NSW Education expects to have spent $573 million on its troubled ERP overhaul by the middle of next year, at which point it will have to return to the state government for more funds to finish the mammoth project.
In a report released today, NSW Auditor-General Grant Hehir detailed how the department’s Learning Management and Business Reform project got the better of the state’s education administrators.
Hehir revealed the project will be nearly $100 million past its original $483 million budget by the end of 2014-15, with as many as 2000 NSW schools still waiting to receive the upgraded SAP-based finance, payroll and student management solutions.
The Education department (DEC) has now completed a business case for an additional phase of the LMBR, which it will soon submit to cabinet. The program - originally made up of two phases - had been forecast to be complete this month after eight years in the works.
The department will be forced to ask for more funds to expand the rollout of the software suite to the remaining schools, and to pay for a higher level of training and support it has committed to delivering after complaints about schools struggling to resource the system change-over.
It will also need funds to remediate a number of shortcomings in the software deployed so far, which continue to cause schools and teachers headaches.
Hehir and his team surveyed 28 schools from the pilot group of 229 that have already received the LMBR upgrade and found more than 70 percent said the installed components did not match up to what they were promised.
Half felt like the LMBR project managers were deaf to their needs, and another 12 claimed that so much time had passed between their training in the system and it going live in their schools that the sessions felt useless.
The LMBR program was signed off in 2005 as a way to replace a 15-year old cluster of expensive and no longer suitable finance, HR payroll and student administration systems, plus a further 100+ smaller school and TAFE-based programs that had sprung up across the state.
The software upgrade was pitched to stakeholders as having the potential to save the state $35 million each year by reducing the time teachers spent collating material for parent teacher interviews.
The departmant also said it would save a further $29 million per year in back-office finance processing efficiencies, and $11 million per year in saved community time by offering TAFE applicants access to online enrolment.
But an internal report earlier this year cast doubt on the department’s ambitious return on investment - which it put at up to $139.2 million annually after the project is complete - suggesting the reality could be as low as $26.3 million.
“The 2014 review found that, in the view of benefit owners and stakeholders, the value of benefits that can be realised is considerably lower than that stated in the business cases, or they have already been achieved outside of the LMBR program, and some claimed benefits will not be achieved at all,” the internal report stated.
The department has disputed the claims.
So what went wrong?
The audit team suggested that a project of the size and complexity of the LMBR was almost certain to cause trouble from the outset.
“The LMBR program has faced all the inherent difficulties expected in trying to manage a large-scale, long-term, and complex program with diverse business requirements and complex commercial arrangements,” they wrote.
“We found that the department is not adequately managing these significant issues.”
Hehir recommended the department implement a three-year cap on large projects, meaning longer implementations must be broken down into reviewable chunks.
The auditors also cast doubt over the costings that informed the original business cases, pointing out that risk management and mitigation was never factored into the expense projections, nor was an estimated $4.9 million in accommodation costs to house travelling LMBR program staff.
The report found project governance and change management were also lacking - four LMBR program leaders had turned over in eight years, and an early-stage project management office essentially left the performance assessment of third-party contractors up to their colleagues.
Meanwhile, NSW schools continue to fork out for stop-gap timetabling software because the commercial-off-the-shelf SAP solution the department chose does not provide this function.
“The department advised that it is taking action to meet the requirements for high school timetabling, which should be implemented by mid-2015,” the report stated.