Cost estimation has various issues that affect the ability to conductreasonable and accurate cost estimates. Among the common reasons for costs tooverrun are: low initial estimates, unexpected technical difficulties, lack ofdefinition, specification changes and external factors (Hamburger, 1986). Creating a project budget The process of developing a project budget is a mix of estimation,analysis, intuition and repetitive work. The project budget is a plan that “identifiesall the allocated resources, the project goals and the schedule that allows theorganisation to achieve those goals” (Pinto, 2016). There are two commonapproaches to budgeting, top-down and bottom-up. “The project budgetconsists of sizing or scoping the project, estimating the effort and timerequired, and then developing a calendar schedule, taking into considerationsuch factors as resource availability, technology acquisition, and businesscycles. The benefits of accurate estimates include fewer mistakes; lessovertime, schedule pressure, and staff turnover; better coordination with non-developmenttasks; better budgeting; and, of course, more credibility for the project team”(Nelson, 2007) Analysis Lyytinen and Hirschheim define process failure when a ComputerisedInformation System (IS) cannot be developed in an allocated budget and/ortimeframe.
This happens when an IS is deployed with massive overspending inboth cost and time, thus negating the global benefits of the system (Lyytinenand Hirschheim, 1996). The 2013 House of Commons Committee of Public Accountsreports “The public purse is continuing to pay the price for failures by theDepartment and its contractors” and “The full cost of the National Programme isstill not certain”, eleven years on from the projected commenced (House ofCommons Committee of Public Accounts, 2013). This comes in context with the2007 House of Commons Public Accounts Committee report that noted, “At thepresent rate of progress it is unlikely that significant clinical benefits willbe delivered by the end of the contract period” and the delivery of the NHSCare Records Service “has in general been hampered by unclear communication anda worrying lack of progress on implementing local systems and we are concernedthat leadership of the Programme has focused too narrowly on the delivery ofthe IT systems, at the expense of proper consideration of how best to use ITwithin a broader process of business change” (House of Commons Public AccountsCommittee, 2007). This suggests that a fundamental catalogue of errors andmisjudgement has led to uncontrollable costs and an unmanageable scope, whichultimately, saw the termination of the project. External factors One of the problems encountered by NPfIT is the withdrawal of Accentureas a supplier in 2006 (CFH 2007) and Fujitsu in 2008 (Computer Weekly, 2008).
This caused severe delays in the delivery incritical software surrounding core patient records and administration systems. Asa result this required the project management to renegotiate contracts withsuppliers. The estimated additional cost was projected at £2.2 billion (Houseof Commons Committee of Public Accounts, 2013) with £572 million just for thecore record system. House of Commons Committee was critical of the way theproject handled these renegotiations and condemned the weak negotiatingposition the project leadership were in as it only caused the cost to increase.