Testing the BBC.s 
DQF Efficiency 
Programme 

Ernst & Young review 
November 2011 


 

 

 


 


Background 

 

The BBC Trust commissioned Ernst & Young to review 
and test the BBC.s efficiency programme arising from its 
Delivering Quality First (DQF) initiative. The purpose of the 
review was to provide a level of confidence to the BBC 
Trust, on the rigour and approach taken by the BBC 
Executive in defining its efficiency proposals. 

 

Our assignment was performed in accordance with our 
letter of engagement dated 28 July 2011, and our 
procedures were limited to those described in this letter. 
Our work was carried out between 4 August and 30 
September 2011. 

 

Scope of our work 

 

Our report to the Trust is based upon an assessment of 
what we found through executive interviews, report 
reviews, data analysis and comparisons with other 
organisations applied across five key questions: 


1. Has the BBC Executive undertaken a rigorous and 
thorough process in identifying where efficiency 
savings can potentially be made within the BBC? 
2. Has the BBC Executive provided sufficient challenge to 
all divisions of the BBC in testing the cost information 
and assumptions used to inform the final 
recommendations? 
3. Has the BBC Executive compared BBC performance 
with appropriate external efficiency benchmarks? 
4. Has the BBC Executive given appropriate 
consideration to the likely impact of the efficiency 
proposals on the quality of BBC services? 
5. Does the BBC Executive have sufficient evidence to 
conclude on whether its proposed efficiency savings 
are achievable yet sufficiently challenging? 


Our work has been limited to our scope and time spent 
with the BBC Executive and Senior Management team and 
our review of appropriate documents provided and 
analysis undertaken. 


Our conclusions are based on what we have observed 
during the period of our engagement. 

 

Our report and restrictions to its use 

 

Our report covers the context, approach, findings and 
recommendations of our work. It does not constitute an 
audit or review in accordance with any particular 
regulatory auditing or review standards. 

 

This report is intended solely for the purpose and use of 
the management of the BBC Trust and BBC Executive and 
is not intended to be, and should not be, used by anyone 
other than those specified parties. We therefore assume 
no responsibility to any user of the report other than the 
BBC Trust and BBC Executive. Any other persons who 
choose to rely on our report do so entirely at their own 
risk. 

 

We acknowledge the contribution of the BBC Executive 
and Senior Management team involved in the DQF 
programme for the time they have afforded us to conduct 
this review. 


BBC: British Broadcasting Corporation 


CI: Continuous Improvement 

 

CI&S: Central Information and Support 

 

DQF: Delivering Quality First 

 

FD: Finance Director 

 

KPI: Key Performance Indicator 


NAO: National Audit Office 


PMO: Programme Management Office for DQF1 

1 Known internally as the „Engine Room. 

 

PQF: Putting Quality First 

 

PSB: Public Service Broadcast 

 

QRV: Quality, Reach and Value 


RAG: Red, Amber and Green 


WoCC: Window of Creative Competition 

 


1. Executive summary and recommendations 


 

4 

2. Context 


 

7 

3. Approach 


 

9 

4. Findings and conclusions 


Question 1 

Question 2 

Question 3 

Question 4 

Question 5 

 

 

11 

12 

13 

14 

15 


5. Appendices 


 

A. Interviewees 


17 

B. Report inventory 


18 

 




“Our review has found that the 
BBC Executive is leading and 
managing an effective DQF 
programme from which robust 
and challenging efficiency 
proposals have emerged. We 
believe the full and active 
engagement of the BBC 
Executive, the cross-workstream 
approach to generating efficiency 
ideas, and the presence of a well 
managed programme team 
provide confidence in the process 
of developing the DQF efficiency 
proposals. 

 

The challenge remains delivering 
this significant transformation 
programme in a difficult 
economic environment. 

 

The BBC must apply increasing 
levels of robustness through the 
subsequent planning and delivery 
stages of DQF. Retaining the 
necessary key BBC resources 
during this process will be 
essential.” 

 

 

 

 

 

Introduction 

1. The BBC Trust recognised that, following the new 
licence fee settlement, the BBC would need to develop 
proposals for implementing a strategy that reflects the 
tougher financial conditions in which the BBC is 
operating. These include the freezing of the licence fee 
at its current level until 2016/17 and new obligations 
such as funding the World Service. 
2. The Trust asked the BBC Executive to review the 
Corporation.s cost base, develop savings proposals 
and present them to the Trust in the second half of 
2011. The BBC Executive has developed and 
presented its initial plans for removing 20% (including 
4% for re-investment) of the BBC.s cost base. 
3. The BBC Trust commissioned Ernst & Young to review 
the efficiency element of the DQF programme (c11%) 
based on the five key questions laid out on page 1. 


 

4. The purpose of the review was to provide an 
independent assessment to the BBC Trust of the BBC 
Executive.s DQF programme. 


