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BBC Loses £38 Million In Failed Digital Media Initiative

The BBC's highly ambitious Digital Media Initiative has been criticised in a report by the for not just failing to realise the planned savings, but running up large losses.

According to the report, the BBC DMI project, which was originally tasked to Siemens, was supposed to cost £81.7 million and provide benefits of £99.6 million. But now it appears the IT project, which has been undertaken by the BBC internally, will cost £133.6 million and result in benefits of merely £95.4 million.

The government report criticised the BBC for not considering other IT service providers when it was scouting for a contractor. The project was shelved after Siemens failed to meet the desired deadline for completing the project, causing lesser savings than anticipated.

“With hindsight, the BBC should not have let the contract for its Digital Media Initiative to Siemens without testing the contractor against other suppliers, especially as there was a high degree of innovation involved,” said Margaret Hodge MP, chair of the Committee of Public Accounts.

The committee has also questioned how the BBC has come up with 'efficiencies' within its divisions of £26 million and a new £24.5 million of additional savings, after coming under financial pressure in relation to the losses.

“We are concerned with the ease with which the BBC found over £50 million in savings to make up for the losses it suffered through late delivery of the project and its own increased delivery costs,” the committee said.