VIC GOVERNMENT IT IN FLAMES:
$1.4 billion over budget, all projects late or failed

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news Victoria’s Ombudsman has handed down one of the most damning assessments of public sector IT project governance in Australia’s history, noting total cost over-runs of $1.44 billion, extensive delays and a general failure to actually deliver on stated aims in 10 major IT projects carried out by the state over the past half-decade.

The report (available in full online) was undertaken over the past year by Ombudsman George Brouwer as a self-initiated action of his office, after a string of minor reports published by the Ombudsman and the state’s Auditor-General Des Pearson over the past few years had raised significant concerns with Victoria’s handling of IT project governance. Pearson’s office assisted with the report.

In the report, Brouwer and his team documented their investigations of ten major IT projects carried out by the state over the past half-decade.

Some, such as the Link project being carried out at Victoria Police, the myki public transport smartcard effort, the education department’s Ultranet initiative and the HealthSMART health systems rejuvenation, are projects which are well-known in Australia’s technology industry. However, others, such as an integrated courts management system and a new integrated housing information program have had a lower profile.

What they shared in common, Brouwer wrote in his report, was that they had all gone off the rails. “Each of the 10 projects I examined failed to meet expectations,” the Ombudsman wrote. “Most failed to meet delivery timeframes and all ran over budget.”

The original total budget for the projects totalled $1.3 billion. However, Brouwer estimated their total cost to date as being $2.74 billion — an additional $1.44 billion cost to Government. “On average, project will have more than doubled in cost by the time they are finished,” the report states.

Some of the most extreme examples were the Department of Human Services Client Relationship Information System (CRIS), which ballooned in cost from $22 million to $70 million, LINK, which expanded from $49 million to $187 million (if it was completed, as it has been cancelled), myki, which started at $999 million and will require another $350 million and HealthSMART, which was originally budgeted at $323 million and will require a further $243 million to complete.

Some of the money represented what Brouwer described as “abject waste”. “Victoria Police spent $59 million on LINK over four years, only for it to be cancelled,” the Ombudsman wrote. “VicRoads spent $52 million on RandL, which has not yet made it past the design phase.”
Causes

In the report, Brouwer listed a litany of reasons why the projects had gone wrong.

For starters, he noted, “none of the projects investigated was well-planned”. The departments and agencies concerned simply failed to commit the necessary time and effort into planning and business case development.

Not only were many of the roles and responsibilities for those leading the projects not clearly defined, but senior government officers often appeared reluctant to make critical decisions when they were needed — and project steering committees often did not have sufficient expertise in the areas concerned.

Business cases weren’t updated as projects changed — or in some cases, even read by key figures concerned. Agencies gave politicians no choice other than their preferred technology project option — and failed to give them adequate advice to make informed decisions about the initiatives. “In some cases, optimism bias led to costs and timelines being based upon hope, rather than evidence or comparisons with similar projects and despite advice from experts and vendors,” wrote Brouwer.

In general, departments and agencies felt they needed to create “big vision” projects to capture politicians’ attention — increasing project complexity and risk. However, in some cases the state Cabinet only partially funded projects. Despite this, agencies didn’t revise the scope of their projects downwards to fit them within the allocated budgets.

A lack of leadership, a lack of accountability, a lack of governance, poor planning, inadequate funding, below standard probity controls and under-par project management. All of these were issues raised by the Ombudsman. And in the extensive case studies which Brouwer published at the end of his report — detailing each project’s history and issues — all of the same problems appeared.

AAP today reported that Victorian Premier Ted Baillieu had stressed there would be much greater scrutiny of IT projects under his Government, compared with the previous Labor administration — with his preference being projects handled in smaller bite-sized pieces rather than large initiatives. “What we need is to have some performance benchmarks along the way so that we know we’re getting the results that are expected,” he reportedly said today.

opinion/analysis
I’m planning to pull together some thoughts in a separate article on this topic, but what I want to note at first glance is that this report is shocking.

What it baldly states is that every single major technology project in the Victorian State Government over a period of half a decade went badly wrong — over budget drastically (to the tune of more than a billion dollars), late (in some cases, by almost half a decade) and in some cases, the projects just failed to deliver and were scrapped, despite the fact that many millions of dollars had already been spent on them, and that the legacy systems they were intended to replace still needed to be replaced.

What Australia’s technology sector needs to begin to understand from the publication of this document is that our whole paradigm for approaching government technology projects is broken. The way departments obtain funding for such projects. The way they consult with and contract technology suppliers. The way they manage the projects. Everything.

Everything.

To be honest, as a journalist reporting on enterprise IT I have never seen anything quite like this. Western Australia and Queensland have also had disastrous technology project implementations over the past few years, and of course we can always look back at the Integrated Cargo System disaster at Customs a few years back if we really want to see a large catastrophe in action. But to have every single major technology project in one of Australia’s largest state governments go wrong in a five year period? To the tune of $1.44 billion? This is something of unprecedented scale. It will take a while to digest this one.

