Watchdog: ‘EastEnders refurb not value for money’

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The BBC’s E20 programme, to replace and enlarge the external set of long-running soap opera EastEnders and improve various infrastructure at BBC Elstree Centre is now forecast to cost £27 million more, and take an additional two and a half years to complete, compared to its plans in October 2015, according to a report from public spending watchdog National Audit Office (NAO), which concludes that the BBC will not be able to deliver value for money on the E20 programme in the way that it envisaged in 2015.

The BBC built the external filming set for EastEnders (including ‘Albert Square’) in 1984, and originally planned to use it for two years. It has lasted for 34 years but is no longer fit for purpose. The poor condition of the set means the BBC cannot film in high-definition, degradation has led to increasing filming delays owing to stoppages in production due to health and safety concerns, and there are ongoing maintenance costs to ensure filming can continue.

In 2013, the BBC proposed building a temporary set, two-thirds of the size of the existing external filming site, to use while it constructed a new permanent set. It expected E20 to cost £59.7 million and to be completed by August 2018. Due partly to forecast cost increases, the BBC substantially revised its plans in 2015, moving its target completion date to October 2020. The case for E20, and the rationale for the current approach, is clear. However, in October 2017, the BBC reported internally that its revised plans were no longer achievable due to forecast delays and cost increases.

As a result of what the NAO calls “more realistic” plans, the BBC now forecasts E20 will cost £86.7 million – 45 per cent more than the original budget. Most of this increase relates to the higher cost of the Front Lot, which the BBC now estimates will cost £54.7 million – £23.5 million (75 per cent) more than planned. Following negotiation and clarification around the Front Lot construction contract, including the type and supply of bricks required, Wates was appointed by the BBC in September 2018 to carry out the work at a fixed price of £24.2 million, £9.5 million more than the BBC budgeted in October 2015. The BBC expects the Front Lot to be completed at the end of March 2021, 22 months later than originally planned.

The BBC now intends for E20 to be completed in May 2023 – 31 months later than envisaged in its 2015 plans. Delays primarily stem from: procurement delays, as limited market interest resulted in the BBC revising its approach; subsequent contract negotiations taking longer than planned; and more realistic assumptions about the time needed to age the newly-built Lots. The overall forecast delay, which includes contingency time, is additional and separate to the 26 months the NAO reported in 20163.

By the end of September 2018, the BBC had spent £28.2 million and completed various elements of E20, though much of this work has cost more and taken longer than planned. In October 2018, the BBC began constructing the Front Lot, the most challenging part of E20, and the Back Lot was at an early design stage. Therefore, it is not yet possible to conclude on the value for money of the latest programme plan. Nevertheless, the programme has been subject to ongoing scrutiny and reporting and, in the last 18 months, the BBC has made many improvements to the programme. The BBC still expects to realise the intended benefits of E20, albeit at a later date and greater cost than originally planned.

The NAO considers that some of the reasons for the delays and cost increases could have been addressed earlier by the BBC. Early planning processes resulted in the BBC underestimating aspects of complexity, cost and risks of its approach. There was also insufficient construction project management expertise to identify critical design issues, for example with the Front Lot. Furthermore, while they did engage with each other, the programme team and EastEnders production (the end users of the set) were not sufficiently integrated, leading to ineffective design development and change processes.

The BBC has also faced issues such as higher than expected inflation in the construction sector, as well as asbestos and obstructions in the ground which to some extent were unforeseen by the programme team, partly due to poor site records. Inflation has had a greater impact than it would have done had the programme completed without any delays.

“The BBC will not be able to deliver value for money on E20 in the way that it originally envisaged,” stated Amyas Morse, head of the NAO. “It is surprising that some of the reasons for this were built in from the beginning. Despite recent project management improvements, E20 is late and over budget against its 2015 plans. We believe that the planned benefits are still broadly achievable, but given the high-risk nature of E20, it will need close scrutiny until it is finished.”

In response, the BBC said it acknowledged the NAO’s review of the E20 programme, noting that EastEnders celebrated its thirtieth anniversary in 2015 and confirming that the Corporation was committed to seeing one of BBC One’s biggest shows mark future anniversaries. “The drama continues to attract a loyal and diverse audience, including younger viewers. This is a priority for the BBC, supporting our strategy to reinvent the BBC for a new generation. The new set will enable us to rebuild Albert Square with actual brick buildings and extend the external filming locations at Elstree. This will also provide new creative opportunities to explore different storylines and to better reflect modern East End London on screen,” it suggested.

The BBC points out that the E20 programme also includes updating other facilities at BBC Elstree, including the installation of more efficient boilers and construction of facilities to house them, a new electrical infrastructure, two TV production control rooms and new edit suites. These works have already been completed.

“As the report acknowledges, E20 is a particularly complex and bespoke programme. As a continuing drama, EastEnders has constantly evolving storylines which often require set changes. The build needs to replicate the look of the existing set to maintain continuity on-screen. And construction works need to be coordinated with live filming,” says the BBC.

“We recognise that this complexity has brought challenges, impacting both cost and timelines. The BBC has made many improvements to the programme including across the governance, stakeholder engagement, scheduling and budgeting, as the NAO has acknowledged. We are also pleased that the NAO conclude that the benefits remain achievable,” it concludes.

In response to the NAO’s specific recommendations:

Given that E20 remains high risk, in addition to the work of the BBC’s Programme Management Office (PMO), the BBC should continue periodic, independent scrutiny of the feasibility of its new programme plans.

The Board will continue to receive monthly updates on E20 alongside all of the BBC’s Critical Projects from the Corporate PMO. Additionally, the Board has asked the BBC’s Audit and Risk Committee to provide additional independent oversight on a quarterly basis.

Following the BBC’s problems with design development and change request process on E20, and subsequent changes in these areas in 2017 and 2018, the BBC should keep these processes under active review, particularly as the Front Lot has now entered the important construction phase and the Back Lot plans advance.

As the report acknowledges, EastEnders is a continuing drama and often requires set changes as part of its storylines. The E20 programme will always have to work alongside these variable circumstances. We are pleased the NAO recognises the changes we’ve already made which will ensure any design changes are appropriately managed by the programme.

We will undertake periodic reviews of these processes, with the first being three months into our Front Lot build. The E20 Steering Group will continue to receive monthly reports on the cost and programme impact of any design changes to additionally provide management oversight.

The BBC should ensure, via its corporate PMO, that the E20 programme team continues to capture lessons systematically, and that learning is applied for the remainder of the programme.

We will continue to capture systematically lessons learned on the programme, aligned to the key stages of the programme, with the support of Corporate PMO.

The lessons learnt will be made visible to the wider programme team to ensure that they are applied for the remainder of the programme. Additionally, we will share further learnings from other critical projects, so they can be usefully applied on E20.

The BBC should ensure, via its corporate PMO, that appropriate assessments of the skills needed for all current and new critical projects have been carried out, particularly in terms of technical and specialist roles.

BBC’s Corporate PMO already delivers regular reviews to ensure critical projects are set up for success. In addition to this, we will specifically increase our focus on the specialist skills that are required for key roles.

The BBC should review its wider portfolio of critical projects to ensure that end users are sufficiently integrated and engaged in the scope, development and progress of projects from the outset.

We will build on existing guidelines in place to enhance stakeholder engagement throughout a programme’s lifecycle, including at its outset.

The Corporate PMO will continue to share best practice, alongside ensuring that programme teams and Steering Groups build in end user integration and engagement into any significant stage gates of a project.


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