Queensland Health

Following entry is a record in the “Catalogue of Catastrophe” – a list of failed and troubled projects from around the world.

Queensland Health – Government of Queensland – Australia
Project type : Payroll (ERP)
Project name : Shared Services Initiative – LATTICE replacement
Date : Jun 2010 Cost : $64.5M AUD direct cost + $1.2B AUD for 8 years of subsequent operations.

Synopsis :
In an effort to save costs, the Queensland Government initiated a “shared services” program in 2003. The program aimed to centralize, standardize and integrate the management of basic HR functions across all government departments. Due to the urgent need to replace legacy payroll systems in the Queensland Health (QH) authority, systems used by QH became the initial focus of the program. As for many large and long-standing organizations QH had evolved a complex IT infrastructure supporting a complex web of pay agreements. Reports note that the “QH payroll system comprised complex award structures, with 13 awards and multiple industrial agreements providing for over 200 different allowances”. The net result was that there were 24,000 different combinations of rules and calculations for QH’s 78,000 employees. Following a tendering process conducted in 2007 and a three year development effort, the new system was implemented in 2010. The deployment brought to the surface quality deficiencies and deep seated management problems that had besieged the project. Following cutover thousands of staff were left with little or no pay. A 2010 Auditor General’s report and a subsequent (Jul 2013) special commission report indicated a long list of classic mistakes behind the failure. The scathing reports noted that:

  1. “The replacement of the QH payroll system must take a place in the front rank of failures in public administration in this country. It may be the worst”, and that,
  2. “The system did not perform adequately with terrible consequences for the employees of QH and equally serious financial consequences for the State. After many months of anguished activity during which employees of Queensland Health endured hardship and uncertainty, a functioning payroll system was developed, but it is very costly. It required about 1,000 employees to process data in order to deliver fortnightly pays. It is estimated that it will cost about $1.2B over the next eight years.”

At its root the failure was triggered by a laize-faire approach to solicitation and a weak governance and management structure that failed to see or address the issues in the early stages of the project. The commission’s report indicates favoritism in the tendering process that gave one contractor an advantage over the other interested parties.

Contributing factors as reported in the press:
Lack of planning and failure to put in place a robust tendering process. Unclear roles and responsibilities and a weak governance structure. Failure to engage stakeholders effectively. Tensions between government departments. Failure to clean up complex business processes prior to implementing new system. Requirements management and alignment of the project to business needs. Poorly design team structure (main integrator was 6 layers down the org chart).  Poorly managed cut-over and lack of communications and training. Go-live decision made despite high defect counts (in fact severity definitions were apparently downgraded part way through the project to allow the project to proceed despite serious problems being present). Lack of risk management and contingency planning.

See also (other failed payroll projects) :

  1. Service personnel and veterans agency UK
  2. Los Angeles Unified School District

Reference links :

  1. Failure to prepare: Government slammed over health payroll bungle
  2. Auditors report – Information systems governance and control, including the Queensland Health Implementation of Continuity Project
  3. Queensland Health Payroll System Commission of Inquiry – Published Jul 2013