Approach 

5. To assist in our assessment of the BBC.s efficiency 
programme we used Ernst & Young.s cost 
transformation methodology which has been used with 
many other corporations to guide them through their 
programmes. The BBC is at a relatively early stage in 
relation to this. 
6. This approach was applied across the five key 
workstreams of the DQF programme – News, 
Television, Radio, Digital, and Central Infrastructure 
and Support (CI&S). The DQF programme also 
included other cross- cutting workstreams which were 
focused on identifying pan-BBC savings. 
7. The information and insight necessary to complete the 
review was gathered through a programme of work 
which included interviews, document reviews and data 
analysis. Further, more detailed reviews were 



conducted with the workstream teams to establish the 
level of consistency of the savings and phasing 
identified, compared with those recognised and 
reported from the PMO. 
8. The efficiency review included members of the BBC 
Executive, Senior Management engaged in DQF and 
selected workstream members. Over 80 documents 
and pieces of analysis were reviewed and over 70 
people interviewed, including representation from the 
Nations and Regions. 
9. The review was commissioned by the BBC Trust in 
July 2011. Fieldwork was carried out during August 
and September 2011. 


Summary findings & conclusions 

10. The review has found that the BBC Executive is leading 
and managing an effective DQF programme from 
which robust and challenging efficiency proposals have 
emerged. We believe the full and active engagement 
of the BBC Executive, the cross-workstream approach 
to generating efficiency ideas, and a well managed 
programme team provide confidence in the process of 
developing the DQF efficiency proposals. 
11. There is evidence of an organised challenge process 
with regard to cost information and assumptions. 
Challenge has been both financial and operational in 
nature. It has sought to stretch efficiency savings 
identified whilst being mindful of the organisation.s 
ability to achieve these and the impact on the quality 
of services delivered. The DQF programme has also 
included key challenge events covering all the 
workstreams and Senior Management teams which 
have played their part in creating peer group pressure 
to drive the process and outcomes. 
12. The BBC has an informed understanding of its 
performance in many areas, relative to external 
benchmarks and comparisons. It also uses various 
internal benchmarks (e.g. across the local radio 
network). Our work has noted that the DQF 
programme has included appropriate and good use of 
this information to challenge and shape the efficiency 
proposals. 


 

13. Quality of BBC output is managed and maintained by a 
dedicated audience team who focus on quality, reach 
and value (QRV) as the key measures. Members of this 
audience team have been involved in developing and 
reviewing the proposals and applying these measures 
to help understand and predict the impact the 
proposals might have on the future delivered output. 
14. The approach taken to date has laid good foundations, 
providing confidence in the process to generate the 
efficiencies proposed by the DQF programme. 
Detailed design work now needs to be done by the 
BBC to conclude to what extent the efficiency 
proposals are deliverable. Plans are being developed 
to move the DQF programme to this next stage. 


 

15. From our experience of other cost transformation 
programmes of a similar nature, complexity and 
relatively early stage in the process, the BBC.s DQF 
programme compares positively and is currently well 
positioned to move to the next step. The challenge 
remains delivering this significant transformation in a 
difficult economic environment. 


Recommendations 

16. The BBC must apply increasing levels of robustness 
through the subsequent design, planning and delivery 
stages of the DQF programme. Retaining the 
necessary BBC skills and resources to do this will be 
essential. 
17. Leadership focus is required to navigate the 
Corporation through pan-BBC interdependencies such 
as the timing of property divestment, the impact of 
inflation and the response of the public and unions to 
DQF proposals. 
18. Specific recommendations arising from the review 
can be split into two key areas: Strategic – covering 
corporate risk management, mitigation and reporting; 
and Operational – covering resource planning, 



delivery and quality assurance and benchmarking. 
Strategic 


19. High level executive reporting: The BBC leadership 
needs to gain a better understanding of how pan-BBC 
risk affects the delivery of the DQF programme. High 
level executive reporting should be developed by the 
strategy and risk team and put in place immediately 
to enable this insight to be monitored and managed 
throughout the delivery of DQF. 
20. Critical path analysis: The BBC.s central PMO should 
develop a critical path for the DQF programme 
covering pan-BBC risk, resource availability, IT 
constraints and the delivery of new ways of working 
to fully understand the effect these have at the 
individual project level. This will allow greater visibility 
and control of the critical events across the 
programme and provide a clearer picture of delivery 
going forward. This should be developed in line with 
the current budgeting process to provide insight into 
the phasing and timing of the benefits planned. 
21. Stress test scenario plans: The development of a 
contingency plan needs to be put in place now by the 
BBC strategy and risk team, so it is ready in the event 
it is needed. This should be stress tested to provide 
for a number of the major risks all arising at the same 
time (e.g. inflation stays above 3%, the property 
market slumps and moves to new sites are delayed). 
22. Health checks: External DQF check-points should be 
applied quarterly across the programme to continue 
to give confidence of delivery and to accelerate 
efficiencies where required in such areas as TV, 
property and IT. These should focus on delivering 
benefits from quality proposals and highlighting 
remedial action to close any funding gap emerging. 


Operational 

23. Design review process: The development of a design 
review process should be included as part of the PMO 
function during the next stages of the DQF 
programme. This will serve to protect the efficiency 
proposals in place and help shape new proposals to 
meet challenges such as quality at the right cost. 
24. Resource planning: An integrated delivery resource 
plan should be put in place at the divisional level, in 
line with the budgeting process, to manage the overall 
reduction required as a consequence of the DQF 
proposals. This tool can also be used to help ensure 
the right BBC resources and skills are retained to 
deliver on the programme itself as well as developing 
and retaining the skills for the new ways of working in 
the future. 
25. DQF reporting built up from the divisions: The 
reporting of DQF needs to develop a better “early 
warning system” to assess the challenges of delivery 
against budget and plans at the divisional level. This is 
necessary to assure leadership of the actual position, 
whilst still applying pressure to deliver the proposed 
savings in the required time scale and meeting the 
financial commitments along the way (e.g. integration 
of World Service). This should be put in place by the 
PMO in line with the budgeting process early next 
year (2012). 
26. Benchmarking: The BBC should develop a single point 
of focus from which benchmarking activities across 
the corporation can be coordinated and applied. This 
would build deeper insight of trends across the sector 
and competitor markets, leading to even greater 
levels of challenge applied earlier in the process. We 
recommend that this capability is developed within 
BBC Operations and managed through the role of the 
divisional Chief Operating Officers across the 
corporation. 


