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October 30, 2013

HS2 highlights the need for integrated thinking in government

By Charles Tilley

As the UK government revises downwards the business case for the HS2 high-speed rail link, Charles Tilley, chief executive of the Chartered Institute of Management Accountants (CIMA), argues that any successful organisation, including governments, should be driven by solid management information.

As the Transport Secretary seeks to rebuild support for the HS2 project, and commentators doubt whether large infrastructure projects are good value, we find ourselves once more questioning a lack of efficiency in the public sector.

The fact that there is yet another iteration of the government’s business case – yet another cost justification – suggests that the project has been hampered by a lack of integrated thinking from the outset.

Certainly the shifting focus on benefits is a problem. Initially the focus was on benefits derived from the much debated assumption that people do not work on trains. Then there was the regional economic benefits.

Now we see a move towards the benefit of providing extra capacity and connectivity on the rail network. Projects of this scale depend on a transparent, evidence-based approach which clearly links costs to measurable outcomes.

The expected benefit-cost ratio for HS2 has fallen due to the £10bn rise in the scheme’s projected cost, and this lack of foresight would have been avoided if there was a greater emphasis on strong project and performance management across the government.

All successful organisations are characterised by a relentless focus on efficiency and effective decision-making, which is rooted in solid management information. This government should be no different.

If this more rigorous approach replaces the current emphasis on populist policies, we will see a reduction in the number of projects which are over budget or late.

There are encouraging signs in the public sector that must be built on, such as the professionally qualified accountants and non-executive directors brought in to embed best practice management accounting.

The UK’s private sector has significant experience of running large, diversified organisations. Drawing on this experience to strengthen the centre of government has the potential to be a truly world-leading initiative.

Related link

The Chartered Institute of Management Accountants

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