New report confirms Customs’ role in CMR shambles

Friday, 09 February 2007

CMR management framework lacked the ‘basic fundamentals to succeed’

AUSTRALIAN Customs has been given a rap over the knuckles in a major government report on the Cargo Management Re-Engineering (CMR) project.

And the Customs Brokers & Forwarders Council of Australia (CBFCA) has also weighed in with strong criticism of Customs following the report by the Australian National Audit Office (ANAO).

The ANAO report made seven recommendations on the Integrated Cargo System (ICS) part of the CMR project, which encountered considerable delays and cost overruns, while the implementation of the imports component of the ICS caused havoc on cargo movements at Australia’s major ports and airports.

The report said the management framework that Customs had in place to support the CMR project lacked many of the basic fundamentals necessary to successfully implement a large Information Communion Technology (ICT) project.

“The outcomes to be achieved and the expected benefits from the project were never clearly defined. There was no overall CMR project plan financial management plan, project budget or proper assessment of the risks facing the project,” said the report.

And it went on: “There was also a lack of supporting documentation surrounding contractual arrangements. Delays in the early years of the project had major repercussions for the latter stages of the project.

“Project teams were continually under pressure to meet tight deadlines, which were not achieved. Delays with the project necessitated three amendments to the legislated implementation date.”

The scathing report blamed Customs for underestimating the complexity and the risks associated with the project and failed to properly respond to emerging issues and changes in the risks. It said the implementation was not supported by a co-ordinated implementation strategy or adequate business continuity planning. Insufficient time was allowed for system testing, particularly end-to-end testing.

“Customs did not have quality assurance mechanisms to assess the readiness of third-party software providers, the quality of their software or the preparedness of industry participants. Problems with the Cargo Risk Assessment system also impacted on Customs’ ability to clear cargo and to target and assess high-risk cargo, increasing the risks to Australia’s border security and Customs’ revenue collection responsibilities,” the report said.

And it added: “Customs acknowledges that the CMR project could have been better managed and has learnt lessons from the project. It has initiated a number of reviews to improve its processes, revised its organisational structure and is modifying the ICS to more closely align with user and business requirements. It is also taking steps to more actively engage industry. Successfully implementing the outcomes of these reviews and initiatives and rebuilding its relationship with industry will be critical if Customs, industry and the community are to realise the full benefits of the CMR project.”

After the release of the ANAO report, Customs said it had accepted all seven recommendations designed to complement improvements that it was already implementing. According to Customs chief executive officer, Michael Carmody, progress has already been made on a number of them.

“The ANAO report is consistent with the report by consultants — Booz Allen Hamilton (BAH), that Customs commissioned early last year. In response to that report, Customs acknowledged the failings in the way it went about implementing the ICS,” said Carmody.

“Recognising the difficulties faced by industry during the implementation of ICS, Customs offered to pay compensation in appropriate cases. To date, close to A$1.5 million has been paid (or is in the process of being paid) following consideration of the majority of applications received,” he added.

According to the CBFCA, the ICS process continues to impact on the productivity of all service providers in international trade logistics and supply chain management.

It said some 16 months after ICS was implemented, the time and resources expended not only by industry but also by Customs to meet the ICS challenge, while not qualified or quantified, were clearly in terms of cost efficiency and cost effectiveness not in the tens but in the hundreds of millions of dollars.

The CBFCA said the fact that Carmody had agreed the outcomes of both the BAH and ANAO reports, the early signs in terms of appropriate industry consultation were encouraging. The future of the ceo’s “engagement” process is the key - and it is refreshing to note those in Customs who had previously taken the arms length approach to industry were now committed to the ceo’s “engagement” proposal.

The CBFCA contended that Customs should have listened to it - and other industry associations - and acted appropriately on that advice.

“Suffice to say that this was not the case and those key players in Customs responsible for the October 12, 2005, disaster (the day the ICS was implemented) have either slipped silently away into retirement or elsewhere leaving those who remain to salvage, under the new direction of the CEO, the ICS process,” it added.