In response to the article on this blog about “eight generalisations” – some common factors in IT-related failures in the public sector – an evidently well-informed reader writes:
“All valid points. But having helped structure, close and finance a number of Private Finance Initiative//Public Private Partnership backed IT deals I think the key failing is in fact that old favourite: scope creep.
“Consider Inland Revenue sorry HM Revenue & Customs, forced to outsource core IT support under a 10 year fixed price pay for output contract. Of course the Chancellor can’t be clear on scope as (s)he reserves the right to change the fundamental tax law every year (eg working tax credit introduction) and requires this be implemented with x months notice.
“Would BP say or GSK ever try a fundamental global restructuring of their business every year for a decade and not expect that (a) staff would become “change survivors” rather than enablers or (b) infrastructure costs might rise?
“Would any road builder under a PFI/PPP price, or deliver, anything close to time or budget if the contract is say London to Oxford but might, with 3 months notice, become London to Canterbury?
“It’s actually a miracle that PFI/PPP in public sector IT delivers ANYTHING at all.
“Remember the rules of thumb: time and material becomes fixed price? Double the quote. Scope unclear? Double the quote again and try and make everything undefined “out of scope” at penal time and material rates. 10 years financing at 10% cost of capital with PFI/PPP? Double or triple the quote again. That “simple” £50m change programme just became £400m – £600m and rising.
“The losers – current and future tax payers. The only winners, sadly, are the lawyers and the bankers
“From a sad taxpayer and ex PFI/PPP financier.”