Opposition damns govt IT stocktake

A damning analysis by the Labour Opposition of the 1997 government stocktake of IT projects paints a vastly different picture of the health of state IT projects. Labour estimates - and it has produced strong figures to back up its claims - that budget blowouts and time delays have cost the taxpayer $80 million to $200 million over the past few years.

A damning analysis by the Labour Opposition of the 1997 government stocktake of IT projects paints a vastly different picture of the health of state IT projects.

Labour estimates — and it has produced strong figures to back up its claims — that budget blowouts and time delays have cost the taxpayer $80 million to $200 million over the past few years.

The $30,000 stocktake was commissioned by Prime Minister Jenny Shipley in her then role as State Services Minister.

Releasing the Labour report at a press conference, Labour State Services spokesman Trevor Mallard said it appeared, at the very least, that Shipley and Communications Minister Maurice Williamson had had the wool pulled over their eyes by officials.

"At the very minimum, the State Services Commission supplied figures that didn't tell the whole story and then put the best possible face on it. The ministers were gullible.

Mallard publicly acknowledged the role Computerworld played in instigating the stocktake. "It wouldn't have happened without Computerworld's Official Information Act enquiries, which stimulated the government into action."

The stocktake, made public a week before Christmas last year, said that of 174 major projects (over $500,000) running or initiated in the past five years, just 14% were over budget, by an average 2%. Three had been dropped, three were on hold and three were 20% or more over budget. Major projects completed during the period cost $186.2 million -— 2% under total budgets.

The stocktake was notable for the amount of information it didn't provide; for example, budget data was provided for only 80 of the 86 projects completed.

Labour's analysis shows at least 27 projects — rather than five identified in the stocktake — were at least 20% over budget, and that there was a $25.1 million net cost overrun rather than the government's claimed saving of $3.4 million across all projects.

The stocktake did contain a caveat: "The stocktake did not require departments to verify their responses by, for example, providing relevant documents ..."

Labour claims that not only were vital statistics not collected but that important statistics such as budget and costs appear to have been manipulated to hide cost overruns.

And it questions government methodology of arriving at a $3.4 million saving by offsetting savings in some departments against cost overruns in others.

The Opposition questioned ministers responsible for the 174 IT projects and sought data on initial budgets rather than the stocktake's apparent use of "total budget to date" to uncover creeping budget increases.

Full financial data in replies to its questions were provided for 149 projects (105 completed and 44 in progress). The 1997 stocktake was based on 142 projects — 80 completed and 62 in progress.

"Of the 105 projects completed by July 1998, 28% were over budget," Labour says. "The total cost over what was initially budgeted for completed projects was $37 million.

"Of the 44 projects still in progress, 25% were now expected to come in over budget. The total cost was $26 million. Altogether, these 40 projects are expected to cost the country at least $63 million more than they were initially budgeted for."

The total amount spent to July 1998 on the 105 completed stocktake projects was $338.6 million, or $25.1 million over initial budget.

Labour has also addressed, in some detail, project delays, which were defined in the stocktake using a Gartner definition for large-scale IT project failure of being 30% over budget or allotted time.

Of 150 projects on which Labour gathered information, 55% were expected to go over their completion deadline, and of those 82 projects, 48 will have exceeded their deadline by 30% or more on completion. Under the Gartner definition, 32% of the projects Labour collected information on were failures.

In fact, not one project came in on time. That's the basis of Labour's claim of perhaps a $200 million cost blowout, which Mallard says could be conservative. It estimated that if 10 people lost a day's productivity for each day stocktake projects were delayed, $145 million would be lost. That's based on Treasury figures that cost time at $100 an hour.

But Labour has not got all the figures. Some government departments — notably Commerce and Police — have provided limited answers. "We're trying hard under the Official Information Act to get the facts out," Mallard says. He notes that one year after the stocktake, five ministers and their officials were unable to identify some projects

There were five projects lost or abandoned, with budgets totalling at least $10.4 million. That figure is not included in Labour's analysis. Mallard says one of those was the NDIS project at National Library, which he says is currently the subject of a court case. "They're already over budget on their new system," he says.

The cost figures supplied to Labour and the non-inclusion of costs for time over-runs are exemplified by the Police CARD project. CARD came in on budget, according to the figures, but was 12 months late at apparently no extra cost.

The standout project in trouble is the digital cadastral database at Land Information New Zealand. It was expected to take 72 months but actual time was 98 months, and the budget has blown out by 169%, from $16.86 million to $45.41 million.

A student loans re-engineering project at Inland Revenue blew out by 149%, from $469,000 to $1.168 million, while Commerce's PRISM project was up 236% on its original $1.1 million budget, to $3.7 million.

None of the Crown agencies, such as ACC, are included in the stocktake. It's understood the government is undertaking a separate stocktake for them.

Mallard says one of the reasons for the stocktake was that government was regarded as a soft touch by the IT industry.

He's highly critical of Treasury's role. "Treasury has been very poor in monitoring government expenditure... "

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