Centrelink recently terminated a $191 million project for a new Entitlements Calculation Engine (ECE) after it failed to meet performance standards. Produced by Infosys using Pega technology, the scrapped system could only process claims in minutes, in stark contrast to the two seconds needed by the existing system. What can we learn?
Services Australia, which oversees Centrelink and Medicare, had initiated this project with the goal of making the implementation of welfare policy changes faster and more flexible. The existing ISIS system requires any change in entitlement rules to be “hardcoded,” a process that takes several months.
Why It Failed
Two key issues led to the project’s cancellation:
- Poor Performance: Although the new ECE system was capable of calculating accurate payments, it took minutes to produce the results. In comparison, the existing ISIS system accomplishes this in just two seconds.
- Integration Issues: The new system had compatibility problems when put into a production setting. The system faced performance issues and defects when it had to work in conjunction with ISIS and other systems.
Cancelling the project has far-reaching implications. Charles McHardie, Chief Information and Digital Officer at Services Australia, pointed out that the ability to make faster and more flexible changes to entitlements has been lost. “Changes to entitlements will still be a costly and somewhat slow exercise,” said Rebecca Skinner, Services Australia’s CEO.
Pivot and Future Direction
During its lifecycle, the project went through a significant pivot—from a “bottom-up” approach of converting existing code in ISIS to Pega rules, to a “top-down” approach. However, neither method succeeded in enhancing the system’s performance to the desired level.
After a thorough gateway review process, the agency decided to abandon the ECE project. Some of the IT hardware used for the ECE has been repurposed, and the lessons learned have informed other uses of Pega technology within the agency.
The Centrelink debacle serves as both a cautionary tale and a case study in the risks of poorly managed government-led IT projects. Although costly, the failure brings to light critical lessons that can guide future projects toward more successful trajectories. The situation reinforces the need for diligent planning and consistent progress evaluation, highlighting not just the financial but also the operational risks of letting government projects run unchecked.