Failed Bioscience Institute: A Lesson in How Not to Manage Innovation Projects
Date: Wednesday, 23 May 2012
Reference: PAC 08/11/12
The failure of a major innovation project, the Bioscience and Technology Institute Limited (BTI), provides a good case study in how not to manage a major innovation initiative. That’s the stark message from the Northern Ireland Assembly Public Accounts Committee which today published its report into the project, which aimed to provide biotechnology facilities through the development of a specialist building at Belfast City Hospital.
Speaking at the launch of the report, Chairperson Paul Maskey MP MLA, said: “This project provides one of the starkest examples of incompetence and mismanagement that the Committee has ever examined.
“It would be difficult to overstate just how badly this project was handled, both by the funding bodies and by the BTI Board itself. From beginning to end, there was a catalogue of negligence and ineptitude, which can only be described as staggering.
Mr Maskey continued: “The Committee was extremely concerned at a number of aspects of this project. One of the most worrying was the repeated failure, at a senior level, within the Department of Enterprise, Trade and Investment (DETI) together with the Industrial Development Board (IDB) and Invest NI, to get a firm grip on the project. The Committee’s impression was of a management culture, at that time, which ignored the rules and circumvented their own controls. This was an appalling state of affairs.
“A key message of the report is therefore that an organisation’s top management has a particular responsibility to ensure that control procedures are followed. All publicly funded organisations must ensure that they demonstrate their commitment to open and accountable procedures.”
The report emphasises that while the Committee does not want the Department and Invest NI (which took over the functions of the IDB in 2002) to operate as risk-averse organisations, it was deeply disappointed at the handling of a project which promised so much. The report makes clear that the Committee supports risk-taking, but only where it is properly assessed and effectively managed.
The report also notes a worrying lack of documentary evidence, most notably around IDB’s approval of funding for BTI. A particular issue of concern was around the destruction of a file and file review form by Invest NI, after the file was requested for examination by Company Inspectors investigating the case. With Invest NI unable to provide a convincing explanation for what happened, the Committee had a deep sense of unease about this and was concerned that there may have been a deliberate cover-up.
The report also criticises the adequacy of the Department’s response to the failings in this case, particularly on its suspicions of fraud and impropriety. Regarding the conduct of officials, the Committee commended the Department for instigating a disciplinary process, but expressed concerns that the conduct of only four officials was examined, whereas the failings in this case ranged much more widely.
The Committee was not convinced that it had got to the bottom of the circumstances surrounding the purchase of the Harbourgate building, transacted when the City Hospital site no longer appeared to board members to be a viable option. The lack of transparency around the sourcing of the premises and the negotiation of the purchase price was of such concern to the Committee that it has called on the Department to look further into these issues and discuss them in detail with the PSNI, to determine whether any criminal activity may have taken place.
Mr Maskey concluded: “Perhaps what is most disappointing about this project is that it despite its promise, through a combination of apathy, incompetence and a disregard for proper administration, it was an unmitigated failure. This is a most unsatisfactory ending to a venture that had so much potential.”
Notes to Editors:
The report examines the reasons for the failure of the Bioscience and Technology Institute Limited (BTI). BTI was incorporated as a not-for-profit company in November 1998. Its primary objective was to provide biotechnology incubator facilities, through the development of a specialist building at Belfast City Hospital (BCH).
Difficulties in progressing the project at BCH, within the required funding timeframe, led to BTI purchasing “Harbourgate”, a shell building some four miles away in the Belfast Harbour Estate. In the event, BTI had inadequate funds to complete the fit-out, the costs of which turned out to have been substantially underestimated. As a result, the building never became operational and did not generate any income for BTI.
In November 2005, with the company unable to service its loan funding, the bank took possession of Harbourgate and sold it the following month. BTI remains technically insolvent and steps are now being taken to begin winding up the company.