The $50 million Biometric Capability Update is among four in 10 MBIE project failures in the last year, with the ministry citing ‘planning optimism’ as a reason for its missed targets.
The Ministry of Business, Innovation and Employment’s annual report shows 40 percent of its big capital projects did not meet their scope, time or budget requirements in the last year.
Among them is the high-profile biometric programme (BCU), along with its associated identity project In-Person Enrolment (IPE).
Immigration minister Erica Stanford previously suggested staff had kept her in the dark about BCU’s problems and had concerns about ‘creative accounting‘. Parliament’s privileges committee also found officials deliberately misled MPs, by not telling them in March the BCU had been discontinued months earlier.
The annual report goes further than previous MBIE commentary on BCU, explicitly admitting it should not have been capitalised in the previous financial year. Audit New Zealand was concerned about that move, which usually happens when a new asset is operational and logged on balance sheets, including for depreciation purposes.
“The BCU project was capitalised in June 2025, with the BCU Valuestream project being established immediately following,” said the annual report, released on Monday. “The capitalisation of BCU in June 2025 should not have occurred as the asset was not operational at that time. Both BCU projects were ended in January 2026 without the creation of a workable asset.”
Contractor performance and optimism bias
Key reasons given for overall MBIE targets being missed in project delivery outcomes were planning optimism and ‘contractor performance issues’. Planning optimism, often called planning fallacy or optimism bias, involves estimates of task completion time that are overly optimistic, or at odds with experience of similar projects in the past.
The ministry capital projects’ result (60 percent achieved) was below both its target of 85 percent and the previous year’s result (66 percent).
MBIE outlined what it was doing to react to the findings of the Greg James report, which highlighted some of the reasons BCU did not succeed, and the missed opportunities for leaders to curb its losses earlier.
The annual report also highlighted measures it was taking to improve visibility and transparency with ministers and the public and “reinforcing leadership expectations, accountability and capability to support culture and integrity at MBIE, including greater awareness of channels for speaking up.”
BCU is already the subject of a Public Service Commission review, as is MBIE’s larger and more expensive Our Future Services (OFS) programme, a seven-year strategic transformation to modernise immigration visa processes which has been put on hold after only 18 months.
The OFS review by David Hosking is ‘assessing programme governance, management, reporting, costs, and expected benefits, and the extent to which lessons from the BCU project have been addressed, including the programme’s reliance on biometric capability originally intended to be delivered through the BCU project.’
The ministry said it was also working on the BCU replacement, previously estimated at another $35m.
“In response, and as part of the BCU review, the Ministry has completed a stocktake of IT projects, validated their status and governance controls, and is strengthening programme governance. This includes setting more realistic baselines at project initiation, reducing change requests during delivery, and improving reporting against original project baselines. These actions are expected to improve project delivery performance.”