Poor project management led to ADF EHR cost blow-out

Poor planning in the early stages of an electronic health record project for defence force personnel, including an unrealistic original budget and a decision to change from internal to external hosting, was the main cause behind a blow-out of $110 million in the ultimate cost of the system, an audit has found.

The Australian National Audit Office (ANAO) described the Department of Defence's planning, budgeting and risk management for the implementation of the system as “deficient”, resulting in substantial cost increases, a three-year delay in implementation and the potential for reputational damage to the department.

Defence first finalised a plan for an electronic health records management system in May 2009, with an original budget of $23.3 million to acquire and maintain a commercial off-the-shelf product for 80,000 Australian Defence Force (ADF) personnel.

Originally known as the Joint eHealth Data and Information System (JeHDI), there was an expectation that a production system of what is now known as the Defence eHealth System (DeHS) would be up and running by December 2011.

According to the ANAO report, there was also an expectation at the time that the system would be hosted and managed internally as part of the Defence ICT environment, which meant the resources already assigned to existing systems could eventually be used to support the new system.

However, the auditor found that shortcomings in project planning and budgeting were evident from the project’s earliest days.

“Defence’s initial 2009 DeHS project proposal and budget were not properly scoped, made an incorrect assumption about ICT hosting arrangements, and were not appropriately validated before approval.”

The department went to tender in February 2010, with five vendors on the shortlist. However, by that time the DeHS business case had changed substantially from the 2009 plan, in that it was now seeking a bid for an externally hosted system and ongoing support.

“This change in direction had significant implications for the project’s scope and budget, and contributed to a subsequent approach to government seeking approval of significantly higher project costs,” the report says.

The contract was won by CSC, which intended to source the EMIS system widely used in primary care in the UK and which had also been adapted for use by the UK Ministry of Defence (MoD) in 2006.

The value of the contract was set at $85.9 million, including $54.6 million for acquisition costs and $31.3 million for sustainment costs between 2010-11 and 2019-20.

In February 2014, a further $47.4 million was required by Defence to address capability shortfalls following the identification of further impediments, including the purchase of additional software licences and to fund training.

The auditor found that Defence had not properly scoped and budgeted for system deployment and business implementation, including changes to Defence’s core ICT systems, hardware upgrades and training requirements and user software licences.

According to the report, the total cost for the whole project is now $133.3 million, a massive $110 million higher than originally planned. It was finally rolled out at the end of last year.

The auditor's report says the two major increases to the original budget were due to changes to project scope, and the auditor puts the blame squarely on the department.

“Overall, Defence’s planning, budgeting and risk management for the implementation of DeHS were deficient, resulting in substantial cost increases, schedule delay and criticism within government,” it says.

“During the initial phases of the project, Defence did not: scope and cost key components of the project; validate project cost estimates and assumptions; obtain government approval when required; follow a project management methodology; or adequately mitigate risk by adopting fit for purpose governance and coordination arrangements.

“Defence’s planning and management of the initial phases of the DeHS project were well below the standards that might be reasonably expected by Defence’s senior leadership, and exposed the department to reputational damage."

The report also says the initial plan was to develop DeHS as a mature system by December 2011, but did not complete the roll-out until December 2014.

“The DeHS project was led by Defence’s Joint Health Command (JHC), which lacked experience in managing complex ICT-related projects," the report says. "Further, the contribution of Defence’s Chief Information Officer Group was limited; a weakness in internal project governance and coordination arrangements which introduced substantial additional risk.”

On a positive note, the system seems to have been generally accepted by clinicians, the report says, and it has the potential to capture civilian healthcare provider referrals and reporting as well as a dispensing module. The latter has not been implemented as yet, with Defence planning to prepare a design document to introduce this in future.

There are a few issues with the system remaining, including system performance, delays in accessing templates and longer consultation periods required.

“A key lesson of this audit is the importance of properly scoping and planning complex ICT projects, as a basis for providing sound advice to Defence senior leadership and government, and establishing the pre-conditions for successful implementation,” the auditor says.

The ANAO has made two recommendations following the audit concerning the reliability of project proposals and cost estimates, as well as standardising the use of the system and implementing agreed functionality, both of which the department has accepted.

Posted in Australian eHealth

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