 


Background 

1. The BBC Trust recognised that, following the new 
licence fee settlement, the BBC would need to develop 
proposals for implementing a strategy that reflects the 
tougher financial conditions in which the BBC is 
operating. These included the freezing of the licence 
fee at its current level until 2016/17 and new 
obligations, notably funding World Service. 
2. The BBC Trust asked the BBC Executive to develop 
savings proposals and present them to the Trust in the 
second half of 2011. The BBC Executive has developed 
and presented its initial plans for removing 20% of its 
cost base in response to the financial challenge. 


 

3. The BBC Trust commissioned Ernst & Young to review 
its efficiency programme (productivity savings within 
DQF which represent c11% of the savings total) and 
were asked to provide independent evaluation and 
challenge to the approach taken, as well as assess the 
scope and scale of efficiencies identified. 
4. This report – Testing the BBC.s DQF Efficiency 
Programme covers the key findings, conclusions and 
recommendations from our review. This was 
presented to the Trust in October 2011. 


Objectives and scope 

5. The information and insight necessary to complete the 
review of the DQF productivity savings was gathered 
through a programme of work comprising: 
Document review – of papers, strategies and analysis 
held by the Trust and Executive as part of the DQF 
programme; 
Structured interviews – of senior staff engaged in the 
development of the efficiency programme; 
Data analysis – and consideration of the underlying 
assumptions underpinning the efficiency proposals; 
Benchmarking – where appropriate, to assess how 
benchmarking had been used; 
Industry insight – challenge through our advisory 
panel on industry practice elsewhere and where the 
BBC could have pushed its thinking further. 
6. The Trust asked us to consider five key questions: 


 
(1) Has the BBC Executive undertaken a rigorous and 
thorough process in identifying where efficiency 
savings can potentially be made within the BBC? 
(2) Has the BBC Executive provided sufficient 
challenge to all divisions of the BBC in testing the 
cost information and assumptions used to inform the 
final recommendations? 
(3) Has the BBC Executive compared BBC 
performance with appropriate external efficiency 
benchmarks? 
(4) Has the BBC Executive given appropriate 
consideration to the likely impact of the efficiency 
proposals on the quality of BBC services? 
(5) Does the BBC Executive have sufficient evidence 
to conclude on whether its proposed efficiency 
savings are achievable yet sufficiently challenging? 


7. Our review included the coverage of over 80 
documents and pieces of analysis and more than 70 
interviews with BBC staff. 


 

Delivering Quality First 

8. The BBC.s mission for the period to 2016 is “to inform, 
educate and entertain audiences with programmes 
and services of the highest quality, originality and 
value”. At the same time it will seek to reach a greater 
number of people than ever before in one of the most 
economically challenging periods of its history. 


 

9. The overall strategy is called Putting Quality First 
(PQF). This strategy was approved by the BBC Trust 
before the licence fee settlement in late 2010. This 
settlement resulted in the licence fee, per UK TV 
household, remaining unchanged until 2016/17. This, 
along with funding the new obligations of World 
Service and absorbing the effect of inflation during this 
period, has resulted in the BBC having to reduce its 



56%
30%
6%
4%
4%
Productivity SavingsContent Scope 
ReductionsAdded Commercial 
IncomeWorking Capital SavingsExisting Efficiency 
Programmes
cost base by 20% in the same period. 
10. PQF set a vision of what the BBC could achieve 
between now and 2016/17 as it develops its 
reputation as a broadcaster of quality and 
distinctiveness, an innovator and an anchor-tenant of 
the UK.s creative industries, whilst investing and 
supporting talent. 
11. Delivering Quality First (DQF) is the programme which 
is designed to deliver the 20% (including 4% for re-
investment) savings enabling the BBC to live within its 
means, whilst achieving the mission described above. 
The DQF programme sets out how the BBC will deliver 
the necessary savings that will enable this. 
12. The overall savings target amounts to £700m per 
annum (20% of the licence fee income – see figure 1) 
by 2016/17 and is expected to be achieved from two 
main areas: 


 

Productivity savings (56%) – using a combination of 
new ways of working and technology to deliver 
programmes and services at the same or higher levels 
of quality for less cost (for example, new digital 
production centres at Salford Quays and Broadcasting 
House – London W1). 

Scope savings (30%) – requiring the BBC to change 
programmes and services, provided for its audiences, 
in whole or in part. 
Other (14%) – from working capital savings (4%), 
existing efficiency programmes (4%) and added 
commercial income (6%). 

13. In order for the BBC Trust and the BBC Executive to be 
confident about the level of initial scope changes 
proposed, they must gain comfort that the level of 
savings, identified from the productivity proposals, can 
be achieved. 
14. This review is specifically focused on the process and 
approach, used by the BBC Executive, to identify the 
productivity (£391m) savings only. The process used 
to identify scope savings has not been subject to our 
review. 


