For the umpteenth time in the last year (it seems) I heard yet another story this morning about how appalling it is that government can’t seem to manage big contracts, particularly (but not exclusively) big IT contracts.
This time, it was sparked by a government announcement that in future, IT contracts would have maximum spend limits, time limits, limits to contract extension and various anti-monopoly provisions “after failures which have cost the taxpayer billions”, as Radio 4 put it today.
This continues a long pattern of criticism of government for such failures, and the implicit and explicit lauding of the private sector for being so much better at handling such stuff. A common pattern is to criticise the government partners while completely ignoring the role that the private sector contractors played: here for example. The solution to these problems is always ‘outsource’ even though, of course, the problem cases are always to do with outsourcing large contracts in the first place.
The story comes hot on the heels of widely-reported research into government project failures from two Grand Poobahs of British political science, Anthony King and Ivor Crewe, called The Blunders of Our Governments.
It would be easy to draw a simple conclusion from all this: government couldn’t organise a piss-up in a brewery, so hand everything to the private sector. Competitive pressures keep them hungry, high quality and delivering 9 times out of 10. Privatise, outsource, get the state’s incompetent hands off service delivery.
But hang on a second. Check out this report from KPMG in 2002 which says that a staggering 56 percent — yes, you read that correctly — of publicly listed firms had had to write off AT LEAST one IT project in the previous year for precisely the same reasons that the critics beat government with: poor project management, poor procurement expertise, inadequate fit with strategy, inadequate oversight, over-promising and under-delivering, and all the other project failure criteria nicely set out in a blog piece from Simon Buehring.
That fits very well with my own experience as a communications specialist on big IT projects, prior to my academic career. I have worked for some big, private sector bureaucracies and some light on their feet SMEs, and they too have their IT successes and their monumental failures.
So why do we hear so much about government failures and not about private sector ones? I have one word for you: accountability.
Public organisations are taxpayer funded and are accountable to taxpayers via government agencies and freedom of information laws. They are scrutinsed by the Audit Office, the Commons Public Accounts Committee, investigative journalists, think tanks, interest groups, unions, regulatory agencies, UN rapporteurs, Great Uncle Horace with too much time on his hands, you name it.
Publicly listed companies are allegedly accountable to their boards who represent the interests of shareholders. In practice, Boards and senior management do nothing to damage the reputation of their firm. If a supplier screws up, they hush up, in order to protect themselves from criticism for hiring screw-ups in the first place. Corporate conferences and publications and spout endless case studies declaring how Acme Corporation innovated, reengineered and transformed their business models to the delight of customers, their customers’ customers, and their customers’ customers’ customers, yea unto the seventh generation. Their mistakes they try to keep very, very quiet, hidden behind confidentiality clauses and the basic understanding that if I diss you, you’ll diss me. And there is little in the way of accountability regimes to force them to do otherwise, shareholder activism notwithstanding.
We might wonder whether government agencies have the necessary skills to manage such projects; but we should ask the same question of private sector firms. The fact that we generally don’t is related to the fact that its government which faces the bright lights of publicity, the private sector which can hide behind ‘commercial sensitivity’.
How about this as an alternative? If you provide a public service, you face public scrutiny. Then we might become a little less ready to believe the bollocks line that the private sector is the bastion of competence, the public sector the bastion of Homer Simpson on a bad day.
As for King and Crewe’s Blunders book, they might be right but they have fed the myth. Well done, thanks for nothing.
There is an interesting literature on the seductive, sexy appeal of megaprojects, and the reasons why they almost always fail to hit any of their targets. For an excellent primer, check out Bent Flyvberg‘s 2003 book, Megaprojects and Risk.