When the UK government last month ended one of its least successful experiments in its sorry history of project management – the Public Finance Initiative (PFI) – there were only a few muted cheers among bruised suppliers and project managers.
Most observers had two questions: first, why did the government persist with a policy that was so evidently disastrous for so long; and why is it still determined to go ahead with so many large-scale IT projects, in spite of repeated warnings that it is about to repeat the failures.
PFI was developed as a way of passing the risk – and the initial financing of a project – on to private suppliers. The idea is that taxpayers will be relieved of the up-front capital investment, and the money will paid back over time, when the project is complete. It is the kind of scheme that works well with bridges and buildings, but not so well with IT projects, where specifications change.
The roll-call of IT project failures is spectacular: the £800 million (cancelled) benefits card; the Child Support Agency system; the Passport Agency upgrade; the Nirs national insurance system; and the Libra magistrates computerisation scheme.
All of these projects suffered from changing specifications, blurred areas of responsibility and ongoing costs overshadowing start up costs. But perhaps most tellingly for the government, so few private sector organisations were interested in getting involved that the cost of capital became too high.
Clearly, they know something the government does not about its IT management. Nick Calisperas of the IT supplier’s association Intellect, which is working with the government to produce new financing ideas, said that suppliers welcomed the ending of PFI. But he agreed that alternative schemes being put forward are still in their early stages.
Meanwhile, PFI projects at the procurement phase will still go ahead – and that includes the £4 billion Inland Revenue project. The NHS computerisation project is unaffected, as are smaller, local government projects.