ICT Project for Housing and Care Benefits

• Conclusions
• Recommendations
• Response of the state secretary

Between May and August 2007 we audited the design of an ICT project for the payment of housing and care benefits. The Tax and Customs Administration has been responsible for the payment of these benefits since the Income-Related Schemes Act (AWIR) came into force on 1 January 2006. We carried out the audit because 52,000 people had not received their housing or care benefits at the end of 2005. This was just 1% of the applicants but, owing to the nature of the payments, the source of many complaints. Moreover, the advance payments received by a further 460,000 people were either too low or too high. The Court of Audit has qualified these payments as irregular.

The ICT system introduced for housing and care benefits was designed and built between the end of 2003 and mid-2007. At the end of 2003 the Tax and Customs Administration had estimated the cost of the ICT project for housing and care benefits at €38 million. The project's actual cost, however, was more than double the budget: €78 million as at the end of 2006. The greater part of the system was delivered at the end of 2005. In July 2007 the Administration decided to replace the system as of 1 January 2009. The system was too unstable and the cost of making it more robust was prohibitively high.

Conclusions

The majority of the six million people who applied for housing and/or care benefits in 2006 received their first advanced payments on time. This was achieved, however, at significant social cost: about 11,000 complaints and an ICT system that cost twice as much as budgeted. In addition, the ICT system, according to the Tax and Customs Administration, was so unstable that within 18 months of taking it into operation the Administration decided to replace it. The main reasons for this were that the technical complexity was underestimated, the time pressure was too great and the approach taken by the project organisation was inappropriate.

In part I of an audit that we carried out at the request of the House of Representatives, Lessons learned from Government ICT Projects, which we published on 28 November 2007, [link] we concluded that ICT projects often become too complex because of a combination of political, organisational and technical factors. In practice, the ICT project for housing and care benefits also proved to be more complex than foreseen. The Tax and Customs Administration accepted the challenge of designing and building within two years an ICT system that would be able to process six million applications in a matter of weeks. The Administration, however, did not have sufficient staff capacity to carry out such complex projects because it was already implementing two other major ICT projects. The time available was also limited.

Owing to the political pressure to deliver the system on time, the Administration could not afford any delays: the government wanted to take the new benefit system into operation in January 2006. The time pressure led to inefficient working methods, with work on one phase being started before that on the previous phase had been completed. Such an approach increases the risk of mistakes. The work was also carried out by large teams, which led to problems of coordination. The turnover of project leaders was also high and cooperation between the client and the contractor was less than optimal.

The system also proved to be technically more complex than foreseen. A large number of exceptions, for example, had to be built in for the housing benefits. The large number of changes typical of benefit applications also proved to be problematic. Changes, such as a change of address or the death of an applicant, often have to be processed with retroactive effect because they have a direct impact on the amount of the monthly benefit. This proved to be more difficult than thought, particularly when several changes overlapped.

The Administration's design included several contingency scenarios in case the ICT system for housing and care benefits did not operate properly. One of these 'fallback' scenarios had to be implemented in December 2005 in order to pay 940,000 advance payments on time. The drawback of having fallback scenarios, however, is that they increase the complexity and instability of the system.

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Recommendations

We recommend that the State Secretary of Finance divide projects into phases and allow sufficient time in each phase for an assessment to be made of the project's feasibility. Any changes in the planning and budget should also be assessed by an independent body and the go/no go decision reported to the House of Representatives. We further recommend that in future ICT projects the state secretary better match the size of the team to the complexity of the project and have the project managers report directly to senior management.

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Response of the state secretary

The state secretary accepts our conclusions and recommendations. He notes, though, that a formal reconsideration of housing benefits did not take place in 2005 but senior decision makers (political and administrative) were convinced that the system had to be introduced correctly.

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