IT’S BEEN A BEEF OF MINE FOR SOME TIME that many large and complex IT projects end up over inflated, finish way over time, and in some cases, just don’t deliver (see Ultranet, for example). I’ve often wondered whether this is a case of poor project management, overly ambitious system specifications, or unskilled personnel – maybe a combination of all three.
Recently however, I’ve realised there may be another cause – deliberate CR-driven projects.
The way it works is like this.
Government (and it’s generally government IT projects where this occurs) puts out a tender request on a large IT project. The idea is initiated from within – maybe even from a political promise – and the relevant department seeks advice from an external consultant to prepare a design specification for the tender. These specifications are not fully fleshed out – their purpose is to provide sufficient information for the tendering organisations to come up with a comparable budget and design solution, so that a proper judgement can be made on securing the best contractor.
On the contractors’ side, they are in a competitive position, and know that as their competitors’ capabilities are likely to be fairly equal, the selection decision will probably come down to the dollars. So, they will err on the side of lowering their cost budget.
Once they have been selected, they will enter a scoping phase with the client before the contract is signed, where the full dimensions of the project are discussed and revealed. The contractor in this stage will generally increase their costs more in line with the scope of the project. This is a legitimate negotiation, and one the client should have already anticipated in their budget.
It’s once the project has begun when the contractor can now implement a ‘CR-driven strategy’.
What this means is that the contractor deliberately finds gaps in the original specification that it can call “change requests” – CRs. These gaps may be technical problems that occur in the development of the IT system, or more likely, where the contractor highlights areas in the design of the system which were not considered – a raft of new technologies, new programming methodologies, new features and functions that could add value to the original idea.
These change requests are not ‘variations’ like we have when building a house, for example. In house building, it’s generally the architect or us who have overlooked something or want a change in the plan, and the builder adds costs to cover the additional work. In the IT change request scenario, these are deliberately raised by the contractor in order to inflate the budget. And each time this is done, the schedule of work is changed and the timeline pushed out accordingly.
As a CR is raised, the client has to consider it, and then agree or disagree. Generally, they feel compelled to agree: the contractor will always have a technical knowledge that far surpasses the client, even if they have their IT consultant on hand. After all, that’s why the contractor has been engaged to do the job.
This strategy can also complicate the system functional specification, as more changes are made, more features are promised and more complexities piled on to the contractor programmers. The initial design objectives get lost in the maze of variations.
Is a project CR-driven strategy unethical? After all, it’s just a way giving more money to the contractor, and it’s a government project anyway. Governments now “open for business” support businesses in their efforts make healthy profits, even if it’s a budget under their control. As we have recently witnessed here in Australia with the AWH case, governments, political parties and companies work together very cosily; the same kind of people looking after one another’s “business interests” (known as standard business practice).
If it’s money (profits) to be made, why behave ethically? Is business behaviour only intolerable when it strays beyond the law?
We argued above that the CR-driven strategy may lead to a poor system outcome – that is, the system may not work as well as planned, or at all. But this is no compulsion for ethical practice, because the contractor that fails, simply blames the client and moves on to the next project. After all, the relationship between them and the client is protected by a ‘commercial-in-confidence’ contract, so there’s no exposure here. An IT failure is not liable, because no laws have been breached – just tax payers’ money lost.
‘Just tax payers’ money lost’. Is this the only criteria we can use when making a claim for ethical project management in a government context? That is, if we are doing business with government, we have an ethical responsibility to ensure that tax payers’ money is not squandered or syphoned off.
I recently reviewed the training in community radio, which is government funded. My project was to evaluate whether the funds were being employed effectively, and how better they could be employed. I was surprised that so many people reacted negatively to my taking this proposition so seriously – I took an ethical position on this: that it was tax payers’ money we were dealing with here and vital that it was used effectively and efficiently. But another way of seeing this is that the government has provided money to the sector, so it is the community’s right to use the funds as they wished (within the broad objectives of the funding arrangement, of course).
Taking an ethical position is often high minded and hypocritical. Take the case of the ballyhoo about tax payers money being ‘lost’ in the Rudd Government’s housing insulation program; those making the most noise fail to criticise the $17.8 billion that is used to subsidise industry in Australia. Making claims for ethical use of tax payers’ money is clearly in the eyes of the beholder – it’s generally those other guys who don’t deserve it, or who are using it ‘unethically’ and wasting it.
My conclusion: in the world of commerce, ethics are no longer relevant. Transparency in relations between governments and business would go half way to protecting our hard earned tax. The only thing that really protects the tax payers’ money (or any other commercial transaction for that matter) is the law – enforceable by agencies such as icac.