantly improved its management of major estates projects over the past four years,” the trust added.

In a separate response, BBC management said it ‘notes “The NAO’s” conclusion that the BBC is not well placed to demonstrate value for money on the three projects’.

BBC management added that changes to the projects, after their initial approval, had been “necessary and justified but at the time unpredictable, and will help ensure that value is in fact delivered”.

‘We are confident that value for money will be achieved. Only one of the three projects is complete, and already we are seeing real evidence that “Pacific Quay” is enabling BBC Scotland to deliver better value to licence fee payers,’ the BBC said.

“‘We believe that a full view of value for money needs to take proper account of necessary, but unpredictable, changes introduced after the start of the three major projects under review, but welcome the recommendations made by “The NAO” on the future delivery of critical projects.’

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