The government’s plan to build a single system to manage the information of all prisoners and offenders on probation is late, over-budget and will eventually provide less functionality than required because of the inability of senior management to handle such a complex project, according to a new report by the National Audit Office (NAO).

The National Offender Management Information System (NOMIS) project was approved in 2005, and was expected to cost £234 million until 2020. After just two years, the project had burned through £155 million, and was somehow two years behind schedule.

The government imposed a moratorium on the project, before splitting it up into five lesser projects. Roll-out of those projects will commence in April 2009, and the total spend by completion in 2011 is expected to have been £513 million.

The NAO report criticised project leaders for being overly optimistic. “The desirability of the project’s aims appears to have overly influenced decision-makers, leading to the failure to evaluate other technical options sufficiently and establish realistic budget, timescales and governance for the project,” it said.

Specifically, it listed inadequate oversight, governance and programme management, as well as underestimating the complexity of the project and the business change required to make it successful, as reasons for the failure.

The failure to manage supplier relationships was also implicated. “NOMS’s relationship with its suppliers, particularly [IT services provider] EDS, deteriorated during 2005 and 2006, and it did not make best use of their expertise,” the report said.

“Significantly, NOMS did not seek to revise its contractual arrangements with Syscon, the software developers, immediately [when] the extent of the customisation became clear,” it added. “Syscon is now able to market the improved software, but taxpayers will not benefit from their investment in the product.”