A ‘bad track record in ICT projects’: learn from Victoria’s mistakes

By David Donaldson

Tuesday March 15, 2016

Victorian government ICT projects “continue to show poor planning and implementation, resulting in significant delays and budget blowouts”, according to a Victorian Auditor-General’s Office report on six troubled projects that ran over budget and, in all but one case, over time.

“Unfortunately,” acting auditor-general Peter Frost wrote, “the Victorian public sector does not have a good track record of successfully completing ICT projects.”

As in previous audits, the auditor-argued weaknesses in planning and implementation continue to mean projects often: do not meet functionality expectations nor demonstrate expected outcomes; cost much more than the planned budget, or are delivered much later than planned; or are cancelled prior to completion after already incurring significant costs.

In one of the projects reviewed by VAGO, the government terminated investment when it became clear the vendor could not complete the project — more than six years after its original completion date. This cancelled project, administered by the Department of Justice and Regulation, cost nearly $60 million in Victorian taxpayers’ funds, noted Frost. “This is simply not acceptable.”

None of the six projects examined in the audit were completed as budgeted, and only one was completed on schedule. All had governance arrangements in place, but this “did not prevent other project management weaknesses from adversely affecting the effective planning and implementation of their ICT projects”.

“None of the six projects examined in the audit were completed as budgeted …”

Some of the projects ran significantly over budget. City West Water’s Arrow program, as yet uncompleted, was initially planned to cost $106 million, but is now expected to cost $122 million. Yarra Valley Water’s Improving Infrastructure Management System program jumped from $17 million to $26 million by the time it was finished. The University of Melbourne’s ISIS Student Management System project was completed $7 million over the intended $23 million budget.

Others have had to be scaled back and will not deliver the full functionality initially planned. The Victorian Commission for Gambling and Liquor Regulation’s Information System project will likely be delivered for the original price but has been de-scoped. Worksafe’s Electronic Document and Records Management System project was completed at less than the initial budget but likewise with decreased functionality.

But the Department of Justice and Regulation’s Infringement Management and Enforcement System project stands out. It was terminated nearly six years after the expected completion date and after just under $60 million had been spent — more than double the original budget of $24.9 million. The audit noted the original projected cost included only fixed costs payable to the vendor, but not things like staff and consulting fees. The Victorian auditor-general argues total costs should be considered when determining the budget.

The failure of the project means not only that Justice must continue using its legacy system, but that proposed legislative reform reliant on the project has now been postponed.

The project highlights the importance of being an informed buyer. The Department of Justice and Regulation “acknowledges that it was far from being an informed buyer and that it relied on external legal advice to outsource the risks”, the auditor wrote:

“DJR did not engage appropriately skilled technical people who could have guided it through the challenges of procuring a bespoke ICT system. … [and] says it was ‘probable’ that the steering committee lacked suitably skilled and experienced staff for the type of project being embarked upon.”

The report is the second part of a series of audits of Victorian ICT projects. Phase one, published in April 2015, found that nearly 35% of the 1249 reported projects went over budget or were over budget prior to completion, and that although a business case was prepared for just over 70% of ICT projects, a review of a sample revealed that only 38% included the minimum required elements, such as financial analysis and expected benefits.

Moreover, very few agencies measure the effectiveness of their ICT projects. Of the 788 completed projects surveyed in phase one, a little over 10% had undertaken some assessment of their expected benefits.

How to manage an ICT project

In the report published last week, the auditor highlighted the need for executives to lead effectively on ICT project management and to ensure personnel with appropriate skills were involved. Frost said:

“It is the responsibility of the executive leadership teams to ensure that their agencies and entities demonstrate the appropriate behaviours and required skills to ensure successful delivery of ICT projects.

“A robust culture of active governance at the senior management level enables agencies to make well-considered decisions and to effectively engage with vendors. Being an informed and vigilant ICT buyer is critical to success.”

Among the six projects audited, weaknesses observed by VAGO include:

  • Inadequate assessment of the vendor’s capability to deliver the project;
  • Ineffective project governance and poor project management;
  • Inability to fully appreciate and specify the business requirements for the ICT system being purchased, including the changes/upgrades required for it to integrate with the existing information technology infrastructure and systems; and
  • Failure to provide appropriately considered advice to senior management at key stages of the project.

Yet despite the generally poor outlook, Frost said it was “heartening” to see “some elements of better practice that contributed to project completion” at the University of Melbourne and Yarra Valley Water in particular. The positive aspects included:

  • Clearly articulated business requirements for the ICT systems being procured;
  • Appointment of appropriately skilled project managers and IT personnel in the project team;
  • Consistent and tenacious monitoring of the vendor’s progress in project delivery; and
  • Commitment to comprehensively and adequately test the new system prior to go-live or project rollout.

Agencies would greatly benefit from revisiting and applying the lessons learned by others in the planning and implementation of their ICT projects, Frost argues, recommending public servants look to VAGO’s 2008 better practice guide Investing smarter in public sector ICT for direction on how to manage ICT projects more effectively.

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