Vic taxpayers hit by $1.4bn in IT overruns

Victorian taxpayers have been slugged an extra $1.44 billion because the previous Labor government mismanaged information and communication (ICT) projects, the ombudsman has found.
Written by AAP , Contributor and  Suzanne Tindal, Contributor

Victorian taxpayers have been slugged an extra $1.44 billion because the previous Labor government mismanaged information and communication (ICT) projects, the ombudsman has found.

Victorian Ombudsman George Brouwer examined 10 major ICT projects that suffered cost overruns under Labor, including the troubled public transport ticketing system, myki.

Brouwer found that each project failed to meet expectations, delivery timelines and budget.

The original budget for the projects was $1.3 billion, but latest estimated costs blew this out by another $1.44 billion.

"On average, projects will have more than doubled in cost by the time they are finished," Brouwer said in his report, tabled in parliament on Wednesday.

Premier Ted Baillieu stressed that there would be much greater scrutiny of IT projects under his government.

He said that big computer projects tend to run the risk of massive cost overruns, and that he prefers to see such projects handled in more manageable, bite-sized pieces.

"What we need is to have some performance benchmarks along the way, so that we know we're getting the results that are expected," he told reporters in Melbourne on Wednesday.

The report found that the two largest projects, myki and the hospital IT system HealthSmart, would need almost $600 million more than planned.

Brouwer said that there has also been abject waste, with Victoria Police spending $59 million on its crime database, Link, over four years, only for it to be cancelled.

Victoria Police Deputy Commissioner Kieran Walshe said that he had been quite surprised when he heard of the cost issues, but defended the decision to scrap the project as the responsible thing to do.

"There were some faults in the original business case," he said.

VicRoads spent $52 million on its licensing system, RandL, which had not yet made it past the design phase.

Brouwer said that a number of reports over the years have shown significant shortcomings in the government's management of ICT projects, but little has been learned.

He said that too often, there is a muted acceptance that all ICT projects go wrong.

But he said that the figures were significant.

"They represent many foregone hospital beds, trains, teachers, police and child protection workers," he said.

"It is critical that government manages and reins in these costs if it is to achieve better outcomes."

Leadership, accountability and governance, planning, funding, probity and procurement and project management are all areas in which the ombudsman found issues. The ombudsman provided a framework with 58 recommendations to improve planning and delivery of the projects. For example, the ombudsman said that the government should increase recruitment, instead of relying on contractors to do work. He also insisted that all projects over $20 million should conduct gateway reviews with six gates.

Victorian opposition leader Daniel Andrews said that he accepts the report's findings.

"I also accept and note the fact the ombudsman makes it clear that these, whilst they were very important projects, they were high-risk projects, they were complex projects, and many of them are still very high-risk and complex projects," he told reporters.

Stay tuned for an in-depth report into the 10 projects.

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