Queensland Health Payroll Project Failure: A Case Study in Management

This case study examines the failure of the Queensland Health payroll system project, initially budgeted at AU$6.9 million but escalating to AU$836 million. The project, contracted to IBM Australia, suffered from inaccurate scope calculations, lack of project management governance, and inadequate communication between Queensland Health and IBM. The analysis identifies key factors contributing to the failure, including the complex scope involving numerous stakeholders, poor governance due to bureaucratic controls, and IBM Australia's lack of experience in handling large-scale projects. The absence of stringent control systems in cost, schedule, and quality further exacerbated the issues, leading to significant cost and time overruns. The case highlights the importance of strong governance, clear communication, and experienced project management in ensuring project success. Desklib provides students access to similar case studies and resources.

Running head: PROJECT MANAGEMENT
Project Management
Name of the student
Name of the university
Author Note:

2
PROJECT MANAGEMENT
Table of Contents
Introduction:....................................................................................................................................3
Major reasons for the failure of the project:....................................................................................4
Inaccurate scope and calculations of the projects:...........................................................................4
Lack of project management governance:.......................................................................................5
Lack of leadership and experience of IBM Australia:.....................................................................5
Lack of communication between principle and agent:....................................................................5
Analysis of the project execution team must be responsible...........................................................8
Project management actions that can be taken to control problems................................................9
Project management actions that can be taken to better control the project and stakeholders......11
Conclusion.....................................................................................................................................12
References......................................................................................................................................15

3
PROJECT MANAGEMENT
Introduction:
Government bodies often undertake projects to bring about improvements in their
internal operations. The government bodies enter into contracts with multinational companies to
execute projects. Multinational companies often perceive government backing to projects as a
security of efficient execution. However, more often than not, government projects fail due to
several internal issues. Government bodies often fail to collaborate with the project management
companies due to internal bureaucracy and complex decision making processes. These factors
lead to poor communication between the two parties involved in the projects namely, the
government body concerned, hereby referred to as the principle or client and the multinational
company(s) executing the projects hereby referred to the project Management Company or
contractor. Project failures result in conflicting interests of the two parties which often lead to the
court room. The aim of paper is to explore the factors which are responsible for project failures.
The case study taken into account to conduct the research would be the Queensland Health
Payroll debacle which led to failure of the Queensland Health, Queensland Government,
Australia to develop an effective payroll system for its employees to replace the then existing
payroll system (Streamline.health.qld.gov.au., 2019). The project management company
Queensland Health hired to execute the project was none other than IBM Australia, the
Australian arm of global American information and communication company, IBM. The initial
budget allocated by the government body towards the project was AU$ 6.9 million and the
deadline of the project was July 2008. However, due to lack of communication and complex
derivable items, the project expanded into 2018 with the budgeting soaring to AU$ 836 million.
The Queensland health filed a case against IBM Australia charging the latter for
misrepresentation of capabilities of executing AU$ 6 million. IBM on its side lodged

4
PROJECT MANAGEMENT
counterclaim which mentioned that the Queensland Health released it charges as early in 2010.
The Brisbane Supreme Court dismissed the claim of the government body and ordered to it to
pay IBM a compensation of an undisclosed amount to compensate the losses the company
suffered due to project failure (Smh.com.au, 2016). The information of the research would be
obtained upon analysis of the several secondary sources like books, online sources and
newspaper articles.
Major reasons for the failure of the project:
The Queensland Health in order to procure a modern payroll system hired IBM was the
project management company to execute the coveted modernization of payroll systems. The
estimated deadline of the project was 2008 and the cost of the project AU$ 6.9 million. However,
the project due to governance flaws right in the base level fell through. The failure of the project
caused problems to several stakeholders like customers and employees. The issue caused failure
of the project and tarnished the goodwill of the government of Queensland. In fact the
government body filed case against the company but lost. However, it also tarnished the image
of IBM Australia. An analysis of the case brought various factors which were responsible for
failure of the coveted payroll system project launched by the Queensland Health:
Inaccurate scope and calculations of the projects:
The Queensland Health failed to manage the scope and the calculations efficiently which
hindered efficient execution of the project. The scope of the project involved alignments of over
24000 wage payment systems and arrears of over 80000 workers. The scope of the project also
included 13 contractors and immense numbers of industrial contracts (Theaustralian.com.au,
2013). The contractors included IT giants like Accenture and SAP. This involvement of immense
number of parties prevented IBM, the main contractor to take decisions regarding the execution

