Large Sum of Money Demanded: Citizens in MV Request Compensation for Unsuccessful IT Initiative, Totalling Over 14 Million Euros
In the heart of Germany lies the state of Mecklenburg-Vorpommern, where a digital project aimed at modernising the state's budget, cash, and accounting system, known as HaVEL, has made headlines for all the wrong reasons. The project, which began in 2018, has cost taxpayers approximately 14.5 million euros and ended prematurely due to major defects.
The case of HaVEL offers several important lessons about digital government projects, procurement, and risk management.
Clear Requirements and Project Scope
The failure of the HaVEL project highlights the importance of having well-defined, realistic, and stable project requirements from the outset. Ambiguities or frequent changes in scope often lead to cost overruns, delays, and failed delivery.
Vendor Selection and Capability Assessment
Choosing a vendor capable of delivering the complex digital infrastructure is critical. Proper due diligence on a vendor’s technical capabilities, experience, and reliability can prevent mismatches that cause project failure.
Contractual Clarity and Risk Allocation
Legal disputes arising from HaVEL’s failure underscore the need for clear contracts that allocate risks, define milestones, and include accountability measures. Contracts must anticipate potential challenges and include procedures for dispute resolution.
Project Governance and Oversight
Effective governance mechanisms, including strong project management, monitoring, and escalation paths, are essential to identify issues early and take corrective action before failures become irreversible.
Importance of Legal Preparedness
The ensuing legal dispute reveals the need for both public authorities and vendors to be legally prepared for conflicts, ensuring that disagreements do not unduly stall digital transformation efforts.
Learning from Failure and Continuity
Awarding the new project to T-Systems International GmbH shows how governments can learn from prior mistakes by choosing experienced firms and restarting projects with improved frameworks, demonstrating resilience and a commitment to digital modernization.
Communication and Stakeholder Engagement
Transparent communication with all stakeholders, including the public, throughout the project lifecycle fosters trust and support, which is vital for complex digital initiatives.
Despite repeated deadline extensions, the performance disruptions were not resolved by the initial contractor, MACH AG. The project was terminated by the state government in June 2022. The state is currently in the implementation project for the new software, scheduled to go live on January 1, 2027.
Over 7.5 million euros were paid to MACH AG before the project was terminated. The legal dispute following the termination ended in October 2024, with the details of the settlement remaining confidential. For projects of this size, such differences in interpretation are not unusual.
The HaVEL case teaches that digital government projects must be approached with rigorous planning, clear contracts, capable vendors, strong governance, and readiness to handle disputes, while maintaining the momentum for modernization by learning from setbacks.
The HaVEL debacle underscores the significance of involving the finance industry in digital government projects, as thorough financial assessments could have anticipated the exorbitant costs associated with the project and potentially prevented its premature termination.
Moreover, the failure of HaVEL reemphasizes the necessity of collaboration between the technology sector and industry stakeholders, as technology-driven projects like HaVEL require robust technical foundations to ensure successful implementation and mitigate the risks of costly setbacks.
