Australian State to sue IBM over $AUD1bn project blowout The Australian State of Queensland has reportedly filed a statement of claim against IBM to recoup some cash from an SAP disaster. Queensland's keen to bash Big Blue because its Health Department engaged the company to build a new payroll system. IBM quoted $AUD6m for the SAP-based project, then upped the quote to $27m. A few …
Agreed
"after a series of threats and counter threats, the then Labor government and IBM entered into a “supplemental agreement” which released IBM from any legal liability once it had completed a series of specified works by 31 October that year"
http://www.itnews.com.au/News/366754,qld-opposition-blasts-ibm-lawsuit-as-waste-of-money.aspx
Not quite.
If the current lot employ the correct spin doctors and get the papers on side it can prove to be a very useful stick to beat the opposition with.
Few things are better than a story that keeps popping it's head up and shining a light directly on the previous governments mess.
The problem with IBM is we -- oops I mean 'they' have to compete on price then are faced with customers who can't believe a project has a defined scope at the start. Rather than saying 'no' and risking immediate dissatisfaction, the answer to scope creep is too often 'yes' and the consequences are longer term. Add to that the frequent, unpredictable and unavoidable meddling from various layers of execs both in and out of country (arbitrary spending freezes, travel freezes, capital freezes, cost targets, redundancies) and when a big project *isn't* a disaster people are left pleasantly surprised.
No. It goes like this. Ask for a bungalow. Then 1 month after construction has begun, decide the rear window should be a bay window. Fine. Then decide it should have a thatched roof not a tile roof. Ok fine. Then discover your new corporate colour is green, so you need it to be repainted, and green looks terrible on bungalows so can we make it look like a cabin. It's now taken three times longer than quoted and cost twice as much as a cabin should have. The supplier's blown their margin trying to keep the customer happy, and the customer still doesn't get why they had to wait so long.
Then there's the customers who 'don't want customization because it's hard to maintain' (correct, good start) 'except for the following major unique and complex components'. Frickinell.
PMs have no say in anything. They are given a budget, time frame and design which has all been signed off and told to go forth and deliver. They are a commodity resource. If it's a project of any size someone with 'exec' in their title will be involved in negotiating with the client.
The point I was trying to make is that in any other industry you get what's in the contract. Its only in software that cost overrun scope creep is guaranteed. I've worked on these sorts of contracts and its not been the customer who has been demanded to sign for a two bed bungalow to house to house 400 people and twenty seven grand pianos. Its only in software where the contractor, who knew all along what was needed, points out these things after the contract is signed.
The 'fuck me you wanted windows well that's REALLY going to cost you' attitude really is deception - and I've been offered a really good transfer to the contracting company for pointing out doors might be a good idea to get me out of the negotiations before. They really dont like the customer to have a clue.
I look forward to seeing IBMs (lengthy) exposition of how the project was derailed by continued and repeated government official incompetence, indecision and meddling.
All of that will have been duly recorded in the meeting minutes, and their lecture will be a feast for everyone who enjoys seeing yet another shameful government debacle come to light.
Sure, IBM project managers will have made some mistakes, but we all know that their most grevious mistake was not pounding their fist on the table and saying "NO!" to the umpteenth scope change.
They should have walked out.
Nobody ever walks out of a government contract.
No government contract ever gets done right.
Could someone please set a precedent ?
".....we all know that their most grevious mistake was not pounding their fist on the table and saying "NO!" to the umpteenth scope change....." Moaner, if you had ever worked on really big projects you would know that the PM saying "no" is irrellevant as the salesgrunts will have already said "yes". Many salesgrunts use scope-creep to generate added revenue, for which they get a pat on the head from management and extra commission. So they are actually encouraged to try and convert a project (especially government contracts) into a continual stream of updates and add-ons, creating what is known as an "on the never-never" project. In essence, they want the project to never complete as long as it delivers regular revenue when agreed project milestones are met. Ironically, a "never-never" project that eventually fails can generate far more revenue than a proper, concise and successful project. To kick the "never-never" cycle off the salesgrunt will price low for an unrealistic project plan but put in clauses for reviews and updates, ensuring a greater return through the add-ons. I want a big tub of popcorn and the court to examine the behaviour of the sales team involved.
