Dutch government IT projects run €1bn over budget

Outliers

There are some outliers in costly projects. The digitisation plan for the IND (the Dutch immigration services), for instance, was budgeted for €1.2m, but over the years has been stretched to €29m. The project is expected to be finished by the summer of next year, despite original projections for mid-2015.

The same goes for DigiD, the country’s national log-in service for citizens to handle governmental affairs. The project ran over budget eight times, and took three times longer than originally planned to complete.

Another project over budget and time is the IT overhaul for the Food and Consumer Goods Safety Authority (NVWA), which was eventually cancelled in 2017 because the system was deemed unusable. By that time, €100m had already been spent on it, more than three times the €30m that was originally budgeted. 

In all, it’s thought these cost overruns have run up to around a €1bn so far. The Financial Times used a list provided by the government’s watchdog for IT projects that was set up after earlier investigations into overdue spending.

Despite the newspaper’s report of the astronomical numbers, the minister of Safety and Justice, Ferdinand Grapperhaus, does not consider the money wasted.

Speaking on behalf of the absent secretary of Internal Affairs, Grapperhaus said: “During the run of a project, you can find new insights or unforeseen problems that need resolve at increased costs.”

Long history

The news report does not come as a big surprise to most in government or the private IT sector, as the Netherlands has a long and painful history of failed IT projects.

The problems were so severe that parliament authorised an inquiry in 2012 into the government’s workings in IT projects. The final report of the so-called Elias Commission drew rough conclusions: Government departments know too little about IT, do not understand its significance and omnipresence, and usually want to find the cheapest solution possible – even if that usually means costs will run up later.

One of the biggest recommendations of the Elias Commission was to set up an independent committee to monitor the progress of large IT projects. The so-called BIT committee subjects IT projects with a budget over €5m to tests to monitor technical feasibility, but also to analyse whether the government has realistic end goals. 

However, the BIT committee is often criticised for its lackluster role. A prime example is the case of the digitisation of the Basic Registration of Citizens, another project that ran amok. In May of this year, government published an evaluation of the project, explicitly calling out the BIT for being too soft on the project.

Severe lack of knowledge

Other problems that came to light by the Elias Commission were familiar to the majority who work in government.

The commissions concluded that there’s not enough knowledge of IT in almost every level of governmental organisation. Officials are “unknowingly unknowledgeable” about IT. Combine that with a severe lack of IT experts in government, and you get what the commission calls “a near unbridgeable gap between policy and IT departments”. Officials warned about that lack of expertise before the Elias Commission publicised its conclusions.

In recent years, the Dutch government has invested heavily in skilled IT personnel, but the overall level of IT knowledge in government remains low.

Low-cost estimates

Partly because of the lack of IT knowledge, civil servants tend to give very specific and detailed orders when outsourcing projects. Meanwhile, external IT agencies tend to give low-cost estimates and tight time frames for projects which often guarantee contracts, but are hardly ever realistic.

The lack of knowledge in government prevents it from choosing the right firms for the right jobs, said professor Chris Verhoef, one of the members of the BIT committee. 

Once projects are underway, it’s hard to stop them, the Elias Commission said. It’s difficult to pull the plug completely on projects because there are no exit strategies in contracts, and departments would rather spend more money to finish projects, it added.