More budget overruns hamper public sector IT

12 May 2008

Lack of IT strategic planning and controls and zero risk management are being blamed by the Comptroller & Auditor General (CAG) for more embarrassing budget overruns in public sector bodies, including FÁS, Beaumont Hospital, the Irish Blood Transfusion Service and Science Foundation Ireland.

In a hard-hitting report, the CAG pointed out that while many of these budget overruns are not to the same scale as the €140m PPARS debacle of two years ago, they point to a number of serious weaknesses when it comes to IT spending.

“IT projects may fail, may not deliver all the expected benefits or may incur unforeseen costs for a number of reasons, but among the causes identified in this report are inadequate specification of requirements; failure to ensure that proper consideration is given to the views of all users of the system; and inadequate evaluation of the concept and of the risks involved and failure to mange the risks in a rigorous way.”

In one example, an internal audit at employment agency FÁS revealed that the cost of developing, maintaining and hosting the Jobs Ireland website was €1.7m. “The internal audit suggested that FÁS paid at least €1m more than should have been the case. In addition, it found that FÁS spent a large proportion of its advertising budget promoting the website between 2000 and 2003.”

The CAG’s report also pointed to evidence of breach of ethics at FÁS in terms of conflicts of interest when it comes to procurement, with at least one FÁS employee intervening on occasions to recommend certain individuals for employment by a supplier. The CAG said that interventions of this kind are not appropriate and are open to abuse.

In the case of the Irish Blood Transfusion Service, a blood banking control system called Progresa that began in 1998 with a budget of €4.2m ran to €9.3m by the time it was completed in 2003.

A subsequent upgrade of the system to a new platform called eProgresa because the old hardware platform was nearing the end of its life was meant to cost €1.8m. However, by 2006 difficulties implementing the system led to the chief executive of the IBTS suspending the eProgresa project and writing off €729,000.

The CAG said it was unclear to what extent the IBTS had evaluated alternatives to the eProgresa project and how it intended to mitigate risks caused by moving to a new and untried system.

In the case of Science Foundation Ireland (SFI), the CAG found that a software project to create a web-based Awards Management System (AMS) to control the distribution of funding that was budgeted to cost €168,746, more than doubled to €382,690.

The SFI said that because the scope of its awards system had evolved, it meant changing the system to meet the new needs.

The CAG said the SFI’s AMS project was undermined by weak project governance structures, exasperated by a high turnover of key personnel.

The lack of a formal IT strategy at Beaumont Hospital was the reason cited by the CAG as to why an IT upgrade at the hospital failed to deliver value for money.

In 2002, the hospital decided to deploy an open source software system that failed to be accepted by the software. Dissatisfaction with the system meant that users were deciding to move back to the proprietary software system the hospital previously used, as well as the older computers. “While open source software resulted in lower licence costs, these costs were only a fraction of the total cost of ownership, which included training, server hardware and support.”

In May 2006, the hospital decided to switch back to the proprietary desktop software and hopes to complete this changeover by mid-2008.

In 2006, the hospital also decided to deploy a patient administration system that ran counter to Department of Finance policy on IT integration, was inappropriate to the needs of a hospital of Beaumont’s size and led to losses as high as €311,000.

In another case at the hospital, the need to get new IT equipment meant a finance lease was entered into at the cost of €1.26m, which hadn’t been approved by the hospital’s IT steering committee.

The hospital cancelled the contracts and managed to get a refund of at least €295,000. An officer at the hospital is now on administrative leave and an investigation is under way. The hospital has agreed to pay the supplier €1.09m.

The CAG said: “It is clear the hospital’s IT governance prior to May 2006 was inadequate and that there was no formal IT strategy in place; the hospital lacked effective IT management oversight; there was no monetary spending limits set for managers in respect of individual transactions.”

By John Kennedy