The Auditor General has delivered a highly critical assessment of the state government's shared services project, which has experienced major cost blow-outs and failed to lift the efficiency of back-office services.Auditor General Colin Murphy said the project was two years late and its viability was under serious threat.It was originally projected to cost $91 million yet the government has allocated $198 million to 2008-09 and individual agencies are incurring further unspecified costs.Mr Murphy found that, from the outset, the WA model for shared services was optimistic and the implementation plans ambitious for the size and complexity of such a project, which involved using untried software and a 'big bang' implementation approach.He added that the governance arrangements were inadequate to oversee such a high-risk project, resulting in blurred lines of responsibility and what was essentially 'management by committee'.The report focuses on the role of government agencies but does not comment on the performance of contractors.Deloitte's consulting arm was the main adviser to the government in the lead-up to the project and is understood to be still advising the government. A spokesman for Deloitte said the firm could not comment on client projects.The main contractors on the troubled implementation of the project are Oracle Corporation and listed Perth company ASG Group Ltd.The Auditor General said about 5,000 people currently provide corporate services, such as finance, procurement and payroll services, to the state government at a cost of $315 million annually.Centralising all of these services into three specialist agencies and using an integrated processing system was meant to achieve savings of $55 million per year.The government committed to this reform project in December 2003 and said agencies would start using the integrated system in July 2005.That was subsequently revised to March 2007 but, as at 1 May 2007, the integrated system had still not been delivered.Mr Murphy said there were multiple reasons for the implementation problems, including weaknesses in project management, the increasingly complex software development requirements and high turnover of key contractor staff and skill shortages. Despite this, he believes the project may still be successful. "The potential for realising long-term benefits from the shared services reform is still feasible, but there are risks to be managed and significant challenges yet to be addressed - it will not be easy," he said in the report.Treasurer Eric Ripper acknowledged that the size of the project and the work needed to implement it were underestimated, but added that the Office of Shared Services was confident of implementing the shared finance, human resource and payroll services.Mr Ripper said the $198 million cost of the project "will be money well spent when you look at the savings that will be realised in the long term"."Similar projects in both the public and private sectors around the world have already shown that shared services deliver significant benefits in terms of cost and efficiency," Mr Ripper said.Shadow Treasurer Troy Buswell said the report sheeted home responsibility to the state government."Alarmingly the Auditor General said that while $200 million was the amount he could track, the processes were so poor he had no idea how much was being spent within individual government agencies as part of the project," Mr Buswell said."This is a damning report that has outlined yet another case of appalling management by the State Government."
© Business News 2018. You may share content using the tools provided but do not copy and redistribute.