New Labour's unlucky 13 IT projects

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Now the Labour Party's conference, which was held in Manchester, is finished, I've looked at the lessons and what went wrong on 13 large, government IT-based projects and programmes:

The analysis is tied in with an analysis and comment, to be published in Computer Weekly this week, on Labour's track record on managing big IT-based projects and programmes. 

 

Magistrates' courts

Fujitsu was the only bidder in 1998 for the "Libra" contract to deliver a standard case management system for magistrates' courts. Fujitsu bid £146m in May 1998 and increased this to £184m by the time the contract was signed in December 1998. The price was renegotiated twice and Fujitsu ended up being paid £232m to deliver only part of the original system: the technical infrastructure and not the case management system. The cost of the full system, from various suppliers, is now put at more than £400m. There was a gross underestimation of costs and complexity. Another key lesson according to the National Audit Office: don't build IT to support existing ways of working but re-work and simplify processes first.

Schools

Education Secretary Ed Balls said the contract with ETS for marking SAT tests had turned into a "shambles" after the company introduced an online service to give schools a detailed breakdown of results and quicker access to pupils' scores. But some markers were either locked out of the system or found it too slow. This was one reason there were long delays in publishing the results of Sat tests. Thousands of pupils finished the school year without their results. It also transpired that test papers were sent to the wrong schools or went missing, pupils were marked "absent" in the ETS database even when they took the tests, some pupils were given marks for tests they had not taken and test papers were returned to schools unmarked. MPs were given conflicting information by ministers and government spokespeople on how well the new system was working and the performance of ETS. The government eventually cancelled the contract with ETS.

Intelligence services

There have been delays of between two and four years to phases of the "Scope" system to help combat terrorism and other threats by linking intelligence services and providing interfaces between MI5, the MoD, government departments and key overseas sites. It appears that complexity was underestimated. The system operates at the "top secret" level of electronic security. The Cabinet Office claimed to Computer Weekly in August 2007 that, after some initial delays, all was well with the system. The Intelligence and Security Committee of MPs reported in January 2008 that there had been some progress and benefits of phase one of the system. But it now appears that phase two has been shelved. The Committee said: "We remain very concerned by the numerous delays to this important programme, including: delays to the delivery of phase one and phase two a general lack of preparedness for full implementation amongst SCOPE partners and difficulties in providing a secure environment for the deployment of Scope overseas". Last week the Cabinet Office refused to answer Computer Weekly's questions on phase 2 of Scope, which was supposed to start this year. A Cabinet Office spokeswoman cited state security as a reason for not discussing the project's problems. The Cabinet Office has also refused to say how much the system has cost, or who is supplying it.

GCHQ

In 1998, the Government's communications headquarters GCHQ estimated the cost of a "box move" of technology from an old building to a new one would be about £60m. But for reasons which have never been explained, GCHQ's board had been told the cost of the technical transition would be only about £20m. In fact even the £60m was an underestimate. The final cost was more than £300m, according to the National Audit Office in a report in July 2003. With a straight face, GCHQ today describes the £300m as "on budget".  

Passports Service

New systems at the Passport Service in 1999 slowed down the processing of passport applications. Instead of travellers receiving passports within 10 days, some applications were taking up to 50 days to process. A backlog of more than half a million applications built up. Emergency measures were introduced, including free two-year extensions to passports. The National Audit Office said there was a "failure to assess and test adequately the time needed by staff to learn and work the new passport processing system". Extending the roll-out from Liverpool to Newport before problems were overcome compounded the difficulties.

National Health Service

The National Programme for IT in the NHS was announced in 2002 after it was approved in principle at a short meeting at Downing Street. The initial plans proved wildly optimistic. Computer Weekly learned the National Programme for IT [NPfIT] was originally planned as a three-year programme but later became a 10-year scheme. The roll-out of the main system, a Care Records Service, is running four years late. What was announced as a £2.3bn scheme is now projected by the National Audit Office to cost £12.7bn. Doctors support the objectives of the scheme but are critical of the way it is being implemented. The programme has lost two of its four local service providers. Implementations of patient administration systems in London and the south of England have caused prolonged delays in treatments and surgical procedures for patients, including some with suspected cancer. Appointments have been delayed, records have gone missing, and some hospitals have been unable to track which patients have been treated and for what. Also, trust finances have been hit by unexpected costs and being unable to invoice for work they have done. Another example of a major project in which over-optimism reigned - and arguably still does.