Figure 1: DQF Annual savings target of £700m per annum by 
2016/17 - September 2011 

 



 

How the BBC challenge compares 

15. In the current economic climate the level of savings 
required and targeted by the BBC is comparable with 
other large established corporations and public sector 
bodies. 
16. Many of the FTSE 250 businesses focused on 
corporate wide cost reduction programmes, are 
targeting efficiencies within the range of 15%-25% of 
total operating costs and planning delivery within 3 
years. Across the public sector, the effects of the 
2014 spend review are resulting in the need for 
efficiency savings of similar proportions. 
17. Ernst & Young.s insight from working with a number of 
these organisations also suggests that these levels of 
savings are typically achieved by addressing both the 
demand-side factors (i.e. stopping lower priority 
activity) as wells as addressing the supply-side factors 
through doing things more efficiently. 
18. The overall balance of the BBC.s identified scope 
savings versus productivity savings, as a proportion of 
the total required (20% of the licence fee income), is in 
line with our observations and experience across other 
sectors and industry. 



Adopting a new approach and creating the right environmentPan-BBC savings initiatives and 
conditions for changeNew ways of workingLeaner 
infra-
structureModernisePeoplePoliciesBuying 
better and 
lessNewsTVRadioDigital 
Figure 2: Ernst & Young’s framework for cost transformation 

 

Approach 

1. The framework for testing the BBC.s efficiency 
proposals was drawn from our cost transformation 
methodology (see above). Relative to this 
methodology, the BBC.s DQF programme was 
positioned at the end of stage 2 (Diagnose) and the 
early part of stage 3 (Design) at the time of this review. 
2. Our work focused on the BBC.s 2012/13 budget cost 
base for PSB (excluding digital switchover costs). 
Related cost drivers were then reviewed for inclusion 
in the thinking and the efficiencies identified. These 
included: 


Cash release – for example, optimising contract 
benefits. 

Cost optimisation – for example, reducing production 
and back office costs. 

Capital resilience – focusing on capital portfolio 
management and the real estate footprint. 

3. This approach enabled us to test the BBC.s focus and 
thinking towards sustainable cost efficiency 
opportunities, on-going service quality and successful 
and sustainable delivery. 


 

4. The DQF programme was structured to include five 
key workstreams. Four were content-related: News, 
Television, Radio and Digital. The fifth; Central 
Infrastructure and Support (CI&S) comprised 
Operations, Finance, Property and IT. These five 
workstreams accounted for the entire addressable 
cost baseline and savings target. 
5. Further „enabling. workstreams were set up as part of 
the DQF programme to identify and develop pan-BBC 


savings opportunities (buying better and less, 
modernised people policies, designing leaner and more 
flexible infrastructure). These enabling workstreams 
supported the five key workstreams (See figure 3). 

 


Figure 3: Breakdown of the pan-BBC saving and efficiency areas 

 



 

6. Our work started with the PMO and focused on the 
method and approach for engaging the business in the 
programme and its role in challenging the proposals 
put forward by the workstreams. This part of the 
review provided insight into the governance, risk 
management and reporting processes used in the DQF 
programme. 
7. The second stage of the review focused on how the 
five key workstreams complied with PMO instructions, 
and identified and underpinned efficiency proposals. It 
reviewed the use of benchmark data and the level of 
challenge applied as a consequence of this information. 
8. During this stage of our fieldwork, we assessed how 
the BBC intended to protect quality in view of the 
savings levels proposed. 
9. Whilst interviews formed a key part of the fieldwork, 
relevant documentation was reviewed to support the 
observations and to develop our findings. Further 
validation was managed, and points of clarification 
were requested, through follow-up discussions with the 
relevant teams and individuals as appropriate. 
10. Our assessment extended into the teams of both the 
content and the enabling workstreams to validate the 
level of consistency in the efficiency savings identified 
by these workstreams and recognised by the PMO for 
the programme (See figure 4). This included 
independently challenging the assumptions across the 
efficiency proposals, seeking evidence of the workings 
to support them and obtaining a view on when the 



workstream teams believed these proposals could be 
delivered. 
11. This part of the review specifically covered the 
efficiency proposals under “New ways of working” for 
each content workstream totalling £221m. It also 
addressed the proposals of each of the enabling 
workstream teams (e.g. “Fewer more sustainable 
hubs” etc.) totalling £170m. 


Figure 4: Productivity savings estimates by workstream – 
September 2011 

 


12. Further focus was directed to the areas where the 
biggest savings were proposed. These included TV and 
the “New ways of working”, which accounted for c35% 
of the total savings proposed and CI&S, which 
accounted for c28% in total. 
13. With this insight, derived from the workstream teams, 
we were able to assess the approach and planned level 
of contingency held by both them and the PMO. This 
helped to develop a view on both the risk and level of 
challenge required to deliver the savings proposed. 
14. The level of engagement and inclusion of BBC staff 
was also assessed throughout our review and 
specifically through sample evidence of key events 
(e.g. video coverage of senior manager communication 
workshops and review meetings). 