I don't know who Moaner is, but I agree with you on the why.
That does not contradict my opinion that some Project Managers should grow a pair and walk out on a project that is obviously heading for the wall.
I know a guy who did just that. The client was incensed, promised fire and brimstone, swore to trash his reputation and went elsewhere. After a year and half, the client meekly called him back to set things straight.
Of course, this was in the private sector, where money is not infinite and must generally be spent in order to generate profit.
Luckily we don't have to look forward to those lengthy explanations because there has already been a tax payer funded commission which has handed down a report; http://www.healthpayrollinquiry.qld.gov.au/
As the article pointed out the previous QLD government had signed away any legal rights to pursue IBM so this claim seems like another example of throwing good money after bad.
Maybe you should spend some time in the consulting world cleaning up after the big boys. In the last 2 years I've been lucky enough to come in and clean up after 2 of the big boys. Let's call them Infloitte and DeSys.
In both cases they exploited their status as preferred partners for the technology they were engaged in. In both cases they were contracting with private companies.
In one case all of the BA work was rushed through with the promise that the clients multiple years of business knowledge could be replicated with the tool and extensive BA work could be done off shore in a country we will call DiaIn <- how close does that look to Dial in. When said company worked onsite the business owners were BANNED from speaking to the consulting techs. No one was embedded.
Infloitte even managed to invent a 7 stage ETL process......
DeSys would make multiple attempts to deliver an environment and after many fails would blow it away along with any end user development and start again.
In both cases they mislead the client, there was no scope creep, just a blatant misleading of what the technology could do and the consultant could deliver.
It is a given that the client knows they want to replicate their Business Logic and improve it's delivery efficiency and reduce the time taken. What is disappointing is the unrepentant grab for cash while screwing over the client wherever possible. Often ridiculing the skills of the onsite tech and in the worst cases blatantly ignoring what is wanted and providing their own logic.
Thankyou Infloitte and DeSys your incompetence keeps me well paid.
As for the dinosaurs attacking the clients, it's not the clients fault. They know what they want, consultancy firms need only progress when everything is signed off and your technical experts know how to deliver.
How about we just go ahead and say that *everyone* invovled, both sides of the government, the councils, the Health Department, Queensland the country and IBM are all equally incompetent.
It doesn't actually solve anything, but at least we feel better. Unless we're health department employees and still wondering when we're getting paid...
Government wants an IT system to do A & B.
Government only wants to pay X.
Suppliers work out system will cost X+N but only bids X to get the contract.
Project rolls on, Government want C, D & E added.
Supplier increases cost to cover for C, D & E plus shortfall of original N.
Repeat last two steps frequently.
Project overruns by several years and is over ten times original budget.
Government blames Supplier, Supplier blames Government, Nothing delivered, Commentards point out the obvious.
Rinse & Repeat.
I completely agree with the evaluation stated by AC and MB.
I regularly see this kind of strategy by some of my competition. Different Business, same strategy.
It is the kind of behavior that makes all sales people look bad.
Contractors that actually know what they are doing and bid to spec can't win the job because of some vendors deliberate underbidding. Thus, we taxpayers eat the cost overruns.
Those who don't care what or how they bid, because they will make it up on change orders; deserve to be dipped in shit and hung out to dry, drawn and quartered and fed to wild dogs.
Government agencies that cannot figure out what they actually want before they bid a job need to suffer a worse fate.
Engineers and Architects that cannot specifiy required work in a rational manner need to be lobotimized.