Rural Payments Agency

In 2003 the Rural Payment Agency appointed Accenture to handle its IT. In 2004 the Rural Payment Agency's Single Payment Scheme was announced. By 2005 the costs of the Accenture contract, which included building systems to support the Single Payment Scheme, were escalating, partly because of the growing complexity of the scheme. In March 2006 the Rural Payments Agency was unable to meet its target for making payments to farmers. The National Audit Office said the failure "caused distress to a significant minority of farmers, cost farmers money in additional interest and bank charges, and undermined the farming industry's confidence in the agency". The National Audit Office found the "risks and complexities involved in delivery had not been fully appreciated. As a consequence the Rural Payments Agency underestimated the amount of work involved. The NAO said: 

"Our analysis of events indicates that the pressure to meet deadlines led the Agency to proceed without sufficient evidence of the robustness of the overall business systems

"The Agency did not have the time to test the system as a whole before introduction. Each key element of the system was tested before introduction, but problems arose afterwards as the testing could not fully simulate the live environment."

Notes of briefings by officials to ministers, which were released under the Freedom of Information Act, showed that ministers were repeatedly given over-optimistic assessments of progress with the system.

Criminal Records Bureau

Officials ignored warnings from the potential end-users of a new IT-based vetting service that the assumptions underpinning the project were wrong. Potential end-users had questioned the proposed use of a call centre and argued that customers would prefer to apply for background checks by paper rather than phone. The Bureau, in partnership with Capita, went ahead with a call centre but most applications came in by paper. Data entry screens had not been designed for keying in data from paper forms. The optical character recognition systems were designed for telephone applications and had insufficient capacity to deal with the volume of paper applications. Business processes were unable to cope with the volume of errors and exceptions on paper applications and the complexity of dealing with individuals and employers. The National Audit Office said in February 2004: "Weaknesses in the business assumptions made at the start of the project, and in the delivery of systems to process all types of application, were key factors in the Bureau's problems."

HM Revenue and Customs

In April 2003 HMRC went live with a new tax credits system. EDS and Capgemini were paid £236m until 31 August 2005, for running the system (excluding software build costs), according to a government statement. Software problems led to incorrect payments being made to claimants. HMRC claimed software errors led to overpayments of £184m in 2003-04 and 2004-05. The department spent a further £65m on extra administration and fixing the system. EDS and HMRC reached a legal settlement over some of the department's tax credits problems.

Department for Work and Pensions

The Department for Work and Pensions (DWP) cancelled an IT programme - the Benefit Processing Replacement Programme - on which it had spent £106m. The cancellation came less than three months after the government gave an assurance to Parliament that new funding for aspects of the Benefit Processing Replacement Programme had been approved. The government made no announcement of the cancellation of the project: its abandonment was discovered by journalists. The then Tory Work and Pensions spokesman Philip Hammond MP said the discrepancy between the reassuring parliamentary reply in June 2006 and the cancellation of the scheme in August 2006 highlighted the poor quality of information provided to Parliament on the progress of major IT schemes. The three-year BPRP programme was based on commercial off-the-shelf products from Siebel, Curam and IBM. The DWP refused to explain to Computer Weekly why Parliament was given information on the progress of the project when the government was quietly planning to scrap it.

Department of Health

Despite many warnings, the Department of Health introduced a flawed, web-based system - the Medical Training Application Service - to select junior doctors for training in their chosen fields. The Association of Surgeons in Training was among the many professional organisations which complained to the Health Secretary about the system. The president of the Association of Surgeons in Training, Conor Marron, wrote to the government in 2007 about the "failure" of the Medical Training Application Service (MTAS):

"Despite serious concerns being raised in the development stage that it would not serve surgical trainees as required, this has been rushed through with crucial deficiencies. The failure of the system and its development, in such a tight timeframe, has led to major errors in the quality control of the long-listing and short-listing processes which has undermined the credibility of the entire process."