 

 

Coverage 

15. The information and insight necessary to complete the 
review was gathered through a work programme 
comprising: document reviews, structured interviews, 
data analysis, review of benchmarking used, and 
industry insight. The latter was provided through our 
advisory panel sharing industry practice elsewhere as 
well as challenging where the BBC could have pushed 
its thinking further. 
16. The review included members of the BBC Executive, 
BBC senior management engaged in the DQF, 
workstream sponsors and selected team members. It 
also covered leadership of the BBC Divisions (TV, 
Radio, Nations, News, etc.) who will be responsible for 
delivering the efficiency targets. 
17. In total over 120 people were directly involved in DQF 
(to-date) with many more consulted by the BBC. Our 
review engaged with over 70 people including 
representation from the Nations and Regions and 
covered over 80 documents and pieces of analysis. 


Timetable for the review 

18. The review of the Efficiency programme was 
commissioned by the BBC Trust in July 2011 and 
delivered during August and September 2011. 


 

19. Interim findings were presented to a sub-committee of 
the Trust on the 6th September 2011. Draft findings 
and conclusions were presented to the full Trust 
meeting on 22nd September 2011, with a follow-up 
meeting with committee members on 6th October 
2011. 
20. A draft final report was presented, at the next 
opportunity, to the sub-committee of the Trust on the 
2nd November 2011 and subsequently issued as a final 
report on 30th November 2011. 



Summary 

1. Our review has found that the BBC Executive is leading 
and managing an effective DQF programme from 
which robust and challenging efficiency proposals have 
emerged. We believe the full and active engagement 
of the BBC Executive, the cross-workstream approach 
to generating efficiency ideas, and a well managed 
programme team provide confidence in the process of 
developing the DQF efficiency proposals. 


Our findings 

2. Based upon the approach taken our review has 
identified that the DQF programme had a clear set of 
objectives from the outset. All workstreams were 
given clear and consistent guidance on the 
programme, the process and the timescales by the 
PMO. 


 

3. The entire PSB cost baseline (less funding for the 
digital switchover) was allocated to the five 
workstreams (TV, Radio, News, Digital and CI&S). A 
productivity savings target was independently 
developed by each workstream, collectively totalling 
£391m per annum by 2016/17. 
4. The leadership team of the BBC Executive 
demonstrated a detailed understanding of the 
Corporation.s cost base and drivers. It had a clear view 
of where the savings were and used this to challenge 
the process. BBC management.s experience of 
identifying and delivering efficiency savings on 
previous cost reduction programmes (e.g. CI) was used 
initially to direct this challenge. 


 

5. The DQF programme has been structured to 
encourage development of pan-BBC savings initiatives 
whilst ensuring ownership of the proposals by the 
divisions. The savings identified by the enabling 
workstreams were apportioned to the content work 
streams and have contributed to their respective 
savings targets. 
6. The BBC made available appropriately skilled 
individuals from across the organisation to join the 
DQF programme workstreams and ensure cost 
efficiency opportunities were identified. Each 
workstream included finance, strategy and quality 
expertise, extensive local business knowledge and a 
mix of industry experience. This encouraged 
comparisons with other BBC divisions and external 
organisations to develop proposals. 


 

7. Robustness in the analysis was delivered through 
finance leads of each workstream who were 
responsible for highlighting areas of cost inefficiency 
and quantifying savings proposals. The finance leads 
were supported by the PMO to enable a consistent and 
rigorous approach to valuing and aggregating savings 
across the BBC. The PMO was in turn supported by 
external advisors (Deloitte). 


 

8. There were processes in place to provide a high level of 
awareness with all staff about the DQF programme. 
This was used by workstreams actively to involve staff 
in identifying savings opportunities within their area of 
focus (e.g. Senior Management workshops and BBC 
wide communications events etc.). 


Areas for continued focus 

9. The BBC has a history of cost reduction. Previous 
efficiency programmes (e.g. CI) have already 
addressed areas of inefficiency and savings from 
these. To achieve the DQF savings in the required 
timescale, it is essential that the new operating model 
and related ways of working are rolled out and 
embedded early within the organisation. Work has 
already begun to make these changes. 
10. The DQF proposals include some further efficiencies 
(e.g. from the roll out of new ways of working) beyond 
those already stated. These may provide opportunities 
for greater levels of savings and re-enforce the need to 
embed these changes early in the DQF programme. 



Summary 

1. Our review found evidence of an organised challenge 
process with regard to cost information, assumptions 
and a series of planned workshops and events 
involving members of the BBC Executive and Senior 
Management teams. Challenge was both financial and 
operational in nature, pushing the potential for further 
efficiency savings, whilst being mindful of the 
organisation.s ability to achieve these and the impact 
on services and quality. 


Our findings 

2. During our discussions and interviews we found that 
the reality of the licence fee settlement meant there 
was acceptance, across the teams, that savings had to 
be identified and that the BBC was required to achieve 
a net reduction in its resources and operating costs by 
2016/17. 


 

3. At the beginning of the DQF programme, the total 
amount of cost savings needed was identified as being 
20%, to be split between scope and productivity. From 
our discussions it was clear that to protect content 
scope, greater focus on productivity savings was 
required. 


 

4. Staff from outside of their respective divisions brought 
relevant experience to challenge previously accepted 
ways of working. Enabling workstreams and regular 
meetings of workstream representatives encouraged 
new ideas to be shared. Comparisons with other parts 
of the BBC were made (e.g. across Nations and Radio). 
Milestone events; where workstreams presented their 
developing proposals, created an element of peer 
pressure to achieve targets. Industry benchmarks 
were used to further challenge the thinking and level of 
savings proposed. 


