Australia's failed Home Insulation Program brings risk management into focus

By Kevin Noonan, Research Director, OVUM | May 10, 2010

In an election year, the Australian government’s high-profile Home Insulation Program failed. With a number of house fires, electrocutions, and deaths linked to the program, the government has announced its cancellation. As public debate diminishes, it is now time to reflect on key lessons for service delivery and government policy development.

The Home Insulation Program began with high expectations. Its primary objective was to help stimulate the economy as part of the government’s response to the global financial crisis. At the same time, it was hoped the program would deliver real green savings to home owners and provide a showpiece for the government’s green credentials.
 
When it all began to go wrong, much of the public debate focused on program delivery failings and on the appropriateness of the program’s risk matrix. However, risk management is more than just managing the documentation tool. Risk management is all about managing the risks. The Home Insulation Program turned out to be a high-risk program. It was high-risk to citizens, to businesses, and ultimately to the government. The final outcome delivers some powerful messages about the way government agencies should manage risk.
 
The program’s risk matrix did indeed raise a number of startling concerns, and this later fuelled intense debate about the program. However, it is important to take care not to shoot the messenger. The authors of risk management plans should be encouraged to uncover all potential risks and to document them as plainly and as clearly as possible – this is an essential precursor of being able to manage the risks.

Risk management can sometimes be seen as an annoying distraction from real project delivery work. Optimistic managers can sometimes place too much hope on the heroic efforts of key individuals and their ability to deal with any potential problems. If there is to be a take-home message from the failed Home Insulation Program, it is that citizens rightly expect an appropriate level of risk management from their government officials. Indeed, it is a basic foundation for efficient, effective, and ethical government service delivery.
 
Government ICT learned many years ago that a manager can not outsource public accountability. Government managers are responsible for ensuring risk management is applied even if the delivery is outsourced. For their part, outsourcers are contractually bound to deliver appropriate, risk-managed services. But the pressure to deliver government outcomes can sometimes be significant, and it can take a brave project manager to raise questions about risk. Sir Peter Gershon noted this very issue in his review of Australian federal government ICT in October 2008. He said, “There is too much variation in the degree and quality of interaction between policy formulation and implementation…There are real downstream implications and risks for policy implementation from poorly considered policy design.”