The new health database at the Department of Defence is $110 million over budget, plagued by shortcomings, and could shatter the department’s reputation.

An Auditor-General’s report has smashed Defence’s management of the new centralised health care database.

In mid-2009, Defence put out its business case for an electronic management system to bring all the health care data for close to 80,000 ADF personnel into one place.

But, “the initial June 2009 budget of $23.3 million increased almost five‐fold to $133.3 million by February 2014 in response to a different ICT hosting model and a better understanding of business needs,” this week’s report said.

The Auditor-General found planning, budgeting and risk management were severely deficient, leading to “substantial cost increases, schedule delay and criticism within government”.

“Defence's planning and management of the initial phases of the project were well below the standards that might be reasonably expected by Defence's senior leadership, and exposed the department to reputational damage,” the report said.

“During the initial phases of the project, Defence did not scope and cost key components of the project; validate project cost estimates and assumptions; obtain government approval when required; follow a project management methodology, or adequately mitigate risk by adopting fit for purpose governance and coordination arrangements.”

But the report found the project did not need supplementary funding from the government, as it was funded internally using the departmental budget.

“Nevertheless, there is an opportunity cost associated with Defence allocating significant additional funds to the project,” the report said.

“The principal reasons for the increase in ... project costs were: a one year extension of the funded sustainment period; hosting the system externally rather than internally; and the inclusion of previously unbudgeted items such as training requirements.”

The auditors did not deny the complexity of the plan.

“The number of serving personnel, their multiple locations, mobility, and access to different channels for health care increase the complexity of maintaining complete, accurate and up to date medical records.”

But they said the program required further improvements and there should be lessons learned at the Department of Defence.

“An ongoing focus on system and business enhancements is required to realise the anticipated benefits of the system given the substantial investment made to date,” the report said.

“A key lesson of this audit is the importance of properly scoping and planning complex ICT projects.

“Project proposals and cost estimates should be based on a full understanding of project parameters and risks, and subject to thorough review.”