35 Accepted

External factors like inflation and supply chain issues significantly complicate project cost and timelines.

Conclusion
We have previously examined how external factors, such as inflation and higher price levels, can affect the cost schedule of projects and also the timeframes involved. We have seen how inflation can be largely driven by supply chain issues, meaning the consequences can be complicated and different for each project. We have asked project management experts about the early warning signs that a project may need to be reset. They replied that the signs include critical milestones not being met, significant cost pressures that cannot be recovered later in the project, and benefits being way off track in terms of realisation.56 Variation across the school estate
Government Response Summary
The government agrees with the committee's observation and states it has already taken steps to address external factors impacting project costs and timeframes, including changing funding policy and robust risk management processes.
Government Response
Accepted
HM Government Accepted
8.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2024 8.2 There are now over 500 schools in the School Rebuilding Programme, including schools with RAAC that need rebuilding projects. The department made rapid progress in setting up the programme and had selected 400 schools by December 2022, ahead of schedule. 8.3 While the National Audit Office (NAO) highlighted that the department had not met initial programme forecasts for the number of contracts awarded, these forecasts were made ahead of the impact on the construction market of significant global events outside of the department’s control that could not have been reasonably predicted, such as the Russian invasion of Ukraine. 8.4 The NAO made clear in its 2023 report on the condition of school buildings that the department has already taken steps to address delays related to these issues, including changing project funding policy to reflect market conditions. There are indications the department is now seeing a more stable position, with overall progress on track to deliver the programme as planned. Where construction contracts have been awarded to date, the department has been delivering projects, faster on average, than expected durations. 8.5 The programme is part of the government’s major projects portfolio. The programme manages risks robustly, continually monitoring the horizon for internal and external factors that could impact on delivery, so it is able to respond quickly to such challenges. There are established processes for formally reviewing progress and overall risks to delivery of the programme through regular Infrastructure and Project Authority (IPA) gateway reviews. The IPA has previously rated progress as very good and commented that the programme was well managed. The next gateway review is expected to take place later in 2024.
Addressee Bodies
HM Treasury
Timeline
Recommendation age 2.7 yrs
Report published 19 Nov 2023