A government project to save money through sharing an IT system across different parts of the Department for Transport will cost twice as much to set up as expected and will lead to £80m in extra costs by 2015, according to a National Audit Office (NAO) report.
The plan to share services for human resources, payroll and finance using a computer system developed by IBM was originally forecast to cost £55m and save £112m. The NAO has reported that the costs will now reach £120m and will save £40m.
The central offices of the Department of Transport and two Department of Transport Agencies, the Driving Standards Agency and the Driver and Vehicle Licensing Agency and are taking part in the project.
The NAO report blames changes to initial cost estimates, inadequate contract management and poor initial implementation for the government missing the targets.
Tim Burr, head of the National Audit Office, said it is disappointing to see a programme to improve efficiency and effectiveness leaving a government department worse off.
"[Government] departments need to be realistic about the challenges of implementing shared services and to manage suppliers effectively. Over the past year, the Department for Transport has made efforts to improve the performance of the Shared Services Programme, and it cannot afford to fail," Burr said.
The NAO said that since April 2007, the Department for Transport has made "considerable efforts" to improve its management of the programme and to resolve problems with the system.
"It is also focusing on extending the functions available from the centre to include routine procurement so as to increase benefits and improve the quality of management information so that it can identify further savings. Illustratively, if the Department for Transport were to achieve additional savings of £50 million per year, there would be benefits worth £84.4 million up to 2015, less any additional set-up costs," said the NAO.