Conclusions and Recommendations | Managing Risks and Issues

The review concluded that there had been substantial difficulties with the e-HR project and the factors which primarily accounted for these were identified as matters of governance, leadership, changes to specification and timetable, project planning and management consideration of risk in relation to cost, working relationships, communication and the performance of the contractor. Some of the difficulties could have been avoided if SE's established procedures and protocols for project management had been properly followed, but it seems the key action from which it was impossible to recover was the attempt to change the scope of the project so that it was better aligned to the HR transformation programme whilst simultaneously shortening the timescale for completion to May 2006. And all this without having undertaken full consideration of the associated risks and dependencies, rigorous project planning, meaningful and considered input from the Programme Board and without having the necessary building blocks in place to deliver related workstreams.

The recommendations were numerous and resonate with the good practice advice and guidance provided. An abbreviated list is set out below:

• Sound and clear governance arrangements need to be put in place, defining roles, responsibilities, accountabilities and authorities of staff at different levels, including 'agency contractors'.
• For any future e-HR procurement Scottish Procurement Division should be represented on the Project Board.
• The SE Centre of Excellence should issue advice and guidance about the composition of Programme and Project Boards and the roles of members, including the responsibilities of any 'non-Executive' members of such Boards.
• Absolute clarity must be achieved about what should now be included within the e-HR element and the HR transformation element. It would be sensible to undertake thorough site visits (to encompass the HR professional users, corporate users of management information, IT command and self-service users) in organisations with similar size, staffing structures, user requirements and culture to the SE before concluding what needs to be in the final scope cost and timing.
• The e-HR and HR Transformation Business case should be revisited in light of the current position on implementing HR transformation and after further consideration of the desired scope of any e-HR software solutions.
• Advice on best practice for establishing and maintaining effective joint teams of SE staff, agency contractors and suppliers should be drawn up for those involved in substantial projects such as this one.
• Communication and training strategies and detailed plans need to be worked up, and to maximise the chances of successfully impressing staff in the line the Programme Board will need to give a heavy emphasis to championing, with Departmental Management Boards and staff, the benefits of the new arrangements.
• The SE Centre of Expertise should consider whether to establish a more formal mechanism for drawing Accountable Officer attention to 'red' ratings in Gateway reviews.

In the light of the review and its recommendations, appropriate actions were taken to put the programme back on track.

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Case Study 2: The Metropolitan Police Service (MPS)

This case study illustrates how the Metropolitan Police Service (MPS) is managing a large, complex HR transformation and provides a more detailed insight into the governance arrangements that surround this £42 million programme.

The MPS is the largest of the police services that operate in greater London (the others include the City of London Police and the British Transport Police). It employs 32,000 officers, 14,000 police staff, 300 traffic wardens and 4,500 Police Community Support Officers as well as being supported by over 2,500 volunteer police officers in the Metropolitan Special Constabulary and its Employer Supported Policing programme. The Metropolitan Police Services covers an area of 620 square miles and a population of 7.2 million.

In 2006 the MPS embarked on a major HR transformation programme, as part of a wider Met Modernisation Programme (MMP) in order to:

• Further improve HR service delivery levels
• Streamline, and where possible, automate standard transactional and informational activities (self service)
• Provide quicker and more consistent HR support to Line Managers
• Remove duplication and bureaucracy and provide the benefits of economies of scale
• Move HR service delivery from being largely reactive to being strategic, pro active and aware of operational needs allowing for greater operational flexibility.

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Martin Tiplady, the Director of HR at the MPS, recalls the rationale and origins of the programme:

We were characterised largely as an administrative processing and rather bureaucratic HR service and it was apparent that we had to do something about that in order to add greater value to the organisation. We also responded to Gershon's review of the effectiveness and efficiency of back-room services and basically we concluded that there were much cheaper ways of doing it.

I also recognised that unless we responded proactively then somebody from Her Majesty's Government might have come in to tell us how we should it. As it is, we are forecasting a saving of around £15 million per year, once the full effects of the transformation have come into force.

But this is simply the foundation layer that enables a different class of HR to emerge, which is about HR doing more of being in the driving seat in the business, securing better outcomes and customer focus; working with our managers to make then better leaders, better managers and easier ways of achieving more objectives and targets than anything else, that's the value added HR, which is what I'm used to and where I think we ought to be. Perhaps putting it another way, we should be more highly regarded for our input into the resourcing strategy for the 2012 Olympics than for our ability to design a new sickness form.

