Thursday, November 28th, 2013


This is not a tongue in cheek (no pun intended) poke at ICT projects, it is a serious outline analysis of another IT project that has failed. An authoritative report has been issued by the Victorian Auditor General in Australia, “Clinical ICT systems in the Victorian Public Health Sector”, Report 2013 14:8.

We are highlighting some of the points made and then making our comments for general consumption on ICT projects generally. Our comments are not only directed at the specific project in Victoria. The positive note is the lessons that can be learnt. If people are minded to do so.

“In 2003 government committed to roll out clinical ICT systems in all major Victorian hospitals by 2007.” We are sure this was a considered objective, probably supported by a business case to justify the proposed expenditure. Perhaps there was a Project Risk Register and even better a Procurement Risk Register. If there was it should have been informed by past ICT failures around the world. There is absolutely nothing unique about such projects failing to deliver the outcomes on time and at the agreed budget.

“By October 2013 the ICT system had been installed at four health services instead of all 19 major Victorian hospitals as planned, and the system had only been implemented at one of these health services.”  You may wish to stand back in shock and amazement! What has happened in TEN YEARS? The contract detail would be a fascination, as would the contract change notes. Did the vendor pay damages for late delivery or was the contract ‘silent on the matter’ as a Barrister once said to us? Being silent on a matter, is more refined than ‘someone forgot’ to include it in the contract.

“DH (Department of Health) failed to complete the expected implementation……..due to poor planning and an inadequate understanding of system requirements. DH significantly underestimated project scope, costs and time lines, as well as the required clinical and other work flow redesign and change management efforts.” There is serious food for thought here. We have little doubt that there would be an extensive team on the project, including ICT specialist and consultants, and that they would effectively liaise with stakeholders. There probably was, also involved, specialists in project management. Our great concern on every ICT project in which we engage is defining the technical requirements. It is almost 100% certain that the specification will change innumerable times. In terms of costs, whatever figure is presented the cynic will multiply it by 3 or 4 (see our article on HS2).

“DH has not demonstrated:

  • An auditable trail of authorisation by government of key changes in the program scope and direction
  • Effective financial monitoring and oversight practices to generate reliable and consistent expenditure data
  • Appropriate attention and action in relation to previous review recommendations and other guidance
  • Effective governance and contract monitoring to ensure vendor performance.”

This is an interesting litany of failures. Thinking outside the specific project, these are pointers to where world class practice should be. The logic isn’t new, so why are these practices not in place for many IT projects? We suggest that one reason is the short sightedness of project managers whose are afraid to say this project is likely to be a disaster so let us abandon it! Any failure of financial monitoring is potentially catastrophic – so where was audit whilst all this is taking place?

“By October 2013 the system cost $145.3 million. Despite its significantly reduced scope this is 150% more than the original budget.” Nothing new here we suggest for many ICT projects. As will be seen below the figure quoted here is not the end of the story. It raises the pertinent issue about someone having the courage to terminate contracts where costs and time lines are out of control.

“DH is not able to definitively advise how much has been paid to the vendor against the approved contract cap.” Pardon me!! Let me pinch myself. A financial project system that fails to monitor payment to a supplier beggars belief. A telephone call to the vendor would have probably got an answer within minutes. Of course, our UK readers will recognise that the UK Government has a current ‘difficulty’ with payments to suppliers on the electronic tagging contract. It appears they know what has been paid. Their difficulty is that it appears that the Justice Ministry don’t know what was being paid for (see the NAO report). Watch this space. The Serious Fraud Office is due to report. We have noted that currently the consultants PwC have been paid circa £2m (so far) to answer the question.

“DH cannot demonstrate that it is aware of relevant details of project costs.”  This facet of cost is not infrequently unknown when in-house resources do not have to account for their time on specific projects. Even when there is this requirement there is the danger that time is booked, wrongly, to different projects to hide the reality. This facet of accountability drives into financial systems and the integrity of project management.

“Under the ICT system arrangement the vendor was given overall project responsibility.” This approach opens the door to a conflict of interest. The vendor is likely to be self-serving and unlikely to draw attention to failures to perform, escalating costs, major risks emerging, etc. It is a potential significant error of judgement.

“DH contract management processes were not effective in addressing the vendor’s performance issues.” It is monotonous how many times there is adverse comment on contract management relating to public service contracts. Why should this be so? Ignorance regarding the skill level required is definitely a factor. The financial constraint on in-house contract management is another factor to be taken into account. It has been argued that circa 10% of the project value should be allocated to contract management. The inability of some organisations to conduct robust contract review meetings is welcome by the non-performing contractor.

“The selected vendor’s clinical ICT system was described as a commercial off the shelf solution. However, it still required configuration to fit the requirement.” On this depressing note we end our extracts from the report. The configuration issue will ring alarm bells with many ICT project managers and procurement specialists. We simply ask what sort of procurement process is it that ends up with a contract, knowing that configuration will be required? It raises many questions, not least who owns the IPR in the developed software, how will the configuration be charged and what impact will there be on the time lines?

This isn’t a happy read. Caveat Emptor!!!!

 If you are embarking on an ICT Procurement and need some help in avoiding such problems please give me a call, Ray Gambell on 01744 20698 or email me at [email protected]. We have number of ways we can help including  our Procurisk® risk identification software service.