"....Those who don't care what or how they bid, because they will make it up on change orders; deserve to be dipped in shit and hung out to dry, drawn and quartered and fed to wild dogs....." Why do you hate wild dogs so much you would want to give them food poisoning?
"...Government agencies that cannot figure out what they actually want before they bid a job need to suffer a worse fate....." The problem is governments very often change course, and then often change completely. I have seen a government project where everything was put on hold for four weeks whilst we conducted a paid-for "review", so the resident Minister concerned could wait for an expected reshuffle, move on and dump the mess on his unfortunate successor. Everyone involved knew the reason for the delay, including the civil servants involved.
"....Engineers and Architects that cannot specifiy required work in a rational manner need to be lobotimized." In my experience as a contractor, engineers and architects that do not play ball with the salesgrunts do not get promoted, simple as. I once contracted with a vendor whose senior PM had never finished a project on-time or on-budget throughout his career with the company, yet he had been promoted over the heads of other PMs because he generated revenue with all the scope-creep he accepted and worked through.
@AC 14:36 - You don't do large projects, do you.
The problems experienced are not unique to the public sector. You hear about those ones because they cost taxpayers but I assure you this happens in the private sector as well.
Here's the thing. Any sufficiently large project will have variations if for no other reason than to attempt to nail down every last detail would cost more in the tender preparation than you save. In other words, sometimes it is cheaper to start work and fill in the details as you make progress. The trick is to manage the risks and variation costs. One way of doing this is agree with the vendor on a methodology like function point analysis as a baseline for costing variations.
One area where the public sector is worse, is sponsorship. Due to elections and other governmental changes, multi-year public sector projects face a far higher risk of political interference. The best antidote to this is to incorporate government agencies as pseudo-private corporations owned by treasury. That way they have a degree of autonomy but, guess what ? The few times this has been tried the governments of the day didn't like not being able to tell the agency what to do, so they reversed the decisions.
The takeaway is - don't assume a large project will work as originally planned. Know your risks, have mitigations in place and maintain a good working relationship with your vendor(s).
It seems that English speaking nations has a civil service that (unusually?) has very similar tactics (as an aside: if so I wonder how those similarities evolved? Collusion perhaps?)
The UK civil service also draws things out to turn any action against it into almost a non-action as it takes so long to take action if that makes sense. It seems to attempt to win by Azkaban Tormentor tactics by attempting to induce a lack of will to live?
The inquiry turned up much more than the "usual" scope and cost creep.
It appears that testing was also bypassed to meet deadlines - meetings were minuted where "critical/showstopper" faults got downgraded to "minor/fix later" in order to meet milestone dates for go-live. There were no real innocents - the project co-ordination group, from both sides of the fence, had to agree on the reclassifications.
Followed by a big-bang, rather than a staged, implementation - that process was decided after a pretty skewed risk assessment of the old system which was officially unsupported but chugging along and support people had been brought in house to keep them available.
Any person involved in a large project who stands up in a meeting and says "We cannot achieve this deadline because <reason>", or "We are not ready to go live due to <outstanding concern>" is 'not a team player', has a 'negative attitude' and is likely to be the first choice for the sack, and the last choice for promotion.
The cult of relentless positivity requires that people accept instructions to do what they know to be impossible, and then act to ensure that someone else takes the blame when they fail to meet their goals. Honest and frank assessments of what can or cannot be achieved by a given date are simply unthinkable.
The only way out of this is to ensure personal (not corporate) responsibility for success or failure - something that is anathema to large organizations, be they Government departments or companies like IBM - indeed, avoiding personal responsibility is the entire raison-de-etre of these large organizations.
What I find surprising is not that disasters like this occur, but that they are so frequently avoided. Of course, each time the senior executives have their balls pulled from the fire by underlings working 48 hours straight to get the thing to limp into action in a manner that conceals the worst of the flaws, this encourages them to set even more impossible deadlines next time; so future debacles of this type become more and more probable over time.
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