5
PROJECT MANAGEMENT
of the projects dynamically. The company was not able to make accurate calculations owing to
the involvement of the large number of stakeholders. Thus, it can be inferred from the discussion
that the complex scope and calculations of the project prevented IBM from planning the project
efficiently which ultimately led to the failure of the project. The inaccuracy in the scope and
measurement resulted in faulty execution of the large scale project. It can be pointed out that the
payroll project was a large scale project containing several components related and dependent on
each other. Thus, failure in component led to failure in the other components as well.
Lack of project management governance:
The Queensland Health exhibited lack of project management governance right at the
inception stage. First of all, the Government of Queensland prior to awarding IBM, spent an
immense amount of funds to procure a standard SAP based HR and financial accounting system.
The Queensland Treasury then spent an immense number of contractors including IBM,
Accenture and Logica. This lack of structured project governance did not profit the government
which ultimately led to the awarding to the project to IBM. Thus, it is evident from the
discussion that lack of project management governance led to failure of the project. It can be
pointed out that strict bureaucratic control of Queensland Health and Queensland Government
resulted in hindrance in the communication process. The departments of the government body
did not communicate information related to the project among themselves. This resulted in poor
governance of the project. It can also be pointed that the state government did not communicated
the information about the project effectively with the central government and was not able to
gain the required support. This in turn was also responsible for the failure of the project.

6
PROJECT MANAGEMENT
Lack of leadership and experience of IBM Australia:
The third factor which led to the failure of the project was lack of experience and
leadership of IBM Australia. IBM Australia, in spite of being the Australian arm of the global IT
giant IBM, was not experienced enough to execute a task of such a huge level. The company
submitted an incomplete scope of work, the state agency which was managing the project of the
Queensland Health, which the latter accepted. There have also been records of malfunctioning of
the IBM systems in Australian Bureau of Statistics and Australian Taxation Office (Ludlow,
2016). Lack of leadership and experience leads to failure of projects due to inaccurate
estimations and calculations (Nguyen et al., 2015). Thus, it can be inferred that lack of leadership
and experience in IBM Australia in undertaking projects worth millions of AU$ led to the failure
of the Queensland Health payroll system project.
Lack of communication between principle and agent:
Sirisomboonsuk et al. (2018) mention that proper and continuous communication
between the principle and the agent is important for efficient management of the projects. The
continuous communication between the two parties enables efficient control over the steps of
commencement of the project as well as control over the mobilization of resources of towards
the different activities. Elbaz and Spang (2018) in their work titled, ‘A objectified public
administration how projects in Swedish local governments become instruments for political
and managerial concerns. ‘Point out in this respect that appropriate mapping of the steps enable
the efficient execution of the steps. Fred and Hall (2017) mention that the projects undertaken by
governments are subject to extreme bureaucracy. This result in concern due to impeding smooth
decision making process. However, the case study under consideration actually presents a totally
opposite portrait. The Queensland Health did not maintain strong communication with the

