University of Queensland: Critical Analysis of HIP Project Failure

This report provides a critical analysis of the Home Insulation Program (HIP), focusing on its failure to meet objectives. The report examines the project's background, including its goals of improving energy efficiency and creating jobs during the global financial crisis. It details the major reasons for the program's failure, such as issues in program governance, design, and administration, as identified by an examination. The analysis delves into the control systems applied, the reasons for cost and time overruns, and the extent to which the project execution team could be held responsible. Furthermore, it explores the relationship between identified problems and stakeholder needs, including the shift in rebate payment methods and the resulting increase in risks. The report also evaluates project management actions that could have been taken to mitigate these issues, such as the establishment of an Energy Efficiency Taskforce. Finally, the report offers recommendations based on the analysis, emphasizing the importance of risk analysis and sound project management practices. The report references key literature on risk management and project control.

Introduction
• Australia had been facing various impacts of the global
financial crisis
• Crisis had resulted in a period of worldwide economic
downturn.
• Objective was to improve the energy efficiency of 2.7
million Australian homes and reduce greenhouse gas
emissions (Aven and Renn 2010)
• Installing insulation at homes was considered the most
cost‐effective opportunity for improving residential energy
efficiency.

Reasons for failure of HIP
• Examination was undertaken by Dr. Alan Hawke and was
completed on 6th April 2010.
• Identified problems in program governance, program design
and administration, risk management, audit and compliance
mechanisms and capacity issues.
• There have been cases of potential fraud identified
• there were a number of contributing factors that impacted on
the successful implementation of Phase 2 of the program

HIP control systems
• The Government has committed to industry assistance
programs expected to total approximately $56 million
• HIP’s budget would be used for activities undertaken post‐
closure of the program (Tah and Carr 2001)
• The design of Phase 2 was strongly influenced by the clear
riding instruction from the Commonwealth Coordinator‐
General

HIP control systems
• Under Phase 2, some 1.16 million payments were made
through the program
• The cost incurred was around $1.45 billion
• Five year rollout was preferred
• Division responsible for implementing HIP was already
seriously stretched in terms of its capacity to deliver
existing programs
• Five year rollout was not accepted by the Government

Relationship of the problems and
stakeholder needs
• Difference between the two phases of HIP is that under Phase 1,
the rebate was paid to householders
• Under Phase 2 rebate was paid directly to installers
(Roumboutsos and Anagnostopoulos 2008)
• risks facing the department increased because there was no
limit to the number of claims that an installer could submit

Relationship of the problems and
stakeholder needs
• Importance of controls is increased to assure the quality
and quantity of installations claimed
• Installer registration process had failed in providing a
satisfactory level of assurance
• Department had anticipated that householders would
check the quality of the installation work

Project management mitigation
measures
• It is challenging for agencies for rolling out a program to
balance the discipline of sound project management
practices with urgent operational demands
• Inaccuracies of project delivery team advice to the then
Minister led to an administrative review to improve
reporting

Project management mitigation
measures
• Review had found that deficiencies in data provided to
minister was due in the part to uncertainties that are
created by demand-driven nature of that particular
program.
• Establishment of an Energy Efficiency Taskforce with a
project management and resourcing focus was necessary
(Erkoyuncu, Roy and Shehab 2011).
• The role of the Taskforce is to bring together other
programs that are demand‐driven and are administered by
DEWHA

Conclusion
• Comparisons with other insulation programs
internationally and in Australia are also instructive.
• Early introduction of an approved product list; requiring
installers to complete mandatory training and
implementation of a sound compliance and audit program
• Programme was a political failure in two, more important,
respects

Recommendations
• Risk analysis was not carried out hence the tragic failure
of the project
• Risk analysis is a vital aspect of any investment as it
provides the stakeholders with the accurate data and
information of the endeavor they are investing in
• Risk assessment for any project should be carried out to
determine the ability of the project to overcome the risks
associated with it and come up with a framework on how
to handle them

References
• Aven, T. and Renn, O., 2010. Risk management. In Risk Management and
Governance (pp. 121-158). Springer, Berlin, Heidelberg.
• Tah, J.H.M. and Carr, V., 2001. Knowledge-based approach to construction project
risk management. Journal of computing in civil engineering, 15(3), pp.170-177.
• Roumboutsos, A. and Anagnostopoulos, K.P., 2008. Public–private partnership
projects in Greece: risk ranking and preferred risk allocation. Construction
Management and Economics, 26(7), pp.751-763.
• Erkoyuncu, J.A., Roy, R., Shehab, E. and Cheruvu, K., 2011. Understanding service
uncertainties in industrial product–service system cost estimation. The International
Journal of Advanced Manufacturing Technology, 52(9-12), pp.1223-1238.