The system was further discredited when it was revealed doctors could read each other's applications. A High Court judge, Mr Justice Goldring, said of MTAS: "The premature introduction of the new system has had disastrous consequences." The Labour-led Health Committee of the House of Commons said of the MTAS system: "The reputations of both the Department of Health and the leaders of the profession were severely diminished by the events of 2007."

An inquiry into the failings by Professor Sir John Tooke said in a 236-page report in January 2008: "The [MTAS] system went live in January 2007. From early in the process there were reports of technical problems and evidence of unacceptable variation in the individuals selected for interview. There was also mounting evidence that doctors who in prior selection processes would have been regarded as first class candidates were not being shortlisted." The Tooke report revealed that a gateway review in September 2006, four months before the system went live, had said:

"The major internal risk lies with the online application system MTAS where the schedule is too close for comfort and would not normally be regarded as acceptable for an IT project".

But officials at the Department of Health concluded at the time of a gateway review that: "MTAS is currently on schedule and deliverable".

John Turner, consultant physician, told the British Medical Journal in June 2007: "Bullying tactics created an unstoppable momentum for MTAS implementation, regardless of the obvious problems piling up and the well based objections of a majority of consultants."

The Department for Innovation Universities and Skills

The Individual Learning Account scheme was announced in the 1997 Labour Party manifesto to support adult education with a system of tax incentives from employers. The Individual Learning Account (ILA) programme launched nationally in September 2000. A month before, in July 2000, Capita had been awarded a contract to run the Individual Learning Account scheme. By October 2001 the scheme had 2.5 million members registered as eligible to undertake subsidised learning.

About 9,000 organisations had registered as learning providers, but some had registered fraudulently. The Secretary of State announced on 24 October 2001 that the programme was being suspended from 7 December 2001 due to evidence of abuse by a small minority of providers. After further serious allegations of fraud and theft involving ILAs, the government decided to shut down the programme immediately on 23 November 2001. John Healey MP, a minister at the Department told the Commons' Committee on Education and Skills that the concept of Individual Learning Accounts and policy were "very much inspired by the Chancellor of the Exchequer [then Gordon Brown]".

Fraud and abuse are believed to have cost taxpayers tens of millions of pounds but nobody knows how much. MPs said there was no understanding of how much the system was being abused . Education committee MPs said the department's officials should have better understood the risks before they allowed the scheme to go live and it was not clear how the supplier and department divided their responsibilities. Labour MP David Chaytor said it was difficult to obtain information on the project:

"It strikes me that whereas in the past few weeks we have been able to read in the financial pages of the major newspapers full details of the accounts of Enron, and more recently WorldCom, in minute detail, we cannot find out how much the Department has paid, out of public funding, to Capita, or what penalties have been incurred as a result of the failure to deliver the skills training."

"The scheme ended up sticking a fire hose out of a window and spraying taxpayers' money over anyone who happened to walk by," said Conservative MP Richard Bacon, a member of the House of Commons' Public Accounts Committee, during a debate on the scheme in the Commons on 27 June 2002.

Ministry of Defence

The expected costs of the Defence Information Infrastructure (DII) are £7bn - when Parliament was told the costs would be £2.3bn. The National Audit Office in July 2008 found there had been "major delays to the roll out of the first stage of the DII programme. The Department contracted to have 62,800 DII terminals in place at permanent defence sites by the end of July 2007. At the end of April 2008, only 29,000 had been delivered

"Currently the end date for installation of increment one is running 18 months late against the estimated latest completion date at contract signature".

The cost of the project was announced originally at about £2.3bn, but the latest cost estimate is £7bn, though not because of any fault of the main contractor EDS. The National Audit Office found the costs of the DII contracts with the Atlas consortium, led by EDS, are under firm control. The MoD paid EDS less than the supplier had originally expected because of an 18-month delay in the roll-out. The difference in costs is because the MoD was not open and candid when announcing the costs originally. The DII programme "assumed that the roll-out of infrastructure and terminals would be more straightforward than transpired," said the National Audit Office.

