It’s been a bad couple of months for public healthcare IT projects.
First, the Public Accounts Committee published a report in September on the dismantled National Programme for IT in the NHS, which makes for grim reading. The Department of Health has spent over 10 years on the National Programme with costs to date nearing £10bn and still rising, and little to show for it. It has been branded as one of the “worst and most expensive contracting fiascos” in the history of the public sector.
Then, in the US the much heralded and signature healthcare reform of Barack Obama went live on 1 October with the launch of healthcare.gov. The launch was disastrous. It has been estimated that more than nine million Americans visited the site in the first week, of which four million tried to register, but only 36,000 managed to enrol themselves in a new healthcare policy.
One could be forgiven for thinking that these projects are nothing more than further evidence of the bungling incompetence of civil servants and of suppliers lining their pockets at the expense of the public purse. For that is the picture which is often painted.
But these are not isolated incidents of large and complex projects going wrong. According to Cranfield School of Management, 68 percent of all complex projects fail. This appears to be across all industries and across all sectors - so not just the public sector and not just IT.
Plus, it has been found that one in six IT projects has a cost overrun of 200 percent on average and a schedule overrun of almost 70 percent. These projects represent the classic ‘black swan’, a term coined by Nassim Nicholas Taleb to describe high-impact events that are rare and unpredictable but in retrospect seem not so improbable.
My view is that these failures are systemic. All projects, whether they are outsourced or resourced internally, are managed with the same principles. And these management principles are at their most damaging in contracts for large projects.
There is an assumption underlying the management principles that the customer knows what it wants before the project starts, and that the project can be finished before significant change occurs. But that is simply not realistic in the fast-paced and complex world of today’s inter-connected society.
The very dynamics of a project lead to changes. This inevitably leads to the customer revisiting its thinking on how to optimise the solution. It also leads to the supplier making more informed and intuitive recommendations.
External forces are also at play. Technology is evolving at an ever increasing pace. The market or context in which the project was conceived continues to change. Hence, the opportunities or risks to be addressed by the project also change.
Specifying too much detail before the project starts actually creates uncertainty if things do not turn out as anticipated. In any event the use of a contract to regulate at a micro level the activities of a project is dysfunctional. This effectively puts the lawyers in charge of a project of which they have little or no understanding or practical experience, and dispenses with the expertise of the project team.
To make matters worse, the contract is too slow to respond to change. If any members of the project team sense that they need to respond to new information, they are not empowered to use their own initiative but must escalate a change request to the contract management team, ultimately controlled by the lawyers, to effect it.
It doesn’t have to be like this. The military dispensed with this style of management for warfare back in the second world war, with the acknowledgement that ‘no plan survives contact with the enemy’.
In the absence of the ability to make perfect plans, don’t attempt to do so. Don’t plan beyond the foreseeable circumstances. Instead use the available information to work out your business objective. Keep the business objective simple, and make sure it is understood by everyone on the project. Don’t tell people what to do and how to do it, but tell them what you want to achieve and why. Then create target outcomes which are aligned with your business objective, rather than a plan, to steer the project and to measure progressively the results of the project.
Don’t try to predict the optimum solution because you can’t. Instead give the project team space and support to figure out the optimum solution. Give them boundaries that are broad enough to take decisions for themselves and to act upon them, but not so broad that a mistake on their part would lead to disaster. And allow the optimum solution to emerge.
This style of management for complex projects is gaining significant traction worldwide, and there is now a movement underway to change contracts to reflect this way of working.
Susan Atkinson is a consultant solicitor at Keystone Law.
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