Headlines: August 21st, 2000

Analysis of a failed high profile PFI project should provide some lessons for those involved in future projects of the potential pitfalls. The Benefits Payment Card Project was originally planned to automate the paying of social security benefits at the Post Office. A PFI contract was jointly awarded by the Benefits Agency and Post Office Counters Limited to a subsidiary of the ICL computer services group in 1996. The project was abandoned in May last year having cost the DSS 127 million, the Post Office more than 500 million and ICL 180 million pounds in development.It is now the subject of a National Audit Office report, which has identified important lessons to government and the wider IT community on handling major projects and managing inherent risks. Divided control of the project, insufficient time for specifying the requirement and piloting, and the lack of a shared, open approach to risk management have all been identified as factors in the project’s failure. The NAO says that the project was probably never fully deliverable within the very tight timetable originally specified. It also points to two of the major partners having different objectives for the project, which, though not incompatible, led to tensions.

The report also contains a warning for public organisations entering a PFI that they have a duty to retain a direct interest and involvement in how the service is to be delivered, especially where public money is to be saved as a result of the project. The report says that had guidance issued by the Cabinet Office in May this year been in place and acted upon by the managers of the benefit card scheme, it may have substantially reduced the risk of it failing.

The government has decided, since cancelling this project, that benefits payments will be made by automated transfers to claimants’ bank accounts, with the transition starting in 2003 and completing by 2005. The automation of post offices by ICL continues, through a conventional, non-private finance, contract.