Report 25: 2018-19

PathWest Laboratory Information System Replacement Project

Audit finding – Early project management was ineffective, but has improved since the DoH’s review

There were major issues with the initial oversight and management of the LIS project. The timelines and budgets were also overly optimistic. Together, these directly affected the time and cost of the project. An intervention by the DoH in 2018 ‘reset’ the project, and put more realistic and appropriate structures in place. The project is now better placed to be completed by mid-2020. 

The early project   

The original project management of the LIS project did not reflect the size, risks and importance of the project. Although the internal project structures were reasonable, the way they were implemented limited their effectiveness. This limited the accountability and transparency of the project.

The initial PathWest management structure (Figure 1) established a hierarchy of groups and reporting lines that reflect good practice:

  • The Project Working Group would receive information from various Module Implementation Groups, which oversaw the completion of specific parts of the LIS.
  • The Project Working Group reported to the PathWest LIS Project Executive (Project Executive) responsible for general management of the project.
  • The Project Executive reported to the LIS Project Board, and the Chief Executive of PathWest.

Figure 1: Original LIS project governance                                                       Source: PathWest

While the project structure was reasonable, there were critical failings in oversight, and project management: 

  • There was insufficient oversight and representation from the NMHS management as the accountable authority until July 2018. In particular, the LIS project did not report formally through existing NMHS governance structures. Nor was the NMHS formally represented on the Project Board or Project Executive. Although the head of PathWest met routinely with the head of the NMHS, there was no formal reporting on project progress, beyond contract expenditure.
  • There was insufficient segregation of duties between the various project bodies. Four of the 5 members of the Project Executive were also on the Project Board, and 3 of the 5 were also on the Peak Authority, which was meant to assess scope issues. This weakened oversight, reporting and accountability.
  • The project leaders and governance team lacked ICT project experience. These teams had senior financial staff and people who understood WA health’s pathology needs. However, none of the key people had significant experience in delivering complex ICT projects.

There were also problems in project planning:

  • There was not enough detail of the work required to complete the many modules in the new LIS. This reduced PathWest’s view of progress of the project as a whole, and of the individual project modules.
  • The plan did not include a consolidated project schedule, detailed project plans or critical path timelines to allow key stakeholders to measure and track project progress.

The 2018 financial review and ‘reset’

In January 2018, the DoH and the NMHS agreed to defer the go live date until September 2018. In June, when the project sponsor sought another extension, the Acting Chief Executive and the NMHS Board Chair raised concerns with the DoH, which were then raised in the Department’s ICT Executive Board. This led to significant reviews and then major changes in project management and the budgeting processes. These have set the project on a better footing.

The DoH brought in external expertise to conduct 2 reviews of the LIS project in June 2018. One was a detailed financial analysis of the project. The other analysed project management against best practice.

The financial review looked at the resources used and costs incurred on the project from 1 July 2014 to 31 July 2018. It also tried to estimate the total cost to complete the project. Finally, it recommended improvements in project budgeting, financial management, accounting and reporting systems.

The financial review found serious issues with PathWest’s financial management of the project. These meant it could not produce an accurate picture of the financial position. Their best estimate was that project spend at 21 August 2018 was $17.2 million, including vendor costs of $9.8 million and PathWest staff costs of $4.7 million (Table 1).

The main reasons for the inability to track costs were vague budgeting, poor recording of project related activities performed by staff and the lack of a consistent and well-documented monthly review process. Our work confirmed that the reviewers could not track the cost of PathWest staff working on the project. Rather, they had to estimate cost based on a survey and interviews with operational divisions. Together, these formed the basis for the $17.2 million estimate.

The 2018 project management review and ‘reset’

The other review analysed project management against good practice. It found that PathWest’s management of the LIS project failed to meet good practice. The reviews made 26 recommendations detailing how to address these deficiencies and produce better management and more accurate reporting.

Following the reviews, the DoH and PathWest began to revise project management. It took until early 2019 to finalise the changes, which is reasonable given that the project did not stop during the ‘reset’.

Following the changes, the project framework and the management information it provides now meet good practice. The key improvements are:

    • There is a much stronger project framework with appropriate representation (Figure 2).
    • In late 2018 an experienced ICT project director and project manager were engaged to run the project.
    • There are now detailed progress flows for the many processes involved in completing the 6,000-plus processes in the pathology system. However, the team has not yet mapped all the processes from beginning to end, so some risks remain.
    • Project reporting is now much more rigorous and comprehensive. It includes work updates, financial status, risk assessment, contract management and progress against implementation of the earlier reviews. This information is presented monthly to the Project Board. This Board was established in late 2018, is chaired by the PathWest Chief Executive and includes the project director, project manager and contracted external ICT project consultants.

Figure 2: Current LIS project governance                                                       Source: PathWest

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