Tag Archives: McKinsey Quarterly

Major Projects Part 1

Some years ago I posted about the comments made by Sir Edward Leigh in regard to the conduct of major projects when he retired as Chairman of the UK Parliaments Public Accounts Committee.

It would seem that the comments made then are still pertinent today, perhaps even more so. My memory was jogged by the recent report from the Taxpayers Union of the apparent massive blowout in a new IRD computer system to handle changes to child support. Then I read the articles in The Dominion Post this morning regarding the transformation project underway at IRD.

The objectives of the changes are not unreasonable, what concerns me is the scale and potential complexity of the project.  In particular this comes at a time when IRD are looking at a massive project to replace existing and aged systems.

I intend to look at the issues around major projects in a series of posts over the next few weeks. My intent is to start with what appears at first sight to be a major blow-out, but on review may come up with a number of different questions requiring answer.

As background I have linked to Sir Edward’s letter, Edward_Leigh_Letter_28_March_2010 and to the IRD report on the child support system  Taxation Annual Rates for 201516 Research and Development and Remedial Matters Bill. In addition there is a link as well to a relevant McKinsey Quarterly article,  Delivering large-scale IT projects on time on budget and on value.


Novopay #6 : the perils of big IT projects

As I started to look at the Novopay papers, my thoughts turned to a recent article I had read at the McKinsey Quarterly website on delivering large-scale IT projects.

Our research, conducted in collaboration with the University of Oxford, suggests that half of all large IT projects—defined as those with initial price tags exceeding $15 million—massively blow their budgets. On average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted. Software projects run the highest risk of cost and schedule overruns

These findings—consistent across industries—emerged from research recently conducted on more than 5,400 IT projectsby McKinsey and the BT Centre for Major Programme Management at the University of Oxford. After comparing budgets, schedules, and predicted performance benefits with the actual costs and results, we found that these IT projects, in total, had a cost overrun of $66 billion, more than the GDP of Luxembourg. We also found that the longer a project is scheduled to last, the more likely it is that it will run over time and budget, with every additional year spent on the project increasing cost overruns by 15 percent.

The findings are very interesting and correlate with other studies as well. I found the graph below of especial interest:-


The dollar figures are US dollars. Now MoE seem to indicate no major over run as such but I would infer that internal costs have escalated dramatically, especially when end user impact is factored in, plus costs incurred by Talent 2 as well as the some NZ$5 million so far set aside for resolution of issues.

It would be fascinating to know just how Novopay stacks up against these findings.

More commentary in the near future.

Voicing values in the workplace

Vodpod videos no longer available.

Prof Mary Gentile Voicing Values in the Workplace -this video, is sourced from the McKinsey Quarterly.

Professor Mary Gentile explores ethical dilemmas at work and how to act on them.Recent years have seen an unprecedented breakdown in public trust of business, spurred in no small part by instances of unethical behavior at some of the world’s most powerful institutions. Mary Gentile, director of business curriculum at Babson College, says the real challenge for business students, employees, and executives isn’t knowing what’s right, but knowing how to act on those convictions within an organization. In this video interview, Gentile shares insights and experiences on how to do that, which she’s gathered through her work developing the Giving Voice to Values curriculum and her eponymous book. McKinsey Publishing’s Lily Cunningham conducted the interview with Mary Gentile in New York in June 2010.

A transcript in PDF form is here.

This interview caught my attention because of the focus on resolving the ethical dilemma of how to do what is right in an organisation, when culture seems non-permitting.

My personal and passionate belief is that effective governance requires strong values and ethics within an organisation. Indeed where the values are wrong, then no matter how many governance frameworks and compliance checks are in place it is probable at best that governance is weak and more possibly non-existent.

To me this where we reach the critical nexus between leadership, values, integrity and how they impact governance and culture.

I am interested in hearing from others on this issue.