Media playback is unsupported on your device Media caption James Purnell, BBC's director of strategy and digital: "We've messed up, we're sorry"

The BBC has scrapped a £98m digital production system, which its director general said had "wasted a huge amount of licence fee payers' money".

The Digital Media Initiative was set up in 2008 but was halted last autumn having never become fully operational.

"I have serious concerns about how we managed this project," BBC director general Tony Hall said.

An independent review has been launched "to find out what went wrong and what lessons can be learned", he said.

The Digital Media Initiative (DMI) was intended to transform the way staff developed, used and shared video and audio material and was seen as an important part of a move of resources to Salford.

"Ambitious technology projects like this always carry a risk of failure," Lord Hall said.

"It does not mean we should not attempt them but we have a responsibility to keep them under much greater control than we did here."

WHAT WAS THE DIGITAL MEDIA INITIATIVE? The Digital Media Initiative (DMI) was designed as a production tool that would make BBC recordings accessible to staff via a desktop - from the raw footage right through to the final edit.

Archive material would also have been accessible via the DMI, making it a one-stop shop for staff making TV and radio programmes.

While it would have been available to both radio and television producers, DMI was primarily designed for TV output.

Off-the-shelf production software like Apple's Final Cut Pro and Avid's Pro Tools are widely used by the rest of the media industry.

The contract to deliver the DMI was originally awarded to technology company Siemens in 2008 but was taken over and relaunched by an in-house BBC team in 2010.

Between 2010 and 2012, the project cost the corporation £98.4m. An internal review was set up in October 2012 after the BBC Trust expressed serious concerns.

In a letter to Margaret Hodge, chair of the House of Commons Public Accounts Committee, the BBC Trust's Anthony Fry revealed the project had generated "little or no assets".

"It is of utmost concern to us that a project which had already failed to deliver value for money in its early stages has now spent so much more of licence fee payers' money," he said.

"We intend to act quickly to ensure that there can be no repeat of a failure on this scale."

Mrs Hodge described the episode as "a terrible shock and clearly completely shambolic".

The corporation said the initiative had been badly managed and outpaced by changing technology, and that to carry on would be throwing good money after bad.

"It's struggled to keep pace with new developments and requirements both within the BBC and the wider broadcasting industry," Lord Hall wrote in an email to BBC staff.

Disciplinary action

"There are now standard off-the-shelf products that provide the kind of digital production tools that simply didn't exist five years ago.

"We will be looking into what has happened and will take appropriate action, disciplinary or otherwise," he added.

Media playback is unsupported on your device Media caption Rob Wilson MP, private secretary to culture secretary: "Disastrous for licence payers"

John Linwood, the BBC's chief technology officer, has been suspended.

In 2011, then director general Mark Thompson told the the Public Accounts Committee that the initiative was "critical" to the BBC's move to Media City in Salford and the establishment of new Broadcasting House.

"A lot of the future of the BBC is tied up in the successful delivery of this project," he said, at the time.

James Purnell, the BBC's director of strategy and digital, said: "In the future we are going to rely far more on off-the-shelf technology. We've messed up and we apologise to licence fee payers for that."

Yet he insisted the failed project was "the exception rather than the rule", citing technical successes such as the BBC iPlayer.