Allied article: Why can't new Labour get IT right?

Links:

Costs of Libra project treble - Computer Weekly, June 2006

Public Accounts Committee report including reference to GCHQ's box move, May 2004

Passport Service operations head says problems of 1999 won' t be repeated, Computer Weekly, July 2005 

Rural Payments Agency's Single Payment Scheme - National Audit Office report

Fujitsu seeks £700m over failed NPfIT contract - IT Projects blog, September 2008

Criminal Records Bureau, National Audit Office report, 2004

HMRC again threatens legal action against EDS over tax credits settlement, IT Projects blog, 2008

DWP scraps core benefits processing system, Computer Weekly, September 2006 

MTAS system - British Medical Journal blogs, 2007

Individual Learning Accounts - statement of closure on the department's website

Ministry of Defence's DII project could cost £7bn - IT Projects blog, 2008 

6 Comments

  • I have a straightforward answer to Tony's question: "Why can't the Government get IT right?"

    My answer is: start thinking about effective systems, instead of technology.

    Until this happens, we can only expect more of the same.

    Over the past few years I too have analysed some of the "failures" cited by Tony and I have seen recurring patterns, such as:

  • a presumption that the initiative is a new technology/ IT project

  • failure to plan beyond the strict boundaries of the "in-play" area of management

  • vendor/ consultant driven "solutions"

  • unexpected cost on a massive scale

  • serious shortfalls in eventual performance
  • The first step in finding better solutions is to start asking better questions. The Government needs to stop launching IT projects and start creating an effective info-structure, based on effective information systems.

  • All good stuff Tony.

    The OGC tells us the common causes of government IT project failure:

    1. Lack of clear link between the project and the organisation’s key strategic priorities, including agreed measures of success.
    2. Lack of clear senior management and Ministerial ownership and leadership.
    3. Lack of effective engagement with stakeholders.
    4. Lack of skills and proven approach to project management and risk management.
    5. Lack of understanding of and contact with the supply industry at senior levels in the organisation.
    6. Evaluation of proposals driven by initial price rather than long term value for money (especially securing delivery of business benefits).
    7. Too little attention to breaking development and implementation into manageable steps.
    8. Inadequate resources and skills to deliver the total portfolio.

    Have lessons really been learned?

    As for the NHS IT, it might also be worth pointing out that one of the reasons given by Lord Warner for the increase in the billions of pounds was that the original estimate only included the base system, not for hooking it up to organisations around the country and training people on how to use it. (Of course! How silly we were to think they were giving us the whole figure.)

    Something we should perhaps reflect on for the ID card and intrusive database scheme?

  • Thanks Colin and UK Liberty for pointing out the lessons. Gateway Reviews were supposed to prevent IT-related failures.

    It may be that the Office of Government Commerce doesn't want them published not because of what they would reveal about ID cards and other projects but because usually they're too polite, deprived of vitality and force by the need to use language which obscures meaning - they're written in civil service code in other words. Which is in keeping with the OGC's advice: it repeatedly emphasises that a "red" traffic light doesn't mean stop: it means in effect "act on recommendations [or be seen to act) then carry on".

    This isn't entirely fair. I have seen gateway reviews which were quite hard-hitting - and in one case the senior responsible owner did not accept the most sensible of the criticisms. Which is one reason they should be published: people would see those reviews that were so polite they made no difference, or were incisive and so ignored - or were successful by putting a project on track.

    I don't think government's record on projects will change until there's enforced, independent, published, contemporaneous scrutiny, which I am sure will never happen.

    Government would say that too much scrutiny would make departments too risk-averse (which would upset suppliers). My response is: what's wrong with the controllers of the public purse being risk-averse?

  • Tony, I couldn't agree more with your last points, and it seems to me there is evidence to suggest that the controllers of the public purse haven't been risk-averse enough.

  • Tactical vs Strategic

    For the record, as well as a background managing blue-chip corporates for companies like IBM, I’ve also had 22 years in professional motorsport. The motorsport involvement perhaps changes my perspective. Whilst mid-season, one has to work around design deficiencies to find the two tenths of a second that makes the difference between 8th and pole position in qualifying, there is always an appreciation that close-season design is the cornerstone of a sustainable, competitive advantage.

