5 days ago
- Business
- Winnipeg Free Press
MPI vows to dive deep into ‘failure'
Manitoba Public Insurance made public Thursday its decision to pull the plug on Project Nova, a $164-million 'failure' intended to modernize outdated business and information technology systems.
'We were trying to fix the plane as we're flying the plane,' the Crown corporation's CEO Satvir Jatana said.
'At this point, we need to ground the plane.'
The Free Press reported in March the Crown corporation had informed the Public Utilities Board of a revised cost estimate pegged at $435 million — 50 per cent more than previously thought — to complete the ill-fated plan, and its decision to abandon the project.
On Wednesday, Manitoba Finance Minister Adrien Sala asked auditor general Tyson Shtykalo to conduct a special audit of Project Nova.
'We need to get off the plane, we need to fix the plane before we can safely bring the passengers back on,' Jatana said, while promising that plans for replacing outdated technology at MPI will be done right going forward, thanks to improved governance, adhering to industry best practices that allow for flexibility and focusing on business priorities while maintaining fiscal prudence.
'That's the process we're taking right now and I am optimistic that we will have a solution, but it is not a solution that can be delivered next month,' she said told a news conference, flanked by MPI board chair Carmen Nedohin and Christian Dandeneau, chair of the MPI board's technology committee.
MPI said it would fully co-operate with an audit and 'looks forward to how the results can shape our work moving forward.'
Shtykalo is 'considering' the audit request on the project that began in 2019 under the previous Tory provincial government and launched in early 2023 before being officially shelved Thursday.
'I am currently reviewing the request and will seek additional information before determining what action, if any, my office will take,' Shtykalo, who was not available for an interview, said in an email.
Justice Minister Matt Wiebe, who is responsible for MPI, echoed the need for a 'closer look.'
'This is about accountability for taxpayers and a significant amount of taxpayers dollars were misspent in this case,' he said Thursday.
University of Winnipeg political scientist Malcolm Bird said there's been too much interference in the operations of Crown corporations by both Progressive Conservative and NDP governments.
The government's call for an audit sounds politically motivated, he said.
Updating IT systems is 'really, really, really hard to do anywhere — whether it's in a public-sector or private-sector area,' said Bird, who studies Crown corporations.
'You have all these systems in place working and then you want to bring in new systems,' he said. 'You have to build them and then, somehow, magically shut the one down and turn the new one on, without it being a disaster.'
Jatana said Project Nova 'was never set up for success' and MPI knows what went wrong.
'There was ineffective governance, critical business requirements were overlooked, significant changes in MPI leadership, a global pandemic and an historic strike,' she said. 'These factors have led to delays and cost overruns with many starts and stops to the project.'
In May 2023, the MPI board fired CEO Eric Herbelin following an internal investigation into his work conduct. The Swiss national with a private insurance background was hired during the COVID-19 pandemic in 2021 while MPI was pursuing the largest technology modernization in its history.
In 2023, unionized MPI workers went on strike for the first time and were off the job for 10 weeks.
An organizational review by Ernst & Young last year, ordered in 2023 by the PC government over concerns about Project Nova and financial reporting, found a litany of problems — from too many managers, to friction between divisions and significant turnover between May 2021 and June 2023.
High-level organizational changes caused instability and impacted the sustainability of ongoing programs, alongside a lack of solid strategic, financial and human resources planning, the report found.
Meanwhile, the projected cost of Project Nova climbed from $85 million in 2019 to $107 million to $290 million to more than $435 million, announced by Jatana in March.
Targets for Autopac and commercial customers being able to renew or amend insurance policies and driver's licences online and providing connections between MPI and repair shops to speed up claims processing were missed.
'Simply put, the project timelines were unrealistic. It is clear that Project Nova has experienced significant missteps and… failures,' Jatana said. 'It has not delivered the value for money that was originally planned and promised.'
She said the $164 million spent to date on Project Nova did not impact MPI customers' rates. She said the public auto insurer is locked into contracts with vendors for the project and committed to paying them roughly $88 million over the next seven years, $68 million of which would be considered of no value.
'We are hopeful and optimistic that we are in conversations with those vendors that we would be able to renegotiate those contracts and mitigate those costs.'
She said there no job losses or layoffs as a result. At one time, 200 employees and close to 300 consultants were working on the project.
'Right now the numbers are very, very low,' she said, adding fewer than 50 consultants and 50 employees have been moved to 'other initiatives.'
Carol SandersLegislature reporter
Carol Sanders is a reporter at the Free Press legislature bureau. The former general assignment reporter and copy editor joined the paper in 1997. Read more about Carol.
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