The National Audit Office (NAO) has said that the BBC cancelled its Digital Media Initiative (DMI), after having spent £125.9 million on the project, without examining the technical feasibility or cost of completing it.

DMI was supposed to be a fully integrated digital production and archiving system to help BBC staff develop, create, share and manage video and audio content and programming on their desktops. However, it canned the project after it found that most of the money it has spent on the project had been wasted.

The BBC only confirmed this week that CTO John Linwood, who was in charge of DMI, was sacked over the debacle in July. However, The Public Accounts Committee (PAC) has previously questioned why Linwood was the sole person suspended over the major project, claiming that more than one BBC manager was to blame.

A PricewaterhouseCoopers (PwC) review commissioned by the BBC Trust also claimed that the BBC had shown serious weaknesses in project management and reporting, as well as a crippling lack of focus on business change.

The NAO report released today found similar results, where it states that there was a growing gap between technology development and what users expected. It found that the BBC did not have a sufficient grip of the programme and did not appear to appreciate the extent of the problems until a late stage.

"The BBC Executive did not have sufficient grip on its Digital Media Initiative programme. Nor did it commission a thorough independent assessment of the whole system to see whether it was technically sound," said Amyas Morse, head of the National Audit Office.

"If the BBC had better governance and reporting for the programme, it would have recognised the difficulties much earlier than May 2012."

The findings from the report include:

  • When the BBC took over responsibility for developing the DMI technology from Siemens in July 2009 it had little time left to meet critical internal deadlines.
  • The BBC did not establish clear requirements or obtain a thorough independent assessment of its technical design to see whether the DMI was technically sound.
  • The BBC completed the most straightforward of its new technology releases for the DMI but these proved not to be a reliable indicator of progress.
  • Technical problems and releases not meeting user expectations contributed to repeated extensions to the timetable for completing the system, eroding user confidence and undermining the business case.
  • The governance arrangements for the DMI were inadequate for its scale, complexity and risk. The BBC did not appoint a senior responsible owner to act as a single point of accountability and align all elements of the DMI. Reporting arrangements were not fit for purpose.
  • The BBC did not adequately address issues identified by external reviewers during the course of the programme. For example, it was aware that business requirements for the DMI were not adequately defined.
  • The BBC estimates that it spent £125.9 million on the DMI. The BBC offset £27.5 million of spending on the DMI against transfers of assets, cash and service credits that formed part of its financial settlement with Siemens. This left a net cost of £98.4 million. The BBC cancelled the DMI without examining the technical feasibility or cost of completing it.
  • The BBC wrote off the value of assets created by the programme, but is exploring how it can develop or redeploy parts of the system to support its future archiving and production needs.

"We are grateful to the NAO for producing this report, which reinforces the conclusions of the PwC review commissioned by the Trust. It is essential that the BBC learns from the losses incurred in the DMI project and applies the lessons to running technology projects in future," said Diane Coyle, vice chairman BBC Trust.

"The NAO's findings, alongside PwC's recommendations will help us make sure this happens. As we announced last December, we are working with the Executive to strengthen project management and reporting arrangements within a clearer governance system. This will ensure that serious problems can be spotted and addressed at an earlier stage."