Civil Service Human Resource Management System: Cancellation of the Payroll Project

A report published today by John Dowdall CB, the Comptroller and Auditor General for Northern Ireland, examines the cancellation of a planned new computerised payroll system for the Northern Ireland Civil Service (NICS). The contract for the payroll system was signed between the Department of Finance and Personnel (DFP) and McDonnell Douglas Information Systems (MDIS) in December 1991. However, the project experienced problems and delays over a period of nine years caused by deficiencies in the software and a range of contractual and management issues. It was finally cancelled in May 2001, without having produced a workable system.

The payroll project was to be part of a wider integrated human resource management system (HRMS) which would include all the main NICS personnel functions. The report found that, while HRMS has delivered benefits to the NICS from the successful implementation of the personnel and pensions systems, the additional improvements in efficiency and effectiveness which would have been achieved from a fully integrated human resource management system have not been delivered.

The NICS spent £3.3 million in developing the project. In addition, planned savings amounting to £6.1 million were not achieved. These savings were not realised because NICS had to continue with the existing inefficient payroll system, which has been operational since 1986, and was not able to achieve planned staff reductions.
 

Main Findings

On the Procurement of a Human Resource Management System

The absence of an overarching strategy for the development of central IT systems, not only at the starting point for the development of HRMS but throughout the long life of the project, was a significant weakness (paragraphs 2.1 to 2.4).

The Project Board could have done more to address the clear warning signs, regarding MDIS’s capability to deliver the payroll project, which had appeared during the period prior to the signing of the contract in December 1991. Given the extent of these warning signs the Department should have commissioned an appraisal of all available options, including a proper assessment of the risks involved in continuing with MDIS, in order to establish whether continuation with the project was the most appropriate course of action (paragraphs 2.15 to 2.24).

The payroll system was acquired by extending the 1987 contract used for the NICS personnel system. The use of this method made it difficult to consider termination when the payroll project ran into difficulties, because of the risk of losing ownership of equipment needed to operate the personnel and pensions systems. A further weakness was the absence of a provision to recover damages in the event of the supplier failing to meet their contractual obligations. This case underlines how important it is to get the contract right in such projects (paragraphs 2.26 to 2.30).

On Development of the Payroll System

The difficulties experienced with the software stemmed from a mismatch between the standard package offered by the company and the much more complex requirements of the NICS payroll system. As a result their standard package had to be tailored to a more significant level than had been envisaged when the project started. This amount of software tailoring substantially increased the risk of project failure (paragraphs 3.4 to 3.8).

Although economic appraisals were carried out by the Project Manager in 1995, 1997 and 1999, the Audit Office considers that an independent appraisal would have provided an opportunity for a fundamental examination of the objectives of the project and might have helped to ensure that better decisions were made as to the way forward (paragraphs 3.23 to 3.25).

On Management of the HRMS Payroll Project

The interdepartmental committee of senior civil servants responsible for overseeing the project was too far removed to operate effectively as a Steering Group and, as a result, it failed to provide effective strategic management of the payroll project (paragraph 4.1 to 4.5).

During the 13 years of the project, nine different individuals held the chairmanship of the main decision-making and monitoring body. The payroll project would have benefited from the appointment of a senior manager with sufficient authority to assume personal responsibility for the project throughout its life. We consider that such an appointment is essential for all future NICS projects of this scale and complexity (paragraphs 4.10 to 4.12).

Where major risks were identified during the course of the project these were avoided rather than managed. A more thorough evaluation of some of the key risks, such as is now accepted good practice, could have significantly improved decision-making at crucial stages in the project (paragraph 4.25).

Departments are now in the position of having a considerable amount of good practice guidance available to them in the management of large procurement projects. Complex IT projects can succeed and it is essential that NICS secures the efficiency gains which they can deliver. It is, however, important that such projects are properly planned, resourced and managed in line with the guidance now available (paragraphs 4.26 to 4.30).