ICT procurement in the public sector – avoiding delays, overruns and service failures

Audit Scotland today published its report following an audit of three public sector IT projects in Scotland. I’d recommend that anyone in the public sector who is involved in ICT procurement reads it – particularly if they are about to embark on any transformational or shared services projects.

Common issues
The findings could be summarised in a single phrase: “lack of governance” – whether within the contracting authority itself or as between the contracting authority and its supplier.

But the report goes into more detail than this, and highlights a number of common issues:

  • Project teams often had a lack of skills and experience in relation to ICT projects.
  • External consultants were used to plug these gaps, but often only at key stages (and often after the project was underway), meaning that there was little support during the intervening periods. Elsewhere, the contracting authority relied upon the supplier for guidance on key decisions.
  • Business cases did not always clearly define the planned benefits of a project, meaning that it was then difficult to measure success – in some cases the “whole-life costs” section was left blank. As such, it was impossible to measure value for money.
  • Intended users of the ICT were not sufficiently involved in the design of programmes – this meant that the solution delivered didn’t always meet the requirements of users. This was exacerbated by an over reliance on the supplier for key decisions.
  • Programme management was weak – with failings in financial control and progress reporting. Boards were provided with insufficient detail, and governance arrangements that were in place weren’t always adhered to.
  • In complex projects, there was a lack of ownership of individual elements of the project, which contributed to cost and time overruns and led to a failure to identify that the overall project was behind schedule and over budget (the “boiling frog” analogy)
  • Finally, Audit Scotland also identified problems with the Scottish Government’s “Gateway” review process, which is intended to provide assurance on project management.

Surprisingly, it seems that in many cases these projects were commenced without carrying out a competitive procurement exercise. Instead, the organisations concerned appointed an incumbent supplier to carry out the work. This lack of competitive procurement undoubtedly exacerbated the problems encountered with cost overrruns and the unsuitability of the solution provided by the supplier.

The cost of getting it wrong can be high. Poor project implementation results in delays, increased cost and end user dissatisfaction, as the ICT service fails to meet the needs of users. In the case of one project reviewed by Audit Scotland, the contracting authority decided that the structure of its wider contract with its IT supplier was inappropriate. It is now in negotiations over the level of compensation due to that supplier as a consequence of terminating 20 months early.

Audit Scotland’s Recommendations
Audit Scotland makes a number of recommendations which all procuring authorities should consider adopting:

  • ensure that an effective governance procedure is in place and is being complied with
  • ensure that established project management frameworks are followed
  • ensure that robust performance management arrangements have been developed and that appropriate progress reporting is taking place
  • ensure that a detailed skills assessment has been completed at the outset of a project to ensure that team members have the necessary skills and experience to undertake their roles

To assist procuring authorities, Audit Scotland’s report includes a list of questions that senior managers and project boards can use to scrutinise and challenge the management of ICT programs undertaken by their authority.

Some additional recommendations
I would add some additional recommendations to the Audit Scotland list:

  • Think carefully before appointing an incumbent supplier to deliver a project. Even if there aren’t procurement law issues, a competitive procurement is likely to deliver better cost efficiencies and a more appropriate solution.
  • Consider the most appropriate procurement procedure for the project. Should you buy off-catalogue (eg OGC) or procure directly? If the latter, consider whether the competitive dialogue procedure gives you more control in more complex projects.
  • Ensure that a clear specification for the services being procured is developed up front with input from all key stakeholders (including those that will be using the services).
  • Develop an appropriate governance and reporting structure both for the internal team within the contracting authority(ies), and also between the contracting authority and the supplier, to ensure that performance, costs and delivery are closely monitored and problems quickly identified and resolved.
  • If there are multiple contracting authorities or agencies, ensure that there is an appropriate governance and reporting structure between the lead authority and the other agencies/authorities, so that the interests of all relevant parties are properly managed.
  • Ensure that a suitably qualified team is assembled to support the procurement throughout the project. This includes external IT consultants (where skills aren’t available in-house) and legal advisors to ensure that the contract terms and conditions and procurement documents are fit for purpose and incorporate the agreed governance structure. This team should be involved from the outset to ensure that the initial ITT or RFP is as detailed as possible, and doesn’t set the project off in the wrong direction.

1 Response to “ICT procurement in the public sector – avoiding delays, overruns and service failures”

  1. 1 e-Update on ICT projects in the public sector: avoiding delays, cost overruns and service failures « Brodies TechBlog Trackback on September 11, 2012 at 9:49 am

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