Audit Scotland report into public sector ICT projects

Audit Scotland report into public sector ICT projects - avoiding delays, overruns and failures

A recent Audit Scotland review of three critical public sector information and communications technology (ICT) projects has identified a number of common themes which caused project delays, overruns and cancellation leading to £133 million in unnecessary costs for the public purse.

Common issues

The main issue identified by Audit Scotland is a lack of effective governance - whether that's within the contracting authority (or between the contracting authority and other public bodies), or between the contracting authority and the supplier:

  • Inexperience - Project teams often had a lack of skills and experience in relation to ICT projects.
  • Insufficient competition - Incumbent framework suppliers were used rather than operating a competitive procurement process.
  • Knowledge gaps - External consultants were used to fill knowledge gaps, but often only at key stages (and often after the project was underway), meaning that there was little support at the outset or during the intervening periods. Elsewhere, the contracting authority relied upon the supplier for guidance on key decisions.
  • SMART Objectives - Business cases did not always clearly define the planned benefits of a project, meaning that it was then difficult to measure success. As such, it was impossible to measure value for money.
  • Poor specifications - Intended users of the ICT were not sufficiently involved in specifying the requirements. Result - the solution delivered didn't always meet the requirements of users but instead reflected what the contracting authority (or the supplier) thought they wanted.
  • Programme management - Was weak, with failings in financial control and progress reporting. Project boards were provided with insufficient detail. Agreed governance arrangements weren't adhered to.
  • Ownership - A lack of ownership of individual elements of the project, contributed to cost and time overruns and a failure to identify that the overall project was behind schedule and over budget.
  • Guidance - Finally, Audit Scotland also identified problems with the Scottish Government's "Gateway" review process, which is intended to provide assurance on project management.

The cost of getting it wrong

The cost of getting it wrong can be high. Poor project implementation results in delays, increased cost and dissatisfaction among end users, as the ICT service fails to meet their needs. Of equal importance is the potential impact on the reputation of the contracting authority - where critical ICT systems fail to deliver efficiencies and improvements in the delivery of key public services that are already over stretched, there is a very real threat of reputational damage and a loss of trust and confidence.

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. Issues like these contributed to the estimated £133 million in wasted costs identified by Audit Scotland across the three projects.

Audit Scotland recommendations

Audit Scotland makes a number of recommendations, which all contracting authorities should consider adopting. They should ensure that:

  • an effective governance procedure is in place and is being complied with
  • established project management frameworks are followed
  • robust performance management arrangements have been developed and that appropriate progress reporting is taking place
  • 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 contracting 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.

Additional recommendations

In addition to Audit Scotland's recommendations, we would recommend considering the following:

  • 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 (under a centrally procured framework) or procure directly? If the latter, consider which procurement procedure is most appropriate for your particular project.
  • Ensure that a clear specification for the services being procured is developed at the outset with input from all key stakeholders (including those that will be using the services).
  • Develop 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.

Finally, you should 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 invitation to tender (ITT) or request for proposal (RFP) is as detailed as possible, and doesn't set the project off in the wrong direction.

Click here to read the Audit Scotland report in full.

The importance of early stage legal input

Brodies' public procurement and technology and outsourcing teams are experienced in advising on complex ICT outsourcing and procurement projects, and can help advise on appropriate procurement strategies and contractual mechanisms to help ensure that projects are better managed.

We have a particular strength in early intervention, ensuring that projects start and stay on track. We can offer a fixed price early intervention scope to provide you with legal input at a time when the value add can be at its greatest, and long before a decision about how the legal input for the whole project will be resourced. As part of this service we:

  • Incumbents: Advise on the existing relationship. What is deliverable in terms of handover? What information can be shared with the new bidders? Does the existing contract impact on timetable?
  • Shaping: Provide legal input to the project shaping discussions - how can we make what is technically required legally deliverable?
  • Goevernance: Review the project governance structure - are the delegated authorities working? Is there the right balance between control and efficiency?
  • Horizon scanning: It is amazing what a fresh pair of eyes can bring, and if issues are spotted early there is always a way to mitigate their consequences. For example, is there a pensions problem connected to TUPE? Can you guarantee the level playing field which procurement law requires?
  • Compliance, plus: Making sure the early stage procurement documents (the PIN, OJEU, PQQ or bidder day information) don't store up headaches for the rest of the process. The "plus" element to compliance is making sure these early stage documents maximise the attractiveness of the project to bidders, and form a platform for competitive procurement to drive out value for money.

These services can be provided for a fixed price and without impacting on overall timetable. When the project reaches that point, the decisions can then be taken about resourcing the legal input for the project overall. We feel that by offering high value legal input at an early stage - without the need for a distracting legal services tender - we can deliver immediate and multiple returns for the project overall.

Key contact

Martin Sloan