An Overview of the State of the Project | Managing Risks and Issues

SE contracted with Fujitsu Services Ltd on 5 September 2005 to provide an e-HR system, using Oracle software providing 'best practice' solutions for better delivery of HR reporting responsibilities, including data integration and some self-service functionality. Within days of signing the contract SE sought, and Fujitsu agreed, a variation to the contract which changed the deliverables and brought forward the date of 'rollout' from November 2006 to May 2006. By December 2005 the risk status of the project delivering on time and budget was deemed 'Amber', by January 2006 it was assessed as 'Red'; in February the project moved into 'recovery' status. In May 2006, the project had been 'paused' pending consideration of this review: the outputs specified in the contract have not been delivered; however, a series of 82 HR business process maps had been produced, capable of configuration into e-HR software with minimum customisation. By June 2006 costs amounting to some £4.6 million of the originally approval £8.5 million (including moving to a new payroll provider) had been incurred.

A separately constituted HR transformation project, embracing major structural changes to HR — the establishment of Business Partners, the launch of a single entry point for the new HR Shared Service Centre and co-location of dispersed HR teams into one new location — was consequentially destabilised by the disruption in the e-HR project because the new HR operating model was not underpinned by the planned self-service facility for line managers or the improved level of management information that had been envisaged.

It was concluded that a 'number of individual factors combined over an extended period and in particular during the last 4 months of 2005 serve to explain the failure of the e-HR project to deliver on time'.

Governance

Governance arrangements fell short of best practice. Concerns were expressed on several occasions by external and Gateway reviewers and by the non-executive Programme Board members. These voices called for clarity and precision in the roles, responsibilities and accountabilities of key personnel. While governance was discussed frequently by all parties, proper, practical and convincing arrangements were not put in place in a timely fashion, with the consequence that there was not sufficiently adequate independent assessment of risk and oversight of progress. This was compounded by the Senior HR User assuming the responsibilities of Senior Responsible Owner. The departure of the established e-HR programme manager shortly after contract commencement and his replacement by two inexperienced successors within the next 3 months meant that project leadership was not sufficiently rigorous or effective.

Business Case

The business case against which the e-HR project was approved was prepared between November 2004 and February 2005. There were calls for it to be revised to reflect the final costs and scope of the contract and the relationship between e-HR and HR transformation. The assumed cost improvements arising from e-HR in terms of headcount reduction in the HR function had already largely been realised by the time the contract was signed. The e-HR business case was not adequately reviewed and updated at the time of contract signing and whilst a draft Project Initiation Document outlining at a high level the additional benefits assumed to arise from HR transformation was circulated to Programme Board members in August, there was no detailed, revised, comprehensive business plan setting out the various critical dependencies, which could be formally evaluated, considered and agreed by the Board. This was regrettable and contrary to best practice: it made it difficult for the Board to undertake its role of understanding and challenging assumptions, assessing risks and deliverability and ultimately of championing the overall programme.

Scope of the e-HR Contract and Revision to Timetable

Changes to scope and timetable were two significant factors contributing to non-delivery. In the run-up to signing the contract Fujitsu agreed to the senior user's request that it would be varied almost immediately to drop some elements and add others. There was at the time (and which remained some months later) confusion among the SE staff closely involved about precisely what has been properly, contractually authorised by way of change requests to the scope of the contract. In the original proposals, the timescale envisaged a start to contract in summer 2005 with Fujitsu's deliverables completed by July 2006 and rollout of service across SE by November 2006. The SE senior user brought the completion date forward to the end of May 2006. While there was discussion with HR team leaders and Fujitsu, no clear detailed plan showing milestones, interdependencies, resource input obligations and risks was prepared at the time, agreed with Fujitsu or shared with the Programme Board, staff and stakeholders. Fujitsu considered they had no option but to agree to the revised date and the local SE context was one which did not support informed, effective challenge to the senior user's estimation of what was possible. The reduction of 40% in the over-all contract period, with a consequence of shortened timescales for workshops to develop the operating model, for testing and for putting in place the major communication and training effort, was over-optimistic and allowed only 9 months to complete the work. This was shorter than the equivalent periods allowed by other government departments involving Fujitsu in e-HR solutions and did not allow sufficient time for contingencies and recovery in the event of significant problems arising with work on the critical path; nor was it realistically achievable given the level of cultural awareness in SE about the changes envisaged, the work which would have to have been put in train to secure staff readiness, and was risky given what was known then about staffing resources going forward (e.g., impending departure of the programme manager, live vacancies and the likely impact of the pay review).

