How I would do it?
Well as the Tories seem to be very open or at least being semi pro open government I thought I would bite on the hook.
OK, so here's what I would do:
-Fire the incompetent (i.e. project managers that don't/can't manage, technical managers which don't have a clue, colleagues which somehow got the job but you wonder how/why as they cannot do their job and have attitude problems to boot).
-Employee technical commentant people only and pay them what they are worth (none of this I've got Prince 2 or ITIL; it should be these people have the following experience and are ideal for the job - infact these are my dream employees/collegues). If anything get as many of these people not only one person who understands all system and no one else who does because this person is overworked.
-Internal training and proper external training courses - none of this cheap tate courses.
-Listen to your employees and their interests - most people work were they are interested and get frustrated when they cannot do their job properly (due to say red tape) - if you wish to keep these people; treat them with respect, give them the career progression and development that they want.
-Get realistic projects which don't interconnect in stupid ways (be realistic) with over major projects (i.e. don't be over dependant).
-Don't get employee stupid contractors (EDS are a prime example) or out source to companies in India who can barely speak English unless you really wish to have communication problems with them? (HP; I'm looking at you) - shock HP owns EDS (shock horror).
-Don't be over releant and unreleastic project deadlines (these are a prime reason projects go over budget in my opinion). Have realistic expectations.
-Use open and existiing open standards.
-Be selective about projects tools and use open source where possible (I'm not preaching open source or linux but some open source tools are very good for their purpose). Likewise use Windows if you must (it might be necessary) but don't build your empire on protery software and don't build it on unmaintained open source either. If you do want to use open source, employee people to maintain and contribute to these projects and your likely to work with others then suggest these tools.
-Don't reinvent the wheel - if you must redesign something for a good reason then do it but should/must you? If the process is failing then look at it.
-Use existing kit where possible (I recently spoke with our 3rd party printer repair guy and reminisced on the old Laserjet 4 Plus/5N printers and how reliable they were - OK so they are now very old and not very quick but they work incredibly well, are reliable for what they do and cheapish to maintain (1x fuser lasts how many years) - why replace quality equipment with cheap tat which lasts 5 minutes and costs a ton to maintain??? This just doesn't make sense.
-Documentation - Make people write documentation and give them time to; if they don't then fire them (I'm serious I've bought people to book for this and the amount of 3rd party I've had to dealt with which don't use documentation or rely on an individual is truely disturbing - THESE PEOPLE ARE NOT PROFESSIONAL; THEY ARE INEPT; FIRE THEM (SHOOT WITH A GUN WOULD BE JUSTICE BUT YOU WILL BE LOCKED AWAY :) I get annoyed dealing with these people and would love to lock them in a cupboard and then drop them in a large hole and fill it into concrete/hot tar.
Sorry last point is a little off topic but its true...