Renai LeMay wrote on the Delimiter back on December 11, 2013 about the Diabolical mess – a “Scandal of epic proportions” with the NT ICT Minister damning Fujitsu to hell in an extraordinary rant. Much of the distress was articulated in the LEGISLATIVE ASSEMBLY OF THE NORTHERN TERRITORY 12th Assembly Public Accounts Committee Public Hearing Transcript on Management of ICT Projects of 9 December 2013 held in the Litchfield Room, Level 3 Parliament House, Darwin.
David Braines-Mead, Acting Deputy Under Treasurer described how he had been involved in the AMS project steering committee since mid 2009 as the committee was apparently well aware from previous briefings and numerous reports, including from the Auditor-General, the AMS system post-go live, had not yet delivered the required business functionality anticipated.
“Post-go live, Treasury commissioned an independent health check review in October 2012 due to the issues in relation to financial asset reporting being experienced at a whole-of-government level. This was assisted by the Department of Corporate and Information Services which was, at that time, part of Treasury and Finance, SAP experts, and asset management experts from KPMG Consulting.
The review found AMS to only be 11% fit for purpose and, from a Treasury perspective, the most fundamental of those issues was the inability of AMS to work properly with our Government Accounting System. In both 2011-12 and 2012-13 financial years, as a result of extensive manual work undertaken by staff and the AMS team and in the Department of Treasury and Finance to manually reconcile asset values, we have been able to produce accurate financials at a whole-of-government level.
However, relying on resource-intensive manual intervention is not the ideal way to deal with this risk and, as such, the health check recommended a number of critical remediation projects that have been implemented to address those issues within the system. The remediation stream is focused on fixing the parts of the system that are causing agencies the most problems trying to manage their assets. Critical priority for this stream includes resolving the financial reconciliation on the interface between AMS and GAS prior to 30 June 2014.
Treasury is not a user of the system per se such as the Departments of Housing or Infrastructure etcetera. We do not use the system on a daily basis but, obviously, we rely on the system, particularly with the interface with GAS as far as producing whole-of-government financial reports.”
Braines-Mead went on to say that “it became apparent after the system went live in mid-April 2012 with the monthly reporting we got to the end of April, which was by middle of May, there were issues being experienced by agencies and there were issues flowing through to agency’s monthly reporting and reconciliation issues.
Treasury did not know, at that stage, the magnitude of those issues, but immediately called a number of meetings of all CFOs together, got the then Under Treasurer to chair that particular meeting to stress to agencies the importance of working together collaboratively to resolve the issues, It soon become clear there were some quite significant inherent problems within the system, lots of manual workarounds. Subsequent to getting though that year end, Treasury undertook the health check review to get a better understanding of what the issues were, particularly from a Treasury perspective. Obviously, it was important to know from a system in general, but Treasury’s particular focus was also looking at what was causing all the issues with financial reporting.
Obviously, coming out of that review it seems there are quite a few issues, particularly around the interface AMS has with GAS. GAS, a system which has been around for many years, interfaces on a daily basis with 50 to 60 – I am sure these guys behind me can confirm that – other systems. There is obviously something inherently wrong with how the AMS system, and the testing that was done, migrated across.”
Back in 2007 the projected cost of the system was $7m. It was something that was not necessarily deemed to be a high-risk implementation at the time.
Funded by housing, “from a Treasury perspective, it was not a significant impost on the Territory budget at that point in time“….”There were, obviously, some issues, when the steering committee did meet, that came to light as far as the blueprint phase went, which was meant to only take 10 weeks, but took 12 months.”
Interestingly Braines-Mead indicated that “It came clear once the procurement phase had ended that it was already up to about $14m or thereabout” and “Ultimately, the cost increased up from $14m up to around $28m by the time it went live.” This is interesting given that per John Baskerville – Managing Director of Power and Water Corporation “The initial proposal put forward in 2006 was largely focused around improvements to IT systems which supported asset management. The project involved the purchase of an off–the-shelf asset management product and a GIS system, combined with an upgrade to the existing finance system. There would be limited integration to the system given the size of Power and Water’s capital program and sophisticated approach to asset management. The original estimate for the project was $14.5m.“ so quite where the $7m cost came from is not clear.