7
PROJECT MANAGEMENT
project management company namely, IBM Australia. The bureaucracy prevailing in the upper
stratum of the ministry hindered prompt decision making. This lose control of the government to
certain extent encouraged IBM to submit incomplete scope and cost estimations. These improper
detailing ultimately led to crashing the entire project leading of cost and time overrun. It can be
pointed out that the management of Queensland Health did not maintain proper communication
with the project management company namely, IBM Australia. This lack of communication
created a perception of loose control among the employees of IBM involved in the project. They
took undue advantage of the situation to deliver poor performances which ultimately led
formation of a faulty payment system. It can be pointed out this conduct of IBM Australia was
unethical.
Control Systems: Explanation of the reasons behind costs, schedule and quality
Successful execution of projects calls for a wide range of control systems in terms of
costs, schedule, scope and quality. Heravi, Coffey and Trigunarsyah (2015) mention in this
respect that the scope of organization wide systems take into account the entire human resources
management strategies and organizations employed by organizations in question. For example,
the project of payroll advancement of Queensland Health took into account the payment systems
of the all the employees and contractors employed by the government body. It has already been
pointed out that the Queensland Health employed as many as 80000 employees and over 13
contractors at the time of formation of the payroll system (Theaustralian.com.au, 2013). Thus, it
can be pointed out from the analysis that the body required a payroll system expansive enough to
meet the requirements of this immense numbers of stakeholders. Niazi et al. (2016) point out in
this respect that the procurement of this large scale of project requires allocation of immense
amount of funds and detailed scheduling of the different activities and sub-activities of the

8
PROJECT MANAGEMENT
project. Joslin & Müller (2015) strengthen the opinion of the previous authors by pointing out
that large scale projects require stringent control and monitoring by the principle or the client to
superior quality of the final project delivered. It can be pointed out in this respect that as far as
the Queensland Health Payroll project is concerned, none of the above areas were met. The client
namely, Queensland Health at first tried to procure a standard payroll service by involving
multiple contractors which to the draining of funds without any positive outcome (Samset &
Volden, 2016). The government body ultimately awarded the project to IBM Australia which
lacked the experience to carry out projects of such large scale. The company delivered
incomplete scope of works to the company which represented the Queensland Government
which it accepted. Bureaucracy and sloth communication process which prevailed in the
government hindered decision making and monitoring of the different stages of the project. This
ultimately led to increase time and cost overrun (Badewi, 2016). Thus, it can be established on
the basis of analysis of the articles in the light of the Queensland Health payroll project that the
use of control systems in areas of cost and quality contribute towards success of projects.
Analysis of the reasons behind Cost and Time Overruns
An analysis of the Queensland Health payroll project brings into light several reasons for
cost and time overrun. The first reason responsible for the overrun was lack of governance on
the side of the Queensland Government. Chen et al. (2018) mention in the article named,
‘Procurement and governance choices for collaborative infrastructure projects’, that the
strict governance of principle is required to ensure execution of projects within the time and cost
limits within minimum overrun. However, the government body did not maintain strong
governance over the project. The body initially aimed to procure the payroll system by
employing several contractors including Accenture and SAP which eroded the budget allocated

9
PROJECT MANAGEMENT
for the purpose. Then the government body employed IBM to modernize the payroll system.
This analysis uncovers the second factor responsible for the cost and time overrun, lack of a
planned project management approach. The third factor responsible for the faulty execution of
the project was that the government body suffered from bureaucracy at the apex level which
hindered smooth decision making. The fourth factor which was responsible for the cost and time
overrun was selection of inappropriate contractor to execute the project. The government body
awarded the project to IBM which lacked the experience of handling large scale projects. Thus,
in short it can be pointed out that the faulty selection of contractor and lack of governance of the
government body were responsible for the time and costs overrun.
Analysis of the project execution team must be responsible
The IT disasters have nowadays become a part of the modern day and there have been
major examples where IT disasters have taken toll of a proper and smooth business running to
convert into a problematic affair for the organization, Market analysts points out to a number of
different reasons behind the failure of different kinds of the projects in a certain manner. The
analysts often point to insufficient resources, poor methods of communication along with the
different kinds of the misaligned business goals. These problems combine altogether to cause
different kinds of problems to the execution of the project. However when the project fails,
because of all these different types of the concerns, the high level of disappointment among the
stakeholders of the particular project is often overwhelmed by the excessive economic cost of the
debacle.
The Queensland Payroll system is a critical IT system and therefore the IT team
appointed to complete the project was highly responsible for the failure. The reports that
investigated the total failure of the project identified that a number of crucial testing phases were

