On 3rd August last year I referred to the award by TfL of the new sub-surface lines signalling system to Thales, which had installed the Jubilee and Northern Line systems. This followed the cancellation of two previous attempts to resignal these lines, and I added my ‘take’ on the huge price London had paid for the extra cost and heavy delay to the automation that will eventually deliver improved services. You can find it HERE.
I hadn’t expected the Greater London Authority’s budget and performance committee’s review of events to be quite so scathing, but this appeared on 16th March this year. I commend it as a good read, but it comes with a warning that you may think it a depressing document – how could an apparently sensible organization like TfL, that we depend on to provide vital services each day, have fouled things up so badly? You can find it HERE.
Do read this for yourself, even if you just refer to the summary, though the useful part of the report itself is only 22 pages and is full of good stuff. There is no point in me just summarizing it here, so I will confine myself to the highlights of what it said.
- Tfl’s procurement process was flawed and changed as it went along.
- The tender scoring system was flawed.
- TfL process was outmanoeuvred by Bombardier, which put in a bid priced to ensure it would win [whether or not it could deliver].
- The capability of Bombardier to deliver the promised benefits was not adequately demonstrated or interrogated.
- Neither TfL’s nor Bombardier’s management teams were up to the task of managing the programme and the high risk this presented was not effectively considered.
- Contract termination clauses were based on value of money spent (even if wasted) and not value of work actually done.
- The programme’s failure raises questions over whether TfL’s Board has the right skills and experience for the job.
- External reviews have been highly critical of both TfL’s internal assurance function – provided by TfL’s Project Management Office (PMO) – and its external assurance function.
- Of the Bombardier work actually paid for, (£80m but later revised to £85m) TfL initially intimated this was a useful contribution towards the project (ie would not need to be spent again). This was untrue and much of the work (nearly £50m) is actually wasted – worse than I thought, I’d costed the waste at only £30m.
The following paragraph from the report expresses the situation better than I can.
‘The [signalling] contract failure will have significant service and financial implications for many years to come and we must do all we can to try and ensure similar failures do not happen again. TfL’s reaction to the lessons learned review has been positive and the way it has set up a new delivery partnership with Thales provides some confidence. However, the nature, scale and sheer number of mistakes that were made with this programme raises cause for considerable concern. TfL has been proactive and implemented the required procedural changes. However, the broader question about the quality of judgement shown by the senior management team remains. The next Mayor will have to assure themself that TfL’s management team is equal to the task of managing TfL.’
Finally I need to add that the GLA report is heavily dependent on the Lessons Learned Review conducted by KPMG. This is less sensationalist but is perhaps more perceptive in identifying some of the real issues. For example, one major TfL skill found to be absent was in the signalling or systems area in being able to identify the gap between what LU actually needed and the off-the-shelf product that Bombardier were offering. It was obvious that the product would have to be adapted to LU requirements but the profound implications of this were not properly understood. This report, too, is well worth the read and may be found HERE.
I estimated that the extra costs of these delays were the ‘thick end’ of £900 million and the GLA report suggests a curiously precise £886 million, adding: ‘this is nothing short of a disaster for London’. The report suggests that irrespective of the cost overrun the loss of direct financial benefits (fares generated by extra people using the services had they been enhanced sooner) is a further £271 million, making overall cash loss about £1150 million, a loss somewhat exceeding the whole cost of the Northern Line extension to Battersea, or a fleet of 100 or more trains, to give this some context. As if that is not enough, the delays in the wider economic benefits to London coming on stream are not free and the report suggests these amount to ‘the hundreds of millions’, though this impact is harder to measure with precision (each year’s full benefits are believed to be worth £180 million). Would it therefore be unfair to put a price tag on this debacle of £1.5 billion?
So, who is accountable then? Yes, you’ve got it in one. Absolutely nobody.
May I draw your attention to the London Underground accounting blunder in 1990 that resulted in a £40 million budget shortfall and uncomfortable press coverage. This saw both the LU and LT finance directors vanish overnight (‘abruptly’, as the FT put it). £40 million then equates perhaps to £80 million now (a mere fraction of the recent signalling disaster). Perhaps that offers some context in which to consider whether exceedingly well paid people within the TfL organization should have been encouraged to fall on their sword: but we don’t have chairmen of the stature of Sir Wilfred Newton any more. It is surely not reassuring to Londoners that this enormous cost is just shrugged off. In other businesses one might have expected heads to have rolled. Not so here. Outgoing Mayor Johnson says he ‘accepts all responsibility for everything that happens on my watch’, thereby relieving the organization of the need to lose heads for the greater good and the scale of the misfortune feels like at least four heads-worths to me. It is interesting that the press has failed to follow up on Boris taking on the responsibility, but so far as his mayoralty is concerned I suppose he’s now irrelevant.
Of course, I fully recognize that the history of this is drawn-out and complicated, and is not wholly unconnected with the Metronet fiasco. Nevertheless all the decisions were taken post-Metronet and this is an awful lot of money. Moreover, it is not as though there weren’t people very familiar with the LU signalling challenge that were openly questioning a Citiflo solution. One would think that in any competent organization structure there would be, somewhere, a clear point of responsibility for entering into a bad contract. If there isn’t, then the structure is wrong. Clear accountabilities are the only effective mechanism for focusing the mind.
There are things to be said about the competence of the so-called procurement industry, about TfL skills loss, and about the wisdom of outsourcing, but that is for another time. For now, I will leave it that there is a crying need for a much enhanced ‘intelligent client’ role within TfL – clients (not procurement people and not project sponsors) who are technical professionals who know as much about the products being offered for tender as the people selling them, and clients who work for the company and have an ongoing stake in getting it right.
I hope the next mayor is listening.