“Over time, it became clear this approach was not going to deliver the asset management improvements and benefits Power and Water was after.“
In response to a question from Mr Wood on how the cost rose from $26m to $50m and where the additional funding came from Braines-Mead responded “Since the project went live, and following the health check review which was done around October 2012, at that point in time, once the health check was finalised, the amount that had been spent was already up to approximately $30m. The additional money that has been spent since that point in time was approved by the current government through usual Cabinet processes.”
Baskerville indicated that “In 2010, the project’s scope and cost was reviewed at the end of Stage 2, as planned. The review resulted in an increase in project budget to $32.4m. To adjust the shifting priorities, resourcing issues and implementation delays, variations to the business case where developed and approved in 2011 and 2012. These variations resulted in the project budget being increased to $57.8m”
There were a number of factors that impacted on the overall cost of the project:
- a change in approach from a single off-the-shelf management system to a more complex integrated management solution
- lack of availability of key Power and Water staff due to the arising needs in other areas in realigning the operational priorities
- lack of availability of local specialists
- information technology and project management skills
- increase in the scope of the project, including customisation that needed to take into account the regulation changes recommended by the Mervyn Davies’ report following the Casuarina substation failure
- significant increase in the capital expenditure program
- changes to the asset maintenance regime
- a large number of defects identified at various stages throughout the implementation, all of which required remediation.
From Baskerville’s viewpoint with an asset base valued at over $2bn, the investment in a 21st century quality asset management system has been proven, wise and essential.
Antoni Murphy, Senior Manager Risk and Compliance, Power and Water Corporation indicated that in 2006, because the corporation had a small management program, following on from Casuarina, and it was quite immature in assets. They needed to have better capabilities. The original project was to replace two systems, the Asset Management System and the GAS system – and integrate those into an upgraded finance system with limited integration. Moving forward to 2008-09, when the business case was redone, it was more about not just a system upgrade, but a redesign and rethink of all the asset management processes around the system as well: procedures etc – data quality was a big matter.
Kelvin Strange, General Counsel/Company Secretary, Power and Water Corporation suggested that if the power and water corporation had a clear direction in what was wanted back in 2006, he felt sure “the budget would have been different from where we ended up. You must bear in mind this was a project which came about by stages and external events.”
In the continuing hearing Jeffrey Moffet, Chief Executive, Department of Health; Jan Currie, Senior Director; and Stephen Moo, Chief Information Officer participated. Moo indicated that $1.036m will be the total cost for Health. A few change requests have been approved, so there has been around $76 000 – through the spent review sessions they identified a few requirements that were not taken into account so that took it up to $1.036m. That was the current contracted price with Fujitsu. Currie indicated that Health “have had a professional relationship with Fujitsu, but we have been very tough, at times, with them at times saying, ‘Your credibility is shot, essentially. We are losing confidence you are going to deliver.’ ” Health have a fortnightly meeting with the head office here of Fujitsu. Fujitsu have been held to account and Health have “been very strong with them when needed about ensuring they deliver”
Moo also indicated that “They also realised, sometimes in the project, they did not have the level of expertise in the project, and the level of resources needed. It was through those fortnightly meetings and monitoring the progress within the sprints, we were able to say, ‘You appear to have a problem here’. To their credit, they did inject additional resources into the project at various times, and they brought on some very senior, very good people on to the project. For the last three or four months, they have had a really good team and the right expertise.”
It seems then, taking a look at the commentary that the challenges with the AMS project have largely been as a result of scope creep, poor project management and underestimates in terms of the ambition and capability of the system.
Per an ABC report on Mar 25, 2014 the system finally rolled in at $70m and is regarded as a failure and will be scrapped. David Tollner – Minister for Corporate and Information Services released the news in a Media Release stating the “former Labor Government’s broken Asset Management System (AMS) after receiving independent advice that it would cost an additional $120 million and five years to fix.”