Makes you wonder what’s going on right now in NSW.

16 COMMENTS

  1. Thundering silence from Victorian Oppositon who started all these bungles in Government.
    A look at NSW would be good. I understand the Health system has two computer systems that cannot talk to each other. Add on the Publoic Transport ticketing. Well done Labor admninstrations!!

    • What the flying turtle are you on about, these programs were started by the previous labor government who have been in power for two and a half decades

      Furthermore it was the Liberal government that started this review which gave the results this article portrays. Talk about completely twisting the story……..

      • Um, that’s what he’s talking about… the Labor government who are now in opposition.

      • The Liberal government did not start, request, auspice or influence this review, it was undertaken as an own-motion initiative by the Ombudsmen (an independent officer of parliament who doesn’t answer to the premier or anyone else in government).

  2. As someone with experience on large IT projects (none of these) I have two observations: There’s on old project management saying: “You can have cheap, fast or done well: Pick two”. The project sponsor of every failed project I have ever seen forced the project manager to attempt all three.

    The second observation is that there is a deep seated confusion in management culture everywhere between a “plan” which is a statement of intentions, as in ‘I plan to go to university next year’, and a “plan” which is a specification of a design, as in the “blueprint” for a building.

    I call this magical thinking. And childish. But we should understand the failure will have been at the middle level. With the department executives and the idiot solution architects who drew pictures with boxes and lines, and the analysts who didn’t now how to listen to users. This is not a failure of politics it’s a failure of practice by a profession that has been justifying its incompetence for a long time.

  3. Seems that the common thread is that they are all Governmental Agencies. Forget the party politics these are agencies made up of bloated bureaucratic incompetent petty political silos who like to hold on to their bit of power and would rather see a project fail than to work together

  4. You can rightly blame the departments but some of the blame should also be directed at the so called IT consultants who take charge of most Government large projects.

    • Including the companies that won the bids for these projects and should have had the experience and expertise to put their hand up and say “now hang on, we’re happy for you to throw money at us to do this – but it’s probably going to hurt!”

  5. At least in Queensland it seemed like a case of some pretty bad upper IT management thinking they could save a bucket load of money on hardware and software by consolidating systems across government without looking into the details enough.

    They failed to realise that each government department is really like an individual company, rather than a department of a single organisation. Like it or not once you get into the details they all have some different requirements. So consolidating say, every departments HR into one HR system was massively more complex than they thought. Therefore blowing huge amounts of money on contractors trying to figure out how to put 20+ almost circular but not quite round pegs in a round hole.

  6. A book entitled Dangerous Enthusiams, provides a litany of US, NZ, Australian, UK and Canadian failures of this type. Check it out.

  7. There is absolutely no doubt in my mind every jurisdiction in Australia has the same track record. Exactly the same !!! Victoria should be singled out for being the only state to do an HONEST review. The other jurisdictions have put their efforts into covering up massive failure.

    Go look at the federal government for example. Projects like REFRESH in Centrelink where $300,000,000 were spent to deliver absolutely nothing. In this case the executive involved was promoted.

    To prove my point the Feds to their credit have done a P3M3 assessment of agencies. Many large agencies were at CMM level 1 (reflecting a project management capability akin to ‘make it up as you go’). This would say to me that they could NEVER run large complex projects. They ARE running them and they CLAIM they are all working, Yeah sure !

  8. Renai, you finish with “What Australia‚Äôs technology sector needs to begin to understand…”

    That’s not really fair.

    Governments employ their own IT teams to manage and direct their consultants. If the client (aka government) wants an elaborate monstrosity using archaic tools, well they’re the client and they get the final word.

    The key to improving this is to have better management accountability in government. There’s no consequences for running over budget or over time; conversely the only incentive for finishing early is that your department now has no funds.

  9. I’m impressed with the VIC auditor. He’s described well the State-of-Practice within large-scale IT, both Government and Private sector.

    I spent over 5 years trying to draw the ANAO’s attention to this area.
    And was unsuccessful with academics, media contacts and Senator Lundy.

    The nub of the problem is twofold:
    – there is no central reporting of Project Outcomes, IT. or not.
    – there are NO consequences for repeating Known Errors, Faults and Failures.

    The Standish Group released their first CHAOS survey around 1996. The results are profound and disappointing, yet there has been no rival group of the many IT data/survey groups, come up with a better defined survey or a parallel, contradictory, dataset.

    Translated to just Federal Govt IT Projects, there is at least $1B of waste in failed and under-performing projects each and every year. But it’s not a story or Parliamentary issue. Certainly no concern to the ANAO or Dept of Finance under s44 of the FMAA they administer.

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