MPs have slammed the Department for Transport’s “stupendous incompetence” in a failed IT scheme, which could cost the taxpayer £81 million instead of making planned savings of £57 million.

Edward Leigh, chair of the Public Accounts Committee (PAC), which audits government spending, said the project to produce an SAP-based HR, payroll and finance shared services system was “one of the worst cases of project management seen by this committee”. He said the computer system was inadequately procured and tested, and that staff do not trust it.

Costs on the IBM-led project will be £121 million instead of a planned £55 million by 2015, the PAC said in its report 'Shared services in the Department for Transport and its agencies'. Savings will be £40 million instead of the £112 million originally forecast.

The losses estimated by the PAC are in line with that of the National Audit Office, which in May predicted an £80 million loss and said the government had been “unrealistic” with plans.

The DfT believed it could improve savings from the project by adding procurement to the shared services, but this optimism was “misplaced”, the report said, because costs and benefits had not been established.

While senior staff have lost bonuses over poor project management, this did not constitute “adequate punishment for the particularly poor performance exhibited during this project”, the PAC said in its new report. It lambasted the fact that “no individuals have been dismissed or been properly held to account” for the failure.

The DfT also came under fire for failing to put the contract to tender, instead using an existing deal with IBM for a similar system at the DVLA, and failing to identify the requirements.

When the DfT realised its project assumptions were incorrect, only two months in, it failed to deviate from the original plan, the PAC said. It also saw a number of key performance indicators as unimportant.

The DfT cut corners in an attempt to meet a deadline of April this year, the PAC said. It cut testing time and, when the system went live for seven other agencies to use, it was not working properly. This was, the report stated, a repeat of a fault made on other government projects.

As a result of the problems, users had little confidence in the system, the report stated, and it is only being used by the department and two agencies. Staff trying to find help online received answers in German, and password reminders appeared in the same language.

The DfT said it was committed to cutting the costs. “As with any large scale and long term project, there have been aspects of Shared Services that have taken longer to implement than others. However, the system is now starting to deliver real change within the Department with smoother and more streamlined processes.”

IBM declined to comment.

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