Can Government Policy reduce IT Project Failure Rates? PART 1

Posted by Kevin Brady on Tue 8th August 2006 at 01:00 AM, Filed in Project /Programme Failures

Quite recently, I had dinner with a couple who have been friends of my family for many years. Unfortunately we got onto a subject I am very passionate about which is IT Project Management. The topic was, “Can the government put together legislation necessary to eradicate the Wild West that is the IT industry?” My own partner Jackie and her friend Jeanett (a consultant with LOGICA) were convinced that the problems, behind the annual 70% IT project failure rate were “totally beyond the control of the government”. 

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Please Do Something Stupid!!

I pointed out during a challenging exchange that the only reason why the building and engineering industries had 95% + project success rates is because of strong regulation /legislation backed up by local government inspection and enforced professionalism i.e. need for chartered qualifications for architects, surveyors and engineers etc.

The government needs to make IT projects a real investment opportunity and not a black hole for the government and non-government sectors of the economy. I stated that it was immoral and economically inefficient and thus not in the interests of the “Greater Public Good” to have a legal and regulatory frame work which allows annually £30.84 + billion in failed IT project /programme failures to persist.

I then stated that at its broadest level, the main cause of these persistent economic losses, is lack of free flowing information between market participants e.g. -

• Companies are not required by law to report on IT costs as a separate line in their accounts. The bigger companies are, the easier it is to hide IT project disasters under the operational costs category within PLC accounts. Accounting regulations currently fail to reflect changes in technology and the growing dependency of companies on IT to deliver profits growth.

• “Money Machine” Management Consultants and Software Houses have developed very successful litigation defence strategies for dealing with dissatisfied clients. It is extremely rare, and near impossible, to find a single legal case where “Money Machine” Management Consultants /Software Houses (Big 5 Management Consultancies /Software Houses) have been sued or shareholders have taken action against company directors for negligent losses related to failed IT projects /programmes of work. If you want to discover the commonly used “litigation avoidance tactics” of the “Money Machine” Management Consultants and Software Houses, you need to read Rip-Off! By David Craig. The almost total lack of legal claims and associated case histories, despite the billions lost annually, means the IT industry is starved of the independent case study information necessary for the re-education of customers and IT solutions vendors. Instead, many failed IT projects /programmes are either covered up or turned into celebrated successes through spin management techniques that the current labour government would find familiar. 

“From the consult /software vendor’s point of view, it’s the only game I know, other than drug dealing, where you can get so much for providing so little without breaking the law”

I reiterated to my partner /dinner guests that the government can, and must, help repair our IT industry in order to serve the “Greater Public Good”. Can you imagine the additional economic prosperity, which would flow out of any government initiative, which might even partially turn some of the £30 billion lost annually on IT project failures into successful profit /efficiency generating IT solutions for government /non-government organisations?

I believe that new government regulation could be the precursor wake up call necessary to turn the UK IT industry into a powerhouse of economic growth. Such government induced industry change, could have a similar economic impact on the UK economy as the transformation of the Japanese economy during the 80s /90s, due to the introduction of their new revolutionary automotive production techniques.

I further pointed out that the government is particularly stupid not to have tackled these problems years ago, because it has the most to gain in making legislative /regulatory changes. Already the government has lost billions of taxpayers’ money on the failed CSA and Benefits Agency systems with media reports indicating more IT losses to come.

My dinner guests then asked – “What is YOUR VISION for the future?”

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I explained that my vision was based around happenings in the US. Where the government (which lost billions of dollars on failed IT projects during the 70s to 80s) has now developed new and reportedly successful legislation, has radically remodelled the IT industry playing field for US Software Houses and Management Consultancies. The changes run as follows:-

• Information Technology Reform Act (commonly called the Clinger-Cohen Act of 1996)

This Act forces transparency (corner stone of my IT Project Management Philosophy) onto the public sector, making departments responsible for reporting on the performance of their IT Projects /Programmes performance to Congress.

