Victorian auditor flags ICT project over-runs


Report-card on 6 audited agencies spotlights “budget-blow-outs.”

In a report just tabled to Parliament, the Victorian auditor-general has flagged concerns around agencies’ ability to deliver projects to time and budget. This report, tabled by the acting auditor-general Dr Peter Frost, warns that ICT projects must be better planned and managed to avoid cost and schedule over-runs.

The latest phase of this audit tracks the progress of six projects with an allocated budget of over $200 million. “The audit confirms that ICT projects continue to show poor planning and implementation, resulting in significant delays and budget blow-outs.”

The performance of recent projects was tracked using a digital dashboard. This dashboard offers a closer scrutiny of key performance benchmarks and reporting arrangements. The 6 recently-audited agencies had formalised governance programs. However, the overall planning and implementation appear to have been compromised. 

Among the weaknesses, there was inadequate assessment of vendors’ capability to deliver projects to time and budget. There was a failure to clearly articulate business requirements.

This oversight included an inability to specify the ICT changes and broader integration with existing agency platforms. There was a perceived failure in providing “considered advice” to senior management. 

The agencies audited were City West Water, Department of Justice and Regulation, University of Melbourne, the Victorian Commission for Gambling and Liquor Regulation, Worksafe Victoria and Yarra Valley Water.

Of these, the University of Melbourne and Yarra Valley Water came closest to meeting best-practices. These organisations had clearly-articulated business requirements for systems being procured and a closer scrutiny of timelines and vendor management. There was a “consistent and tenacious monitoring” of the vendor’s progress around project delivery, says the audit. The new systems were also fully tested before going live.

$3 billion annual spending

The Victorian government’s annual ICT spending is capped at $3 billion. An earlier audit flagged “significant issues in the development and implementation of ICT projects.” One previous report warned that nearly 35 per cent of the 1249 reported projects went over budget before completion.

“Very few agencies measure the effectiveness of their ICT projects. Of the 788 completed projects, a little over 10 per cent had undertaken some assessment of their expected benefits.”

Among the recommendations, the Auditor-General’s Office says that agencies should be “better-informed buyers.” They need to more effectively assess the market’s ability to meet specifications. “Agencies require the skills to assess the competence of vendors or contractors who may overstate their ability.”

The Auditor-General’s Office has canvassed “smarter procurement.” This incorporates allocating enough time and effort during the planning stages. “Often investors do not commit enough time upfront to build a robust case for their investment.”

Revisions on the run

Moreover, “cutting corners on analysis of proposed benefits” risks failure further down the track. This approach leads to “revisions being made on the run.” The upshot of poor planning may result in inaccuracy, and lack of transparency or accountability. The broader goal is to “get the investment logic right” and ensure the right people are involved.

Moreover, the focus is to build a compelling business case for upgrades. This draws on evidence-based data and fully-informed decision making. Clearer lines of communication are recommended between the stakeholders, including government and market players.

“Agencies should educate themselves about what is actually available on the market, and to determine whether the market is equipped to meet the required specifications.” Additionally, the market needs to modify an existing product to meet highly-specialised service needs involving the public sector.