 

5. The DQF process included formal and informal 
challenge. Finance leads and sponsors within the 
workstreams were invited to challenge emerging 
proposals and assumptions. These were further 
challenged at quarterly cross workstream events, by 
the PMO, BBC Executive and Senior Management. 
6. We observed positive responses to these challenges 
and noted in TV specifically that much progress had 
been made to accelerate early ideas into proposals 
during the period of our review (e.g. One Vision) 


 

7. From the materials reviewed and interviews held we 
can conclude that the PMO has run a thorough 
„control, review and filter. process of all savings 
proposals, rating the associated risks of each. This 
process challenged the proposals to drive further 
savings opportunities where appropriate and has 
informed the level of contingency being planned for. 


Areas for continued focus 

8. Progress made, and the time taken, to identify 
productivity savings has varied across workstreams. 
This was due to differing amounts of work required to 
quantify the opportunities for scope savings. Whilst the 
next stage of planning and implementation of some 
workstreams. proposals is just beginning, other 
workstreams have further work to do to complete the 
first part of the DQF programme. These areas require 
accelerating to close the gap. 


 

9. Whilst the challenge of all proposals is not yet 
complete, management have expressed their comfort 
that sufficient internal and external expertise and 
rigour has been used in the process to-date to be 
confident in the level of efficiency savings proposed 
and emerging from the programme. 


 

10. Staff commitment to minimising scope savings, 
through focus on productivity, was noted across the 
DQF programme. However, in some areas there is a 
risk that, to protect scope changes, productivity 
savings may have been pushed too hard beyond what 
is achievable in the timeframe. Management should 
continue to monitor these proposals as they develop 
through a „design review. process focused on 
protecting the proposals whilst managing the impact 
on quality. 



Summary 

1. The BBC has an informed understanding of its 
performance in many areas, relative to external 
benchmarks and comparisons. It also uses various 
internal benchmarks to review performance across the 
BBC. We believe that as part of the DQF programme, 
there has been appropriate and good use of this 
information to challenge and shape the efficiency 
proposals. 


Our findings 

 

2. Throughout our review and from our discussions with 
senior management, we noted that the BBC has a 
history of benchmarking with comparative 
organisations. Whilst recognising the uniqueness of 
some aspects of the BBC, management has gained 
knowledge of how and where other organisations are 
similar and the lessons that can be drawn. This was 
the case, for example, in the „modernised people 
policy. where sector benchmarks suggest the BBC is 
behind the trend in this area. 


 

3. As part of the DQF programme each workstream has 
made use of select benchmark data to test and 
challenge the level of savings proposed. This has 
included external professional benchmark groups such 
as Oliver & Ohlbaum Associates in News, specialist 
external input such as the John Myers review for 
Radio, IPD Benchmarking Group for Estates and 
professional services support in areas such as finance, 
IT and procurement. 


 

4. In addition to external benchmarks, workstreams have 
used internal benchmarks and other proxies (such as 
the Window of Creative Competition (WoCC) used in 
TV) to allow comparisons. The result of the various 
external and internal benchmarks has led to further 
insight and challenge to shape the efficiency proposals. 


 

5. The DQF programme has viewed benchmarking as an 
important element in shaping proposals, but is only 
one of a number of tools used to drive efficiency. 
Another key factor observed amongst the BBC 
resources we engaged with as part of this process, has 
been the culture and desire to be the „best and most 
efficient. at what they do. This, combined with the 
cross workstream skill-base has helped the BBC to 
develop a positive, challenging approach to reviewing 
the way it goes about its business. 


Areas for continued focus 

7. Whilst the BBC could be described as unique „in whole., 
it is, in some of its parts, similar to many other 
corporate organisations. A strong and informed use of 
benchmarks should be maintained to help ensure 
meaningful comparisons continue and that the BBC 
maintains its performance relative to other 
organisations. 


 

8. Central monitoring of the use and findings from 
benchmarking would provide a better understanding of 
how the organisation compares to others. It would 
also drive greater consistency in how benchmarking 
exercises are done across the organisation and how 
insights are used. We would recommend a single point 
of focus from which benchmarking activities across the 
BBC could be coordinated and applied in a timely 
manner (e.g. ahead of its budgeting cycle). 


 

 


Summary 

1. Quality of BBC output is managed and maintained by a 
dedicated audience team who focus on quality, reach 
and value (QRV) as the key measures. Members of this 
audience team have been involved in developing and 
reviewing the proposals and applying these measures 
to help understand and predict the impact the 
proposals might have on the future delivered output. 


Our findings 

2. Through our discussions with members of the 
workstreams we noted the BBC has a methodology for 
measuring the impact of its output, in terms of: 
Quality – how well appreciated is the content? 
Reach – how much people are consuming? and 
Value – how efficiently is this being delivered?. 
This is managed by the dedicated audience team. 


 

3. Each of the content workstreams included a member 
from the BBC.s audience team with the objective of 
helping ensure that the potential impact on quality of 
each proposal was given due consideration. They 
applied their methods, tools and models to assess 
whether proposals would affect quality and, if so, 
helped anticipate what this impact would be. 


