Lessons from Public Sector Project Failure

We have assisted the Oregonian in their drive for fair and accurate reporting by supplying objective input on the Cover Oregon failure:

May 28, 2014: State Invites 10 Firms To Shift Cover Oregon To The Federal Health Insurance Exchange by Nick Budnick

April 9, 2014: Decision To Scrap Or Salvage Cover Oregon Health Insurance Exchange Poses Risks Either Way by Nick Budnick

April 4, 2014: Cover Oregon Consultant: Fix For Health Insurance Exchange Could Take $40 Million, 21 Months by Nick Budnick

In May 2007, the Massachusetts Division of Unemployment Assistance (DUA) signed a contract with Bearing Point, Inc. to modernize the State’s unemployment processing system. The project was called the DUA Quality Unemployment System Transformation (QUEST) Project. Bearing Point filed for bankruptcy in February 2009 and Deloitte announced they would buy Bearing Point for $350MM in March of the same year.

"The government is incapable of running projects. Simply put, their miserably high failure rate proves that government should be out of the project management business." There are plenty of examples of this. We have heard this line, or ones similar to it, time and again and rarely hear how the projects failure reasons support the hypothesis. The reason? The prognosticators purporting this are part of the problem. Coming to that conclusion does not take any superior intellect—just listen to the nightly news. However, to try to get closer to the truth, I candidly and confidentially interviewed a number of government project managers and executives to gather their views. Following is a summary of those conversations.

In order to comply with the Affordable Care Act, the State of Oregon made the decision to build its own Health Insurance Exchange (ORHIX). An online portal to allow applicants was supposed to go live October 1, 2013. As of March 30, 2014 the site was not functional and all ORHIX applications must be processed from paper applications.

Trust relationships, certifications, and standards sound like such a safe harbor. These sound like such great words in a proposal or statement of work. How could you possibly go wrong building a trusted relationship with a customer by committing to follow a standard? In fact, this can burn you… in court.

No one ever starts a project with the goal of ending up in court. In fact, litigation may never cross your mind; after all, you have built a trusted partner relationship. Taking a few cautionary steps, however, will make your life easier if you end up in that ill-fated litigious position. Your best chances for success come long before you enter the courtroom—even before the project starts.

Walking onto any troubled project, guess what I hear? We are spending too much money, we cannot miss the due date, we need everything we are asking for, and it is "their" fault. My job is telling them the bad news—we need more money, we are cutting scope, and the project is still going to be late. Those are the unavoidable facts and the stakeholders need to accept them. Worse than that, I am not going to blame anyone. Blame is counterproductive. So, how does this compare to the situation with the United States Congress? In short, they do not get it. They need an apolitical, outside entity to build the recovery plan—just like we do anytime we are recovering any project.