Principles and Strategies - Queensland Health Payroll - Case Study Example

Project Management: Principles and Strategies 2 Name Name of Institution Executive Summary The paper presents a critical analysis of project management in the Queensland Health Payroll project which was awarded to IBM. The project was initiated to replace the LATTICE system which would no longer receive updates from the vendor. The project was a failure since the delivery was done eighteen months behind schedule with the cost being three times higher than the budget of $6.19 million. The failure of the project was also evident when it was launched with problems that would force the government to spend over a billion in maintaining the new payroll system. A critical analysis of the project shows that the failure can be linked to poor planning. The organisation failed to conduct a risk assessment to identify the extreme reliance on the LATTICE system. A risk assessment should have resulted in a thorough requirements assessment in preparations for the eventual replacement of the old system that handled an extremely complex task. The impending collapse of the system and the inclusion of CorpTech as a third stakeholder further complicated the planning due to communication issues among the stakeholders. In turn, the communication issues led to the selection of IBM as a prime contractor, a decision that prevented Queensland Health from participating in the actual project management. The poor planning explains the scope creep and the resulting increase in cost and time needed to complete the project. The paper concludes with lessons from the project and provides recommendations for project managers. Introduction Queensland Health is the provider of aged care, dental, and medical facilities in the state of Queensland. The state is notable for having a highly dispersed population that makes the provision of health care services a challenging task. According to Eden & Sedera (2014, p. 3), Queensland Health (QH) serves 40,000 people on a daily basis, with the nature of healthcare being that each patient requires services from a broad array of specialists. As a result, Queensland health employs 85,000 employees from a range of professional occupations. The recruitment of these employees is complicated by the presence of two governing Acts, 12 industrial awards, six industrial agreements, 200 allowances, and 24,000 different pay combinations (KPMG 2012, p. 2). To pay these employees, Queensland Health relied on a legacy payroll system referred to as LATTICE that had to be constantly modified to deal with the complex payment structure. To complicate the issue, the vendor of the LATTICE system issued a notice in 2005 that the system would become obsolete in 2008 (Eden & Sedera 2014, p. 3). After the initial planning and scoping, Queensland Health awarded a $6.19 million contract to IBM in January 2008 with the go-live date planned for August 2008. The objective of the project was to come up with a new payroll system that would serve the intricate requirements of Queensland Health. Stakeholder Analysis There were three primary stakeholders in the Queensland Health payroll project. The first stakeholder was Queensland Health, a department of the Queensland Government. Queensland Health was the primary client in the project, and it would become the end user of the payroll system. Its key roles in the project included defining its business requirements and staff training during the implementation of the project. The second stakeholder in the project was CorpTech. It is worth mentioning that the Queensland Government had initiated a project to upgrade the payroll systems across all its departments including the health department. As a result, CorpTech was a key stakeholder in the project where it selected and managed the contractor and oversaw implementation across all departments. The final stakeholder was IBM, the contractor whose role was to implement and configure the new payroll system (Eden & Sedera 2014, p. 4). Appendix 1 illustrates the three stakeholders and their responsibilities. Queensland Health Project Strategy In typical projects, the contractor focuses on satisfying the needs of only one client. However, the Queensland Health Payroll project created in a scenario where IBM had to satisfy the needs of both CorpTech and Queensland Health. When it comes to the client-consultant engagement, the QH project adopted the prime contractor model as the strategy to deliver the new system. The model involves the selection of a single consultant who oversees the entire project by hiring experts and hiring sub-contractors where needed. The use of the prime contractor model was suggested by CorpTech, which employed outside advisers to review the proposed implementation of the new payroll system. Significantly, one of the principal advisers was Mr Terry Burns who had previously worked for IBM and was virtually unknown in the country and who refused to share information with CorpTech staff (Chesterman 2013, p. 23). These and other challenges in the procurement stage ended with the selection of IBM as the principal contractor. Appendix 2 illustrates the project engagement model adopted by Queensland Health and compares it to typical models used in project management. Appendix 3 provides the project timeline which highlights the key events in the project. Critical Analysis of Queensland Health Payroll Project Appendix 2 provides the project timeline that shows that the Queensland Health project was a failure when it comes to running to plan. According to Chesterman (2013, p. 97), IBM had promised to deliver a replacement for the obsolete LATTICE system by 31 July 2008. Numerous revisions were then made with the project ultimately delivered on 14 March 2010. The system issued the first payment to staff on 24 March 2010 with the launch ending up as a failure because a large number of employees