 

4. Proposals that were considered to impact quality, 
reach and value (QRV) were mainly scope savings (and 
not the focus of this review). We were advised that all 
scope proposals had been modelled by the audience 
team to assess their impact on QRV. The output from 
this exercise indicated that the main quality KPIs, 
described above, were modelled and considered as 
part of the scope proposals identified initially in the 
DQF programme. 


 

5. Efficiency proposals were only qualified as such if they 
were deemed to have little impact on quality. In 
practice, there is a blurred line between what will and 
will not impact on quality. Further judgement was 
applied by workstream members and others to 
consider the impact on QRV during the DQF 
programme. 


 

6. To-date, as details and plans for the efficiency 
proposals continue to develop, access to the members 
of the audience team is being maintained. For 
example, in the content workstream for TV, members 
of the audience team are consulted on all the efficiency 
ideas and proposals regarding the editing and 
commissioning processes. 


 

7. From our discussion with members of the 
workstreams, we noted that BBC management is 
focused on ensuring that quality stays front of minds in 
the pursuit of further, more transformational saving 
initiatives. The BBC CI programme has demonstrated 
that quality may be successfully preserved during an 
appropriately managed BBC efficiency programme. 
The quality metrics in 2010 were higher than in 
previous years despite being in year three of this five 
year programme. 


Areas for continued focus 


8. Whilst a further set of proposals are being held for 
contingency purposes, these are at an early stage of 
development and will need to be reviewed for their 
impact on quality before being considered as part of 
the efficiency programme. 
9. As the DQF programme forces greater focus on 
transformational change at the BBC (e.g. from new 
ways of working) it will not be possible fully to predict 
the impact on quality at this relative early stage of 
defining the efficiency proposals. It is imperative that 
Management continually monitors the impact on 
quality, and takes the necessary action as the DQF 
programme develops, to prevent its erosion over 
time. 
10. Given the need for professional judgement in 
managing quality it is important that experienced 
resources within the BBC are retained to deliver the 
DQF programme and maintain quality going forward. 



Summary 

1. Detailed design work needs to be done by the BBC to 
conclude to what extent the efficiency proposals are 
deliverable. This is a reflection of the stage the DQF 
programme is at in the BBC.s cost transformation 
process. The approach taken to date has laid good 
foundations; however detailed design, planning and 
delivery now need to follow. Plans are being developed 
to move the DQF programme to this next stage. 


Our findings 

2. Our review has observed that from the outset of the 
DQF programme, the BBC Executive and Senior 
Management has engaged appropriately skilled 
resources from across the BBC, and have followed a 
comprehensive process to generate challenging 
efficiency proposals to provide confidence in its overall 
target. 


 

3. The PMO has developed a reporting tool (dashboard) 
to show the make-up, and track the deliverability of 
each workstream.s savings. This applies a RAG rating 
criteria, providing a consistent understanding of the 
relative risks associated with all proposals. 


 

4. In some divisions, detailed design and implementation 
of proposals have already begun. However, in other 
divisions, detailed design work and delivery plans are 
only just beginning. In the event that certain proposals 
fail to deliver the expected savings, a number of 
further initiatives and central provisions are being held 
to cover for this and manage this risk. 


 

5. Savings proposals are due to be built into divisional 
budgets. Management is of the opinion that these will 
effectively „lock in. future savings and create the 
targets to deliver against. The recent CI programme, 
was budgeted in a similar way providing further 
confidence, to BBC Senior Management, in the target 
level of savings emerging from the DQF programme. 
6. The focus on staff engagement throughout the DQF 
programme has been a key activity within the people 
and communications team. These include senior 
management workshops and pan-BBC 
correspondence. From the discussions we have had 
with the 70 plus BBC staff, as part of this review; we 
believe the communication and engagement processes 
have been well delivered, achieving high levels of 
awareness of the programme.s ambition and progress 
across the BBC. 


 

7. The BBC is now preparing for the transition from 
savings identification to detailed design and 
implementation. Divisions will take responsibility for 
this along with central PMO support. A reporting 
framework is being developed to provide the 
transparency and information required to monitor 
progress against plan. 


Areas for continued focus 

8. There is a risk that as detailed plans are developed 
some initiatives may no longer be viable. Management 
believes this will be mitigated by the thoroughness of 
the identification stage, its experience of running 
similar programmes, and a list of contingent initiatives 
to call upon if required. We believe work needs to 
continue, throughout the next stages of the DQF 
programme, to ensure the level of contingency 
remains appropriate and that the quality, deliverability 
and timing of the savings from these initiatives is 
improved. 


 

9. It is critical that ownership of the DQF programme and 
proposals is successfully transitioned from the 
workstreams (that generated proposals) to the 
divisions that will be responsible for delivery. Failure to 
do this effectively may put at risk the level of savings 
targeted. Reporting tools should be further developed 
to reflect the division.s view of the planned value and 
timing of the savings proposed. This will enable the 
earliest possible interventions to be made and help 
maintain target outcomes. 


 

10. The DQF programme demands a larger element of 
transformation to deliver the target savings than 
previous efficiency programmes. This creates a higher 



level of risk as successful delivery of savings is 
contingent on implementing and embedding the new 
ways of working. Management need to monitor this 
risk carefully and focus on delivering the new ways of 
working quickly and in line with the DQF programme. 


