Learning the lessons from Queensland’s SPER debacle

Problem-riddled SPER IT project turns into a lesson in governance

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Public sector agencies should be cautious of overreliance on consultants and contractors, which can lead to a situation where they fail to adequately set out the requirements for major ICT projects. When in-house expertise is short on the ground, an entity should consider engaging a “critical friend,” the Queensland Audit Office (QAO) has recommended.

That’s one of the major lessons learned from a failed State Penalties Enforcement Registry (SPER) project and set out in a better practice guide released by the QAO.

The state government in May 2019 announced that it would dump the project to implement a debt-recovery application for SPER, which is part of Queensland’s Office of State Revenue. The government cited a budget blowout for the project, which began in 2014 with a budget of $47.2 million but by mid-March 2019 had cost $59.8 million.

(The state government in May 2016 awarded CGI a contract to implement its Collections360 solution for SPER.)

The QAO today released the results of its scrutiny of the project as well as a collection of 10 key lessons to help manage the risk of project failure.

Thorough due diligence of a vendor and an appropriate definition of project requirements should always be carried out when the project involves software-as-a-service and a long-term contract, the QAO noted in its better practice guide (PDF).

“Entities should not use an outcomes basis as an excuse for not defining detailed project requirements appropriately, particularly if tailoring software is required,” the guide stated.

In order to avoid contract variations and budget blowouts, entities should define contract deliverables up front.

In addition, it’s important to have internal staff that understand an agency’s operations involved in projects, the QAO recommended. Entities should consider freeing internal staff involved in transformational projects from their business-as-usual responsibilities, the guide stated.

When major changes are likely to impact on projects, agencies should “pause, assess risks, and fully reconsider before moving forward”.

The guide also tells entities to be careful of not committing to long-term development and support contracts that are hard to terminate when things go wrong.

Stopping a project before it incurs unnecessary costs is better than stopping it when significant money has already been spent, and organisations should be able to communicate better including making sure “bad news” is communicated, the guide adds.

The QAO also pushes for an iterative approach for major transformation projects, so there is the opportunity to review, learn and prevent risks.

“Project steering committees for major ICT projects should include representation from internal ICT areas and the newly created Office of Assurance and Investment (formerly part of the Queensland Government Chief Information Office),” adds the guide.

Lastly, it says it is important that statutory officers and chief executives work collaboratively to ensure effective delivery of major projects.

Because SPER had opted for a SaaS solution, when the contract was terminated it was left without an ICT system.

“The contract variations, in the end, increased the vendor’s revenue from the project, with an additional $10.3 million on top of the original agreed contract value for implementation of $13,780,609,” the audit found.

This was the result of a series of bad decisions starting with the lack of a detailed assessment of the product’s suitability, the QAO concluded.

“SPER’s ability to assess the vendor’s product was constrained by the fact that it did not begin to define its requirements in sufficient detail until about 15 months after it signed the contract when it conducted a business process mapping exercise,” the report stated.

It also found that steering committee members lacked the skills to govern the delivery of the program’s ICT component and placed too much reliance on its implementation advisor to bring the ICT expertise.

The audit report said that although project reviews were performed they were flawed, with some warning signs were not addressed.

During the project SPER found that the core system it had chosen was not going to deliver some of the functions it required and it had to bring other vendors in.

This required a system integrator to also be brought into the mix to ensure effective coordination of the ICT components being delivered; however it decided to not do so which led to further conflicts with the vendor.

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