2.6bn pounds DSS computer 'failure'

THE COST of computerising the benefit system has spiralled to pounds 2.6bn - almost four times the original estimate - and shows no signs of making the savings intended, according to an independent report.

'Overall, a major risk was that of costs rising out of control. In fact these rose from the original estimate of pounds 700m to over pounds 2.6bn by 1993. It is unlikely that any of the cost savings, estimated in 1989 at pounds 175m, will now be achieved,' according to the report, Are Major Information Technology Projects Worth the Risk?

Leslie Willcocks, an Oxford University lecturer in management studies and co-author of the report, said: 'The spend is in fact so large that the department has actually stopped counting it. If there had been better management, not so much would have been spent.'

He blamed many of the problems on the failure of politicians, determining social security policy, to 'equip themselves with an understanding of information technology'. The Department 'threw money at problems', employing consultants at an annual cost to the taxpayer of up to pounds 22m.

The report says: 'Management cut off staff participation . . . and pulled in external consultants. This put pressure on cost targets . . . and put at risk stated objectives on job satisfaction and systems quality.'

The study, produced for the Oxford Institute of Information Management and Imperial College, University of London, examines the reasons for the frequent failure of large computer schemes.

MPs were told two years ago that the cost of the project, Operational Strategy, had risen to pounds 2bn. Robert Sheldon, chairman of the Commons Public Accounts Committee, said last night: 'This fills me with great alarm. I would very much like to see a copy of the report. I'm afraid I've had a few upsetting incidents of this kind before but this could be the biggest of its kind.'

A spokeswoman for the DSS said: 'The report was made without any inquiry to us and I am not in a position to comment on it. . . . The cost of the Operational Strategy has risen in part because of inflation and due to massive and fundamental changes in the social security system.' When asked for an official, current estimated cost of the project, she said: 'I personally am not in a position to tell you.' She stated that contrary to the assertion in the report, the project had made savings for the taxpayer in excess of pounds 3bn but said she could not detail them.

Andersen Consulting, which has been involved in the design and subsequent management of the system and has supplied the bulk of external consultants to the project, said it had nothing further to add.

Last year, the DSS and Andersen Consulting gave their co-operation to a book about the project in which one senior civil servant describes it as a 'remarkable success'.