 

11. The BBC leadership needs to develop a more robust 
process to measure and monitor how pan-BBC risk 
affects the delivery of the DQF programme so that 
appropriate interventions and action can be taken to 
maintain the delivery of efficiency targets through to 
2016/17. 


How the BBC compares 

12. The DQF programme is at a relative early stage of 
development compared against the Ernst & Young 
cost transformation methodology used with many 
other corporations to guide them through their 
programmes. The approach taken to date has laid 
good foundations; however detailed design, planning 
and delivery now need to follow. 
13. The levels of engagement from BBC leadership 
throughout the programme to date have been high, 
compared with our experience of other transformation 
programmes. We recommend that this is maintained 
throughout the next phases of detailed design and 
delivery. We also recognised the value gained from 
cross workstream engagement and suggest that this is 
continued to maintain the levels of challenge across 
the programme. 
14. Unlike some other approaches adopted, the BBC has 
chosen not to define a prescribed methodology for 
developing the efficiency proposals. Rather, it has 
guided senior management on the target levels 
required and allowed them to work out a set of 
answers to meet this, providing challenge along the 
way. As a result of this approach we have noted the 
potential for greater levels of buy-in from across the 
business, countered however, by a greater amount of 
time needed to achieve it. Going forward, we 
recommend that the pace of delivery is accelerated to 
provide greater potential for the delivery of earlier 
savings, thus increasing the overall level of 
contingency in the programme. 
15. The cross workstream approach has demonstrated 
high levels of collaboration across the BBC in the early 
stages of the DQF programme. Conversely the 
programme team has made intelligent use of “peer 
group pressure” throughout its challenge process, 
leading to a robust level of efficiency proposals to 
meet the targets required. We consider these to be 
good practice techniques to adopt in the early stages 
of cost transformation programmes. 
16. Benchmarking has been used across all the 
workstreams to assist in targeting future performance. 
Whilst this is recognised as an example of good 
practice the BBC could have adopted a more rigorous 
approach to this process in previous efficiency 
programmes, to build deeper insight on trends 
emerging. This is apparent in the areas of workplace 
ratios and remuneration policies (e.g. unpredictability 
allowances) where the gap with the performances of 
other organisations has widened making it more 
challenging to address. 
17. The BBC has developed a robust and consistent way to 
measure quality across its output and has applied this 
effectively in the development of its efficiency 
proposals. In our experience of other cost 
transformation programmes this compares favourably 
and will help the BBC develop a deeper understanding 
of the qualitative impact of its proposals ahead of 
further development and delivery. 
18. From our experience of other programmes of a similar 
nature, complexity and relatively early stage in the 
process, the BBC.s DQF programme compares 
positively overall and is currently well positioned to 
move to the next step. 



Interviews with over 70 members of BBC staff were 
conducted. This included the Director General and 24 
members of the BBC Direction Group. Individuals from 
across all parts of the DQF programme were interviewed 
including: 

 

Executive Team members 

. BBC Director General 
. BBC Chief Operating Officer 
. BBC Chief Finance Officer 


Programme Team 

. Director of Corporate Finance 
. Director of Policy & Strategy 
. Head of Director-General's Office & DQF Programme 
Director 
. Controller of Public Service Strategy 
. Head of Internal Communications 
. Head of Special Projects, Policy and Strategy 
. External Advisors 


People 

. Director of People 
. Head of HR 
. Manager of BBC Transformation Project 


Procurement 

. Director of Procurement & Revenue Management 
. Head of Strategic Relationships 


Operations 

. Finance Director of Operations 
. Chief Advisor to the Chief Operating Director 
. Chief Technology Officer 
. Head of Corporate Real Estate 


News 

. Director of News & Workstream Sponsor 
. COO News and Workstream Lead 
. Finance Director of News 
. Workstream Strategist 


 


 

Television 

. Head of Vision & Workstream Sponsor 
. Director of Vision 
. Finance Director of Vision 
. Workstream Lead 
. Workstream Finance Partner 
. Workstream Strategist 


Radio 

. Director of Audio and Music & Workstream Sponsor 
. Workstream Lead 
. Workstream Finance Partner 
. Workstream Strategist 


Digital 

. Director of Future Media and Workstream Sponsor 
. Workstream Lead 
. Workstream Finance Partner 
. Workstream Strategist 


Quality 

. Controller, Performance and Partnerships 
. Pan-BBC Research Manager, Strategy Audiences 


Regions and Nations 

. Director BBC Scotland 
. Director of BBC Wales 
. Chief Operating Officer of BBC North 


 


A wide range of documents relevant to the programme 
(over 80 in total) have been reviewed. Together these 
demonstrated the context and management of the DQF 
programme, benchmarking and analysis used to inform 
proposals and the work done to develop them. They 
included: 

 

. Letter from Sir Michael Lyons to Mark Thompson 
requesting efficiency proposals 
. BBC Annual report 2010/11 
. The BBC Efficiency Programme – NAO report 2011 
. State of the Estate 2010/11 – A report on the 
efficiency and sustainability of the BBC.s UK property 
estate. 
. An Independent Review of the Rules Governing Local 
Content on Commercial Radio 
. Window of Creative Competition – BBC Trust review – 
November 2010 
. Various internal working papers, communications and 
analysis including: 
- DQF Organisation Chart 
- DQF Project Plans 
- DQF Communication schedule 
- Staff Newsletter Articles 


 

 

 

 

 

 

 

 


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