news The Northern Territory’s parliament has published a landmark report into the management of ICT projects by its departments and agencies, finding a similar list of disasters as have been suffered by other state jurisdictions in Australia and recommending the immediate appointment of a whole of government chief information officer to help rectify the systemic issues.
The report, entitled Management of ICT Projects by Government Agencies, is available online in PDF format and was produced by the Public Accounts Committee of the Territory’s Legislative Assembly. It examined three major ICT projects within the Territory — the Department of Corporate and Information Services’ Asset Management System, Power and Water Corporation’s Asset Management Capability Project, and the Department of Health’s Grants Management System. Issues were found with all three.
Of the three projects reviewed for the inquiry, the Department of Infrastructure’s Asset Management System (AMS) project constituted the most significant failure, according to the report.
The AMS was a complex multi-agency project which aimed to replace the nine legacy systems used to manage the NT Government’s asset management information systems and business processes with an integrated commercial off the shelf product (COTS). Costs for this project blew out from an original budget of $14 million to a final cost for the incomplete project of around $70 million. The original timeline proposed a completion date of April 2010, but the project was not terminated until March 2014. At the time of termination, the system was providing less efficiency than that previously provided by the nine legacy systems the project was intended to replace.
NT Deputy Chief Minister and Minister for Corporate and Information Services David Tollner has previously commented publicly on the project, damning it as a “diabolical mess” and a “scandal of epic proportions”. In late March the NT Government announced it would dump the project, (developed by Fujitsu and based on SAP software), after receiving independent advice that it would cost an additional $120 million and five years to fix. This week’s report stated:
“The failure of the AMS was significantly influenced by: poorly conceived governance structures and processes; inadequate documentation and reporting; issues with the vendor; a shortfall in staff resources; poor monitoring, analysis and reporting of risks; ineffective training and testing strategies; inadequate resourcing of the change management strategy; and a lack of engagement by client agencies. Overall, there was little evidence of timely commitment and support from senior management and a failure to act on risks as they eventuated.”
The Power and Water Corporation’s Asset Management Capability project suffered similar problems. The project was initiated in 2006 to replace a suite of old systems which were poorly integrated and no longer supported by vendors. The original budget of around $15 million blew out to approximately $51.8 million and the proposed completion date was extended from March 2011 to August 2012.
However, ultimately the project eventually succeeded where the AMS project had not. The report stated:
“… the AMC project has delivered to specification, is providing some business benefits and is expected to provide further benefits into the future. Key factors that adversely impacted on this project include data quality and migration issues; inadequate risk management; and lack of experience in estimating the time and costs required to complete activities. In general, planning processes, risk management and quality management could have been more effective.
However, the successful and timely delivery of the AMC project was also influenced by the failure of the Casuarina Zone substation and the subsequent Mervyn Davies report. This had a significant impact because it required an increase in the Corporation’s capital programme and consequently diverted resources away from the project. It also required the scope of the project to be expanded to take account of changes recommended by the Report.”
The report found that although management of the AMC could have been improved, there was also evidence of good practice. In particular, project management took effective actions to reorient the project when significant issues threatened project success. In the absence of a formal Gateway System to monitor the progress of state sponsored ICT projects, Power and Water “effectively reviewed the business case” at key stages through the engagement of independent consultants. This was likely to have been a significant factor in the ultimate success of the project, despite the fact that it went over time and over budget.
The third project — the Department of Health’s Grants Management System — was much smaller. The initiative’s purpose was to develop and implement an ICT system to support the management of service agreements with NGOs. The original budget for the project was around $684,000 and the expected final cost is $979,220. Although the proposed completion date was November 2011 the project is still running and is expected to be completed by the end of June 2014.
According to the report, the project could be divided into two periods. The first period related to the development of the ICS GrantsTracker solution, with Fujitsu as prime contractor and ICS as sub-contractor, and extended from 10 March 2011 to 10 September 2012. The second period related to the Contract Variation in which ICS was terminated and Fujitsu became the sole contractor charged with developing a bespoke system, and extendd from 10 September 2012 to the present.
Key factors associated with the failure of phase one of the GMS included ineffective management of the design specifications stage and communication breakdown between all three parties. Both of these could, in large part, be attributed to the Department’s lack of expertise and experience in managing and delivering an ICT- enabled project, the report found.
Although the initial development of the project was contracted out to an ICT consultant, neither the Project Director nor the Project Manager had expertise in ICT-enabled project delivery. This led to unrealistic expectations and an inability to respond appropriately to issues as they arose. In addition, there appears to have been little understanding of the importance of the business reengineering process. This is evident from the failure to complete and sign off on the Integrated Grants Management Framework (IGMF), which was the mechanism for creating the standard business processes and workflows to underpin the technical solution.
Ultimately, the Department of Health is confident that the second phase of the project will be successful, although it is well over schedule and will result in substantial indirect costs in terms of staff time and resources.
In general, the report noted that the problems being faced in the Northern Territory were not unique. The chair’s statement by Lia Finocchiaro noted:
“The problems the Territory faces in this area are not unique. Governments around Australia and around the world have seen huge losses of public money through expensive ICT projects that run well over time and budget or fail altogether. This has resulted in significant work to improve the management of such projects worldwide over the last decade. Recurrent themes in that work are the need to develop robust governance systems for ICT projects, to develop the necessary capacity for the management of such projects in the public sector, and to adopt appropriate project management methodologies.
The Committee has found that similar work is required in the Northern Territory, and is pleased to see that the Government has already moved in this direction with the adoption of an ICT Governance Framework.”
And the solutions to the Territory’s problems are also not unique. As has occurred in other jurisdictions, the report recommended a number of measures be taken to address the problems, including the prompt implementation of a whole of government ICT governance framework; the inclusion of members with ICT qualifications to the various ICT governance, leadership and ministerial groups; that a new whole of government chief information officer be appointed; and that lessons learnt from all ICT projects undertaken in the Territory be disseminated throughout its operations.
The report also recommended that departments and agencies identify responsible executives and senior project staff in project business cases, and set their personal performance agreements to reflect their accountability for successful project delivery. A number of other more specific recommendations were also made.
The news comes as virtually every other State Government in Australia has over the past several years produced similar reports cataloguing major problems with fundamental ICT project and service delivery.
In November 2011, for example, Victoria’s Ombudsman 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 preceding half-decade.
The most notable single project failure has been Queensland Health’s payroll systems upgrade, which has cost about $1.2 billion and resulted in tens of thousands of medical staff in the state going without pay or being overpaid. The system — which was implemented by IBM and the State Government based on SAP software — still does not function correctly. The debacle resulted in IBM being banned from further contracts with the Queensland Government.
And in June 2013, the Queensland Government’s first comprehensive ICT Audit revealed that ninety percent of the Queensland Government’s ICT systems were outdated and would require replacement within five years at a total cost of $7.4 billion, as Queensland continues to grapple with the catastrophic outcome of years of “chronic underfunding” into its dilapidated ICT infrastructure. Other states such as NSW, WA and SA have also suffered major ICT project problems over recent years.
Not surprising … as I’ve written many times, Australia’s State Governments are currently facing a crisis in terms of their fundamental ICT project and service delivery. The Northern Territory is only the latest jurisdiction to add its own problems to the lengthy national list.