    Let's take an example from the UK, where the business-driven focus of Government Connect (GC) is in danger of contracting the same malaise that affected ‘Priority Outcomes’ set centrally for Local Government organisations. Someone sets a business objective with a short-term timescale, money is thrown at a tactical solution, the realisation dawns that it’s not sustainable, and the business case collapses. In the case of GC, one has to wonder if the technology strategist is again being disregarded as a mere mechanic. For sure, there is an understanding of federated identity management within their technical team, but it doesn’t sound as though anyone’s listening. It’s a bit like trying to overcome a handling problem with expensive new suspension components, despite having been told by the Design Director that it’s the chassis that is at fault.

    There is not necessarily an issue with delivering a proof of concept that demonstrates the business benefit, so long as the tactical technology solution is replaced by a sustainable architecture. But that doesn’t seem to be what’s happening. Brown field, dirty solutions are in danger of becoming the technology solution, severely impacting the long-term business case, because no one understood the significance of technology strategy.

    The days of allowing the business to run around implementing business solutions, without any governance from those delivering the technology strategy, need to end, right now. That mentality has already resulted in dozens of ‘point solutions’ being deployed into local and national government, making it difficult and expensive to join up. Let’s not kid ourselves, many of the suppliers know full-well that there is a better way, but continue to foist point solutions as a means of tying in the customer and maximising revenue.

    If the technology is ever to be aligned with the business need, we need the Design Director to be committing the team to the longer term delivery of a new chassis. In this case, our ‘new chassis’ will move away from the organisation-centric technology architecture, using concepts like TADAG (.com), putting the customer at the centre of: security, authentication, identity management, and records management. Done like this, issues like civil liberties around information sharing disappear, because the customer is given control.

    Whilst we continue to tolerate performance managed, career objectives of civil servants and suppliers being allowed to jointly promote the delivery of tactical solutions, we are, I fear, on a hiding to nothing. To paraphrase a couple of recent quotes:

    “I don’t care about strategies, I’ve promised Gordon Brown that he’ll have a solution within 18 months, and I don’t care how brown-field or dirty it is” - Senior Civil Servant overseeing the development of Government Gateway.

    “Yes, a strategic framework is the obvious way forward, but that would need 4 engineers rather than 40. I have shareholders to answer to. What would you do?” - MD of a well-known FM outsourcing company.

    SITFO will continue to communicate ‘within’ central government to assist those that do understand, but I suspect that they will be sidelined, being categorised as mere mechanics, so that their strategic vision doesn’t impede the tactical solutions upon which the career progress and profits of others depend. No, I conclude that the only way to resolve this is to change the culture at the top. If that means delivering communications to a wider audience that prompts them to ask awkward questions of their government, so be it.

    There is a saying in motorsport: "everyone wants to be a racer, but no one wants to go fast". So, if we stray outside of your comfort zone, tough. We're only interested in winning the race that delivers sustainable transformation, otherwise we lose our citizen sponsorship deal…

    David Gale
    CEO
    SITFO.org

  • As a lowly IT administrator I've found your comments above to be a rather intriguing insight onto the driving forces acting within Government led projects. I’ve decided to base the theme of my Masters degree in this area (identifying the common causal factors behind failed government projects) and have already begun the slow process of pooling this information together, and, I must admit to being more than a little staggered by the seemingly unending volume of case material available. I was wondering if anyone above has any suggestions as to where I might be able to find additional secondary sources on the subject? The National Audit Office appears to have hundreds of examples of failed projects to hand, which is wonderful for my dissertation; as a taxpayer it’s actually becoming quite a frightening discovery.
    In keeping with the motorsport theme I have always wondered whether it is better for teams to invest in building their own engines or whether it is more effective to work in partnership with industry experts? McLaren Mercedes seem able to work effectively in this way and yet Ferrari prefer to invest internally. It’ll be interesting to see how government compares when working in this way. Are they a Honda or a Super-Aguri Honda?

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