It is a decade now since Sir Peter Gershon's seminal report raised the alarm over the way government departments run complex, public-private partnership projects.
But just last week, a report by the National Audit Office (NAO) found many government departments still lack vital commercial skills.
Two-thirds of major projects team had significant skills shortfalls, according to research cited in the report. And only half of all government departments have "effective commercial leadership".
Despite making massive strides over the last decade, the public sector often still fails to properly understand the risks involved, experts say. The potential for things to go wrong is not recognised, nor is the financial impact of those failures well understood.
So why is it so difficult for departments to attract, and hold onto, people with the commercial nous to run major projects? One obvious problem is the relatively low wages such people can command in government service. It doesn't help that commercial roles – contract management, procurement, etc – are less prestigious than those that involve policy-making.
"If you're focusing on procurement and commercial management and all that sort of thing, the career paths are less clear and not always as attractive as if you were involved in policy," says Adrian Kamellard, head of major projects for the Partnerships UK agency, which specialises in complex, privately financed projects.
In addition, most departments carry out complex projects only occasionally. So, rather than leaving commercially skilled staff idle for long periods, government departments instead draw on an army of interim staff and advisers – who now account for over a third of departmental staff spending.
Higher staffing costs
But that often leads to higher staffing costs, a loss of commercial knowledge when interim staff and advisers move on, as they inevitably do, and an imbalance between public and private skill levels. Departments "don't necessarily have many experiences of such practices," says John Tizard, a public-private partnerships expert at Birmingham University.
"Whereas for their private sector partners, negotiating contracts is something they do continually. They build up much more expertise and are able to learn from contracts."
What, then, is the answer? The NAO report says departments should be "flexible" when it comes to paying commercially skilled staff – code for paying them more, which may not be practical in a climate calling for greater public sector discipline. Tizard, meanwhile, advocates making part of public officials' pay dependent on long-term management of projects and user satisfaction.
The report also says departments should tackle the issue of prestige by doing more to retain highly skilled staff, for example by allowing them to be promoted within their current role. But a more fundamental issue, it hints, is making sure successes are copied. Some departments manage complex projects extremely well, but their knowledge is often not shared widely.
One option is simply to make it easier for commercial staff to be seconded quickly between departments. A further, more radical, step would be the creation of a squad of experts who could be sent into government departments when projects run into difficulty.
Edward Leigh, the chairman of the public accounts committee, has long called for a "cadre" of senior civil servants, a kind of public procurement flying squad. Such a scheme would address the problem of retaining staff, by giving them a constant, cross-departmental stream of projects to tackle; it would also, by its high-level nature, increase their status.
Kamellard says the key to improving procurement is not having swathes of commercially minded people at all levels of government but employing a number of "very experienced, high-calibre individuals". He warns, however, that the flying squad idea "has been tried from time to time, [but] has not quite happened yet".
One potential obstacle is the tension at the heart of the civil service. The NAO identifies what it politely calls "a lack of departmental engagement" with current efforts – run by the Office of Government Commerce (OGC) – to improve procurement skills. Two OGC programmes have had to be been abandoned because departments shunned them. Some departments make their own efforts to improve matters, duplicating OGC initiatives, while others simply fail to improve.
This state of affairs cannot persist, warns James Close, a partner with accountants Ernst & Young's government team. Projects are getting ever more complex, he says. And though contract management "is streets ahead of where it was 10 years ago, equally, the level of complexity in terms of commercial arrangements has also increased quite significantly. We have made some progress, but we can't stand still."
Some believe there may never be enough people able to manage the most complex projects and willing to work in government. "It's a very small number of people who can do that," says one senior government official.
Is the answer, then, to abandon the drive towards ever-more complicated deals with the private sector, and do more within the civil service? Kamellard, unsusrprisingly, doesn't think so. That would not reduce the complexity of projects but simply shift it back onto public officials, he argues. "You would be bringing the risk [of failure] back into the public sector, which requires skills which are not there."
