Payroll system problems at Queensland Health Service has created a monster of an IT project. Originally starting as a fixed price $6.19 million dollar project, it has bloated to a possibly $530 million dollar catastrophe. An audit on the project found that even to get the IT system to “acceptable” standards would take somewhere between $3.6 to 6 billion.
Dr. Robert Charette has followed the Queensland Health Service difficulties for the past few years, and the over budget project reminded him of a similar event in Scotland. Apparently, an audit revealed weaknesses in three IT government projects with large system upgrades, among other concerning findings:
The audit also reported that in 2004 the Registers of Scotland signed a ten year, £66 million agreement with telecom company BT to maintain and update its IT systems. However, for six years there was no formal peer review of the project’s overall status. Now, with the contract’s cost reaching £112 million (including having to write off two projects at a cost of £6.7 million) due in part to incorrect strategic assumptions in the original business case and subsequent poor contract management and oversight, the government has belatedly decided to terminate the contract 20 months early. How much the government will pay BT for early contract termination is still under negotiation.
The problems in Scotland came from poor financial control and progress reporting according to a story in the BBC. Poor Risk management and findings from 3rd party reviews were also not acted on, according to the report.
This serves as a lesson for all large IT projects: consider what safeguards you need in order to have visibility, effective reporting, and immediate mitigation tools. If not, the large project could slip into a money pit.