• False Claims Act

This was a Civil War-era law rejuvenated by Congress in 1986. This law successfully exposed the travel expense rebate fraud practised by the big “Money Machine” Management Consultancies /Software houses, leading to PWC in 2005 repaying $41.9m to the US Government. While it is agreed that the act has only helped recover $1.4 billion in government supplier fraud, it is accepted that it has dissuaded Software Houses and “Money Machine” Management Consultancies from further defrauding the US government. The US media has intimated that the numbers of government IT projects initiated where it could have been established at the outset that success was unlikely, have reduced in recent years. The legislation is at last making the “money machine” Software Houses and Management Consultants take their existing “duty of care” legal obligations seriously.

My partner then pointed out that “This is impossibly expensive to Police”.

I then retorted by stating that “The really really clever thing about this act is that it is policed without costing the Government a penny!!

HOW?

The key to the self-policing element of this act is the fact that it contains qui tam, or whistleblower provisions. This allows citizens with evidence of fraud against government contracts to sue on behalf of the Government.

YEAP YOU HEARD IT you can sue on behalf of the Government and pick up a Whistleblower reward of between 15 and 25 percent of any sums recovered.

With reference to the PWC example mentioned earlier an ex partner brought the mentioned case and was paid $10 million for filing a qui tam against PwC.

I THINK THAT’S A SLAM DUNK IN MY BOOKS!! 

I then stated that we should transplant all of the above to the UK ASAP.

TOMMOROW WOULD BE FINE BY ME .

In Part 2 of this Post, I will explain here how we can improve on the above-transplanted legislation so both the UK government and the non-government sectors are treated equally. Please click for PART 2

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READER COMMENTS:

An interesting perspective, particularly the point about building and engineering industries having low failure rates. Of course, when a building or bridge fails, people are injured or killed. The consequences of failure are obviously less severe on most IT projects.

Michael Krigsman
http://projectfailures.com

Posted by Michael Krigsman  on Mon 14th August 2006 at 03:57 PM | #

Your right about consequences of software failure tending to be less severe because lives tend not to be lost - with the growing exceptions of Nuclear Power Plants, Medical Equipment, Radar and Fly by Wire systems for planes.

However the real issue I am trying to make is that complex engineering products can be built successfully and consistently and we should be learning from these guys (I already have). I do appreciate as detailed in the Post that this is not the only thing the IT industry needs to do in order to make 70% annual project failure rates a thing of the past. 

PA consulting is the only Management Consultants I know who interchange Project Managers between IT and Civil Engineering. If we did more of this kind of thing the IT industry might start to grow up and stop wasting £30 billion a year in software faliure.

Surely we ow it to ourselves and the greater public good to stop wasting money equivilent to the gross national product of some countries.

Posted by Kevin Brady  on Tue 15th August 2006 at 10:01 PM | #

Do you know of big examples where a project has failed through poor project initiation?

Posted by Jon  on Mon 23rd July 2007 at 12:25 PM | #

You and I both know of at least one example of a successful project, for a large un-named insurance company. This is the only IT project I have worked on that has delivered on-time and on-budget in over twenty years of working in a variety of projects. Most IT projects do not achieve anywhere near this.

It seems that the biggest offender in failure to deliver has to be the British Government. Recent history demonstrates this more than adequately. Examples such as Child Tax Credit Scheme, NATS and now the NHS IT project demonstrate clearly the level of incompetance of government managers in running very large IT projects.

Posted by Chris Jones  on Mon 19th January 2009 at 08:35 AM | #

Your right. We do know of a successful project we worked on which was a total SUCCESS. How satisfying and rewarding it was to deliver something of value and as ordered by the customer. Successful projects /programmes are as rare as “Hens Teeth” and if we look at the CHAOS survey we discover that this is not just opinion on both our parts but infact TRUE. 70% of all IT projects fail each year according to the survey and this failure rate increases with size. If all the money wasted on such ventures was collected up and handed over to the National Health Service I would feel better but instead most of it ends up in the hands of the big 5 consultancies. Sad but true. Chris keep posting comments. I believe the expression of your 20+ years of industry experience could really make a difference.

Posted by Kevin Brady  on Fri 30th January 2009 at 04:36 PM | #

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