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Dutch government IT projects run €1bn over budget

Dutch government IT projects are costing much more money and taking far longer than expected

This article can also be found in the Premium Editorial Download: CWEurope: CW Europe: Costs stack up for Dutch government IT projects

Government-controlled IT projects in the Netherlands on average go over budget by 40%, according to an analysis by a Dutch newspaper.

Analysis from Financieel Dagblad (FD), the Dutch version of the Financial Times, looked at 125 large government-funded IT projects and concluded that costs ran higher than projected in a majority of cases, and costs at least doubled in 22 cases.

The newspaper said it has made a rather conservative estimate since it did not look at every project, as not all IT projects were categorised in the datasets it analysed, such as IT projects in the Ministry of Defence.

The examples of projects running out of control are plentiful. The massive project to unite all public transportation systems in the country under one definitive payment method (the OV-chipcard) went over budget; the communication system for emergency services P2000 was unreliable for a long time; and in some cases such as the Electronic Patients File (a database for healthcare data of civilians), projects were shelved or integrated in different ones.

Outliers

There are some outliers in costly projects. The digitisation plan for the IND (the Dutch immigration services), for instance, was budgeted for €1.2m, but over the years has been stretched to €29m. The project is expected to be finished by the summer of next year, despite original projections for mid-2015.

The same goes for DigiD, the country’s national log-in service for citizens to handle governmental affairs. The project ran over budget eight times, and took three times longer than originally planned to complete.

Another project over budget and time is the IT overhaul for the Food and Consumer Goods Safety Authority (NVWA), which was eventually cancelled in 2017 because the system was deemed unusable. By that time, €100m had already been spent on it, more than three times the €30m that was originally budgeted. 

In all, it’s thought these cost overruns have run up to around a €1bn so far. The Financial Times used a list provided by the government’s watchdog for IT projects that was set up after earlier investigations into overdue spending.

Despite the newspaper’s report of the astronomical numbers, the minister of Safety and Justice, Ferdinand Grapperhaus, does not consider the money wasted.

Speaking on behalf of the absent secretary of Internal Affairs, Grapperhaus said: “During the run of a project, you can find new insights or unforeseen problems that need resolve at increased costs.”

Long history

The news report does not come as a big surprise to most in government or the private IT sector, as the Netherlands has a long and painful history of failed IT projects.

The problems were so severe that parliament authorised an inquiry in 2012 into the government’s workings in IT projects. The final report of the so-called Elias Commission drew rough conclusions: Government departments know too little about IT, do not understand its significance and omnipresence, and usually want to find the cheapest solution possible – even if that usually means costs will run up later.

One of the biggest recommendations of the Elias Commission was to set up an independent committee to monitor the progress of large IT projects. The so-called BIT committee subjects IT projects with a budget over €5m to tests to monitor technical feasibility, but also to analyse whether the government has realistic end goals. 

However, the BIT committee is often criticised for its lackluster role. A prime example is the case of the digitisation of the Basic Registration of Citizens, another project that ran amok. In May of this year, government published an evaluation of the project, explicitly calling out the BIT for being too soft on the project.

Severe lack of knowledge

Other problems that came to light by the Elias Commission were familiar to the majority who work in government.

The commissions concluded that there’s not enough knowledge of IT in almost every level of governmental organisation. Officials are “unknowingly unknowledgeable” about IT. Combine that with a severe lack of IT experts in government, and you get what the commission calls “a near unbridgeable gap between policy and IT departments”. Officials warned about that lack of expertise before the Elias Commission publicised its conclusions.

In recent years, the Dutch government has invested heavily in skilled IT personnel, but the overall level of IT knowledge in government remains low.

Low-cost estimates

Partly because of the lack of IT knowledge, civil servants tend to give very specific and detailed orders when outsourcing projects. Meanwhile, external IT agencies tend to give low-cost estimates and tight time frames for projects which often guarantee contracts, but are hardly ever realistic.

The lack of knowledge in government prevents it from choosing the right firms for the right jobs, said professor Chris Verhoef, one of the members of the BIT committee. 

Once projects are underway, it’s hard to stop them, the Elias Commission said. It’s difficult to pull the plug completely on projects because there are no exit strategies in contracts, and departments would rather spend more money to finish projects, it added.

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