BBC's IT efficiency project to cost £10.7m

An IT project intended to increase BBC efficiency will cost the corporation more than £10 million, according to a National Audit Office (NAO) report.

In January 2008, it was estimated the project would bring the BBC a net benefit of £17.9 million by March 2015.

But the NAO said the financial benefits of the project were "initially overstated".

The latest forecast, according to the report, results in a final net cost to the BBC of £10.7 million.

The BBC said this was partly due to the project being rolled out to more divisions within the corporation than had been originally planned.

Intended to improve efficiency across the BBC, the Digital Media Initiative (DMI) is designed to allow staff to develop, create, share and manage video and audio content and programming on their desktops.

In 2008, the BBC appointed its existing IT contractor Siemens to develop the system without holding a new competition.

But the contract was terminated from July 2009 by mutual agreement, with the BBC taking the project in-house.

The BBC received a £27.5 million no-fault financial settlement from Siemens to meet the increased cost of completing the delayed project.

Today's report, commissioned by the NAO, said that the early stages of the project were not value for money, mainly as a result of a 21 month-long delay.

That resulted in £26 million of benefits not being achieved from 2009 to 2011, it said.

Amyas Morse, head of the National Audit Office, said the BBC's approach to the early stages of the project "was disappointing and did not achieve value for money".

Since taking it back in-house "delivery of the system has progressed well, and users have responded positively", he said.

Anthony Fry, BBC Trustee with lead responsibility for value for money, said: "The DMI is a cutting edge project that will improve the way the BBC operates and transform the way it makes programmes and content.

"The Trust agrees with the NAO that the early phase of the project ran into significant difficulties, but the BBC reacted with speed and efficiency, and since bringing it in-house delivery is progressing as planned.

"Clearly there are lessons to be learnt and the Trust will continue to monitor progress against the action plan we've asked the BBC executive to produce."