10
PROJECT MANAGEMENT
completely missed by the project. Apart from this the project management team which had IT
experts in it failed to identify a number of problem in the implementation of the project. The
improper arrangement of the systems, processes and the infrastructure is believed to be another
major issue behind the failure of the business organization. The different kinds of the reports also
identified the different types of the organizational faults that led to the fiasco. The huge
complexity of the project has been one of the most important reasons behind the failure of the
organization. The major complexity of the project was the involvement of 24,000 different
combinations of the wage payments and the withholdings of over 80,000 different kinds of the
workers and sub-contractors including the likes of the 13 contractors as well as the multiple
industrial agreements. The major terms of the business includes the likes of the
Project management actions that can be taken to control problems
There are a number of different areas that separates the goods, the great and the project
managers. The project managers are separated by the process of how they handle the different
kinds of the problems when they arise and they prevent them from derailing the deadlines of the
budget. There are different kinds of the problems and the ways to mitigate them. Some of the
problems and the processes to mitigate them are provided below. They are as follows;
a. Team Members do not know their responsibilities and not owning to be part of the
project: The team members selected by IBM for the Queensland Payroll project were
mostly unaware of their particular role in the project and went on with a improper
schedule. The management of IBM in charge of the project also failed to provide a fixed
routine or schedule to the project team. Therefore it is suggested that the decision making
structure must be proactive in nature as the stakeholders and the employees of the project
must be kept updated and informed about their roles and the progress of the project in a

11
PROJECT MANAGEMENT
regular manner. The presence of a good project manager is thus utmost important for the
business as because a good project manager is the one who can change the course of the
project and lead the project in the right way. The project manager must deal with the
team members being pulled in the multiple directions. The pulling of the people in
multiple directions must be stopped by the project manager and all the people must be
integrated in a single chain that can be beneficial for the success of the business
organization. The rework of the project schedule and the implementation of the impact
assessment can be beneficial for the change in the project execution and results.
b. The meeting of the deadlines is highly important for the project. The proper scheduling
and the deadline meeting is important for the organization to ensure business success.
Deadline meeting can also help the project to manage the milestones in the project
(Dunleavy & Evans, 2019). The project can thus be successful in nature. In this particular
case also the presence of a good and efficient project manager can make the ultimate
difference. The presence of a good project manager can ensure a better success in the new
payroll system. It is important to sit down with both the management team and project
management team every time a new feature is added to scope.
c. The absence of proper awareness about the presence of a possible problem can be highly
problematic for the business organization. The absence of a proper awareness can lead to
the failure of the project. Both the management of the system and the project
management team has to stay aware of the different perspectives and updates in regards
with the new project to change the payroll system and implement a new and better
system.

12
PROJECT MANAGEMENT
Project management actions that can be taken to better control the project and
stakeholders
The stakeholders are considered to be the most important part of the project management
system. Each and every decision that is to be taken by the project management and the manager
of the project must be approved by the business organization in order to ensure the success of the
business in a proper and efficient manner. The project stakeholders and the actions that can be
taken are as follows;
a. Queensland Health as customer which had the following subgroups. QHIC (Queensland
Health Implementation of continuity. The project team with the responsibility for the
management of the different kinds of the project. The management of the project forms
an important part of the total process as because the management of the project leads to
the success of the business in a proper and efficient manner (Paterno, & Zhao, 2018). The
proper management of the project will help the business organization to manage the
project in a systematic and successful manner. The management of the project will be
mostly dependent on the use of the different kinds of the steps to be taken to control the
project. This includes the likes of the selection of the different kinds of the people to be
involved in the project, the selection of the manager of the project, the selection of the
budget of the project, scheduling of the project, the allocation of the tasks and the other
necessary details needed to fulfill the different kinds of the necessities needed to
complete the project in a successful manner.
b. The project team QHEST are also considered to be the stakeholders in the following
project as the project management, functional support as well as the business support like
HR and finance support will be provided by the business organization.