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| Cost-effectiveness of large distributed systems For some time now, there has been some concern expressed amongst members that over-concentration of IT efforts increase the risk both to users, contractors and in the case of public projects, tax payers money. The GBI therefore has been looking for an example of such a centralised project in the United Kingdom to assess from the standpoint of risk. Such an example has presented itself through a recent publication (16th June 2006) by the National Audit Office (NAO) of a report on a large Information Technology System being introduced by the National Health Service (NHS). This report is entitled,"The National Programme for IT in the NHS". It is notable that the Swedish Health Powerhouse Group (HPG) published their Euro Health Consumer Index on 26th June 2006. In this index, Britain came 15th under countries such as Slovenia, Malta and Hungary who held 12th, 13th and 14th positions respectively. France came top of the list. Of interest to any audit is the HPG estimate of value for money on funds spent. In this case Britain tumbles to 22nd position under such states as Slovakia, Cyprus and Latvia. On the one hand, such outcomes raise questions as to necessary national standards of public audit, and in particular, in this case, of interventions in the National Health Service. On the other hand we are aware of convincing arguments which cast considerable doubt on some of the findings of the HPG. These arguments will be presented on this website shortly. However, part of the NAO mandate is to assess value gained for money spent. Value for money The determination of value for money in the case of Information & Communications Systems requires, as a bare minimum, three related analyses:
If the technical specifications of the accepted final system are technically sub-optimal, attempting to assess value for money becomes an exercise in futility. Therefore a technical analysis is essential to evaluate the decision analysis applied in selecting the best option from a possible range of solutions to the issues being addressed. This range of options should have been determined either as a result of a contracted service carrying out a review and identification service of state of the art technologies capable of addressing the specified needs of the NHS. Alternatively, and relatively infrequent, this would be undertaken as an internal exercise carried out by staff with a good professional experience in ICT and capable of identifying available options. This process needs to be reviewed before questions as to whether tenders for supply of systems have been competitive and whether or not they contained effective checks and balances to ensure timely delivery to budget. Economic analysis Economic analysis is closely related to the technical solutions and provides the vertical costs structure of the solution, the price. Financial analysis Financial analysis is the time-based costs of delays or cash flow resulting from timely or delayed implementations. Delays carry not only the financial costs associated with segments not delivered (the opportunity cost of inability to use the system components) but also the costs of the management and other staff responsible for the project whose financial performance is eroded by failure of subcontractors to deliver on time. Supplier monetary transfer schemes Supplier monetary transfer schemes exist which operate like escrow accounts with payments being made once a promised output is delivered, even if behind schedule. Taking opportunity costs into account it is not rational to attempt to run supplier monetary transfer schemes which create recoverable fines as a basis upon which to state that this operates so as to incur no cost to the tax payer. Any delay, against the politically promised deadlines, represents a measurable opportunity cost of failure to deliver in project and political terms and this incurs real performance and financial costs on the public service and budget. Large government projects are becoming notorious for being cash cows for developers, a waste of public resources and often failing to perform their public objectives. This is a regrettable state of affairs and one which can be largely avoided with recent advances in operations research and decision anlaysis developed at SEEL. The George Boole Institute will be organizing ISEE (The Institute for Systems Engineering Economics) workshop components to cover design and development techniques which secure cost-effective large distributed systems through low cost, low risk pathways and which can secure a high likelihood of success. Key topics will be components of decision analysis and will include:
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