Reporting Arrangements

Progress on the e-HR project was reported to the Programme Board and other bodies in different ways on a quarterly basis. However, the nature of such quarterly reporting meant that events were reported retrospectively and it was always possible to accurately ascertain the current status of a project operating within a tight timescale via this method of reporting. When the e-HR project was reported as being on target and within budget at the end of October 2005, concerns were already being raised within the project. There was no mandatory requirement for such concerns to have been brought to the attention of the Programme Board at this stage; rather, it was a matter of personal judgement about the extent to which problems needed to be shared with senior colleagues. Three Gateway reviews of the project were conducted in 2004 and early 2005. Whilst the findings of the Gateway reviews were made available to the Programme Board, a number of their specific recommendations were not translated into practical action.

Disharmonies

As we have noted previously, whilst it is not uncommon for tensions to arise within high-profile projects operating within tight deadlines, success is difficult to achieve without a common understanding of goals, a proper respect for team working and mutual trust between the individuals working on the project. The view articulated by many of those involved in the SE programme was that these aspects were not sufficiently present: the programme was lacking in effective, engaged leadership and characterised by poor working relations, both within SE representatives and between SE and the contractor, and low morale. There were problems at all levels, and at times within SE these included a lack of confidence in the project by Programme Board members and tensions between the programme manager and the senior user. More generally, while some staff were enthusiastically supportive of the SRO/senior user, others plainly found her leadership style difficult or felt unclear about the HR vision and project deliverability.

Communications

The lack of a clear, effective and timely communication effort to HR professional staff, line managers in SE and staff in SE and its related departments and agencies contributed to the failure to deliver. Fujitsu argued that the absence of clear understanding by stakeholders prejudiced the successful completion of the business process workshops and in turn meant that the e-HR software could not be configured in the tight timescale set. The major cultural change entailed by e-HR and HR transformation needs to have strong stakeholder engagement and line manager buy-in if staff are to make a success of it. To achieve this a transparent and consistent message must be planned and conveyed and a significant training effort needs to be planned and mounted. That was not done.

Managing Risks and Issues

Risk Management

Risk is any uncertainty, potential threat or occurrence that may prevent you from achieving your objectives. It may affect timescale, costs, quality or benefits. All programmes are exposed to risk in some form, but the extent of this will vary considerably.

The purpose of risk management is to ensure that:

• Risks on programmes are identified and evaluated in a consistent way.
• Recognised risks to programme success are addressed.

You cannot use risk management to eliminate risk altogether, but it will enable you to avoid it in some instances or minimise the disruption in the event of its happening in others. When a programme sponsor approves a programme, he or she does so in full knowledge of the stated risks, and accepting the consequences should things go wrong.

The steps are:

• Identify: Log all the risks that may potentially jeopardise the success of the programme.
• Estimate: Review each risk in turn:
  • assess the likelihood of the risk occurring;
  • assess the severity of the impact on the programme if it occurs.
• Evaluate: Use a risk matrix to determine the 'risk category' (high, medium or low) to help you assess how acceptable the risk is.

Depending on the risk category, take action as follows:

• High risk: Take definitive action to prevent or reduce risk. Reconsider the viability of the programme before proceeding further.
• Medium risk: Take action to prevent or reduce risk where appropriate. Prepare a contingency plan if risk cannot be reduced. Manage risk and implement contingency plan where necessary.
• Low risk: Take action to reduce risks if cost effective. Monitor risk — it may become more significant later.

Taking positive steps to reduce the possible effects of risk is not indicative of pessimism, but is a positive indication of good programme management. Many possible options exist for reducing risk, including:

• Prevention, where countermeasures are put in place either to stop the threat or problem from occurring or to prevent it having any impact.
• Reduction, where the actions either reduce the likelihood of the risk developing or limit the impact on the programme to acceptable levels.
• Transference, which is a specialised form of risk reduction where the impact of the risk is passed to a third party via, for instance, insurance.
• Contingency, where actions are planned or organised to come into force as and when the risk occurs.
• Acceptance, where the organisation decides to go ahead and accept the possibility that the risk might occur and is willing to take the consequences.

Consider also:

• bringing risky activities forward in the schedule to reduce the impact on the programme outcome if they are delayed;
• modifying the programme requirement to reduce aspects with inherently high risk, for example, new, leading-edge technologies;
• allowing appropriate time and cost contingencies;
• using prototypes and pilots to test the viability of new approaches.