Report slams BBC for £100m wasted on failed project to share digital content across the corporation

An independent auditor has identified serious weaknesses around a failed digital project which cost the BBC £100m.

Conceived in Nov 2005 to “fully prepare the BBC for the on-demand digital world” the DMI initiative was initially given the go-ahead in December 2007 with a budget set at £81.7m.

In February 2008 Siemens was awarded £79.8m to take the project on only for it to be taken in-house again in July 2009.

Today’s report found that in June 2012 a BBC review said that of 12 DMI “functions”, only one was in live use “but required a period of stabilisation”.

In October 2012 the project was “paused”. After a review it was decided that DMI would not meet the "future business needs for digital, tapeless production" – at which point the decision was made to stop the programme and "write down the asset value".

The report published today found serious weaknesses around the way the project was run which allowed it to slip further into trouble, but failed to identify any single cause or issue which led to the difficulties.

DMI was being developed to allow BBC staff to create, share and manage video content at their desks.

But following the publication of today's report, compiled by PricewaterhouseCoopers, the project was blasted for the "unacceptable cost to licence fee payers" by Diana Coyle, the vice chairman of the BBC Trust.

Dominic Coles, the BBC's Director of Operations, said: "While the BBC has a strong history of delivering complex projects such as BBC iPlayer, the digital Olympics or major property moves, we got this one wrong which we regret.

"We know it is vital to spot problems early, which is why we have overhauled how these projects are run to ensure this doesn't happen again."

The report, compiled at a cost of more than a quarter of a million pounds, found numerous areas were "not fit for purpose" including governance of the project, arrangements for reporting progress to BBC bosses and risk management.

The report lays down a number of recommendations for management of future major projects at the corporation.

The corporation's chief technology officer John Linwood, who was paid £280,000 a year, was suspended on full pay pending the outcome of investigations.

The BBC would not give an update today. A spokesman said: "We cannot comment as there is an ongoing process."

The BBC executive welcomed the report and accepted its findings. In a statement it added: "Whilst the BBC clearly has a responsibility to keep ambitious technology projects under control, it is also our duty to bring innovation to the market.

"Of course, such technology projects always carry a risk of failure. Nevertheless, to deliver our strategy and bring value to the digital economy, the BBC will continue to innovate and develop new technologies."

The BBC Trust said: "We believe that by being clear about the mistakes which have been made, and by identifying the actions needed to rectify them, the PwC report will help to ensure that there will be no repeat of a failure on the scale of DMI."

The corporation's chief technology officer John Linwood, who was paid £280,000 a year, was earlier this year suspended on full pay pending the outcome of investigations.

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