A shared services scheme by seven research councils in the UK has run 65% over budget and has delivered "significantly" less benefit than expected, according to a report from the National Audit Office (NAO).

Set up in September 2006, the scheme was designed to allow the seven councils to share back-office functions including HR, finance, procurement and IT. It was orginally slated to complete in 2009, but the development phase only closed this year. It was projected to save £395 million over ten years, but as of March 2011 it had only delivered £27 million in cost savings.

Reasons for the poor performance of the project identified by the NAO include a flawed business case, over-complicated governance arrangements and a lack of shared vision between the councils.

The NAO singled out the IT component of the programme for particular criticism. The councils contracted Fujitsu to provide IT services over ten years, despite the fact that it came second in the supplier evaluation. There was no clear definition of the shared services centre’s requirements, and Fujitsu failed to deliver project milestones as planned. By the time the councils terminated Fujitsu’s contract, they had spent £32 million with the company.

Amyas Morse, head of the NAO, said that the project is "yet another example" of a government programme that went ahead without the necessary planning.

"Once it did start to go wrong, proper governance or intervention from the Department [of Business, Innovation and Skills] should have rectified the problems, but this did not happen until a great deal of taxpayers’ money had been spent," she said.

Some value can still be reclaimed from the project, the NAO found. "A single shared service platform has the potential, if managed effectively, to offer broader benefits through streamlined processes," the report says.