were not paid or incorrectly paid (Eden & Sedera 2014, p. 2). When it comes to cost, the contract price of $6.19 million rose to $25.7 million as a result of scope creep that continued until the system went live in 2010. In addition to the direct costs which were four times over budget, the indirect costs of managing the Queensland Health payroll system is projected to go up to $1.253 billion with 245 million going towards fixing defects in the new system (KPMG 2012, p. 1). It is evident that the project was a complete failure due to the high cost, delayed delivery, and an end product that could not serve the requirements of Queensland Health. A critical analysis of the project shows that the failure can be attributed to poor planning. A critical mistake was to force IBM to serve the needs of both Queensland Health and CorpTech while the end user of the system would be Queensland Health. The inclusion of CorpTech as a key stakeholder then led to other issues that affected planning. For example, CorpTech argued that the project had to be undertaken as soon as possible owing to the impending failure of the LATTICE system. This argument meant that Queensland Health’s complex payroll system was updated before other departments in the Queensland Government that had much simpler requirements. If the government-wide project had started with these other departments, critical lessons would have been learnt that would have made planning for the complex Queensland Health system much simpler. Similarly, CorpTech’s decision to give IBM the prime contractor status meant that the clients did not have a say in actual project management. The inclusion of CorpTech also created communication issues which had an impact on planning. Another feature of the poor planning was Queensland Health’s failure to provide details on its complex requirements. To begin with, a complex organisation like Queensland Health needs to conduct frequent risk assessments of critical systems like payroll. A comprehensive risk assessment would have allowed the organisation to understand its extreme reliance on the LATTICE system. This understanding should have prompted the organisation to prepare contingency plans that would ease potential transitions to other systems. Queensland Health’s failure to prepare for such a scenario hindered IBM’s project scoping because there was little time. The need to implement the system as soon as possible also meant that IBM began work without a complete understanding of what the health provider needed to process payroll. The incomplete information resulted in numerous changes to the project scope. According to Choudhury (Richman 2011, p. 52), scope, time, and cost are interrelated factors that determine the success or failure of a project. For example, an increase in project scope will have the impact of delaying a project and increasing total costs. This applies to the Queensland Health project where poor planning resulted in a poorly defined scope. The resulting scope creep can then explain the complete failure of the project where the final cost was four times the budget and delivery was eighteen months behind schedule. The scope creep also explains the end product failing to satisfy the needs of Queensland Health thereby forcing the government to spend more than a billion dollars to maintain and correct defects in the system. Conclusion and Recommendations In conclusion, the Queensland Health project is an example of what not to do in project management. The determination, planning, and management of project objectives determines the success or failure of a project. In the case of Queensland Health, there was a complete failure in identifying the needs of the organisation and coming up with the project scope. This was a critical mistake given the complexity of the employment and remuneration systems in the health sector. The inclusion of CorpTech as a second client, communication issues, and allowing IBM to be the sole project manager are factors that contributed to the project failure. The lessons learnt is that it is essential to clearly define the client and the roles and responsibilities of other project stakeholders to mitigate communication issues. Another lesson is that project managers should determine weaknesses in existing systems and plan ahead for their potential replacement especially when the existing systems are complex. The case also shows that an organisation should not fully outsource project management but should play an active role in planning and controlling all aspects of the project across its lifecycle. As a project manager, I will give utmost priority to the planning stage because poorly defined objectives will lead to project failure in terms of delays and cost. I will also use the Queensland Health project as a guide on what activities I should not do in the future. References Chesterman, R.N., 2013, Queensland Health Payroll System Commission of Inquiry. Queensland Government, viewed 23 September 2016 Eden, R. and Sedera, D., 2014. The largest admitted IT project failure in the Southern Hemisphere: A teaching case. In Proceedings of the 35th International Conference on Information Systems: Building a Better World Through Information Systems. AISeL. KPMG, 2012, Queensland Health: Review of the Queensland Health Payroll System, viewed 23 September 2016 Richman, L 2011, Successful Project Management, Third Edition, American Management Association. Appendix 1 Stakeholder Responsibilities Queensland Health Client, end user of the new payroll system Definition of business requirements Staff training during implementation CorpTech Oversee the development and implementation of new payroll systems across Queensland Departments Manage the contractor IBM Contractor Project Manager Develop, implement, and configure new system Project Stakeholders and their responsibilities (Eden & Sedera 2014) Appendix 2 Appendix 3 Read More