The port of Auckland has come under criticism for multiple failures that resulted in the termination of an automation project for the Fergusson container terminal, costing the port approximately $36 million in investment write-offs.
An independent review of the project identified multiple shortcomings, including an insufficient business case for the project, exclusion of senior management in vendor selection and software procurement, and lack of governance and accountability.
The review of the governance process of the project, carried out by independent infrastructure expert Mark Binns, found the project was doomed for failure because the board did not fully understand the risks involved and due process was largely disregarded.
“The key shortcomings of the business case were a lack of visibility and testing of assumptions adopted, poor risk assessment, simplistic financial analysis and lack of a resourcing and change management plan. Of these shortcomings, the lack of analysis of the IT risks associated with the project was the most significant,” observed Binn.
The complex integration project was conceived in 2016 and involved multiple vendors, equipment and software applications to design and implement.
It was terminated in June this year due to continuing delays in full terminal roll out, failure by the system to perform to expectations and lack of confidence in the projected timeline or cost to completion. Ports of Auckland has returned the terminal to manual operation for the foreseeable future.
“Given the transformational nature of the project and the extremely significant consequences of failure, it was incumbent on the board to fully understand the risks that the company was assuming,” noted Binn.
He added that it was paramount to ensure that senior management was engaged, that the port was capable of the changes required and that the project team was appropriately resourced with employees with expert knowledge in key areas. “On balance, it is apparent the board did not take the steps necessary to ensure that this was the case.”
Ports of Auckland contends that it attempted automation for the right reasons – to lift capacity, productivity and profitability of the Fergusson container terminal without further port expansion or reclamation. Part of the work undertaken before termination included a major infrastructure capacity upgrade, like the new Fergusson North wharf and cranes.
Despite describing it as a bold and innovative project, the board admitted that it was unable to fully deliver. “The automation project was pioneering and involved new and complex technology. Its cancellation and associated write-off of capital expenditure are regrettable. But the improvements we make now will leave us better placed to consider major capital projects in the future,” said Jan Dawson, Ports of Auckland board chair.