BBC criticised for cost overruns on EastEnders set

MPs have lambasted the BBC for ‘fundamental’ project management failures in the redevelopment of the set for its flagship TV series EastEnders, which is set to cost £27m more than budgeted and will be completed five years later than planned

The external set was built 35 years ago and is no longer fit for purpose. The replacement, known as the E20 project, will now cost £87m and will not be ready until May 2023.

A Public Accounts Committee (PAC) inquiry into the project, based on a report from the National Audit Office, found that the costs have increased partly because of inflation in the construction industry, the effect of which has been exacerbated by delays - with the construction of the front lot only starting in October 2018 rather than August 2017 as planned in 2015.

The committee said the BBC has also underestimated the scale and complexity of the project, including how it would age the new sets so that they either exactly replicate what viewers are used to, or look realistic where there are new locations.

In addition, the BBC initially failed to allocate enough money to manage risks and contingencies. It has encountered problems including asbestos and obstructions in the ground, which have, to date, cost the BBC around £1.8m and delayed works by around four months.

The committee recommends that starting in October 2019 – one year into the construction of the front lot - the BBC should annually update the committee on the progress, expected costs and completion date of E20. These updates should demonstrate how the BBC has learned lessons from previous project failings, and whether its revised risk and contingency budget has been adequate.

The report is also critical of the BBC’s procurement approach for the Front Lot contract, which it says was ineffective and increased the cost of the project by £2.3m.

In 2016, the BBC carried out a single-stage open procurement for the Front Lot but this was unsuccessful owing to limited market interest. This led the BBC to move to a two-stage procurement, which cost it £2.3m and delayed the project by six months.

The second procurement, in which only two bidders met the BBC’s requirements, led to Wates being awarded the contract at a cost of £24.2m, £9.5m more than budgeted.

The BBC’s cost consultants were unable to validate £3.1m of the costs that were included in the final contract and concluded that limited market interest was likely to have inflated prices.

In addition, the BBC's contract negotiations with Wates took six months longer than planned, partly because of discussions about what bricks to use for the set.

The report said the commercial problems the BBC has encountered on this project demonstrate its ‘ineffective’ sourcing and negotiating approach, which may have implications for other contracts.

The committee’s recommendation is that by October 2019, the BBC should provide it with evidence of how it ensures best practice in procurement and contract management across its diverse range of contracts – for E20 and other contracts.

Meg Hillier, PAC chair, said: ‘The BBC made fundamental mistakes in planning and delivering E20, at significant extra cost to licence fee payers.

‘The apparent complacency with which the BBC approached the project is entirely at odds with EastEnders’ strategic importance to the corporation.

‘The revised completion date for E20 is still more than four years away and, as work continues, the BBC must demonstrate it now has a firm grip on the project’s costs and progress.’

Public Accounts Committee (PAC) report, Renewing the EastEnders set https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/1737/173702.htm

Report by Pat Sweet

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