MPI cancels Project Nova as costs balloon

Hey there, time traveller!
This article was published 20/03/2025 (192 days ago), so information in it may no longer be current.

WINNIPEG — Following hundreds of millions of dollars in cost overruns, Manitoba Public Insurance is abandoning its Project Nova technology overhaul after a revised estimate pegged costs at $435 million, 50 per cent more than previously thought, the Winnipeg Free Press has learned.

Sources confirmed MPI officials met with the Public Utilities Board this week to reveal the new cost estimate and to indicate it is closing the book on Nova and writing off the money spent to date on the final two phases of the four-phase project.

The Crown corporation plans to pursue some of the goals of Project Nova, but in a more time- and cost-effective manner, the sources said.

NDP MLA Matt Wiebe, the minister responsible for MPI, said in an email statement that abandoning Project Nova now means “the waste of taxpayers’ money is over. Unlike the previous government, we will work with MPI to upgrade its IT systems in a way that is fiscally responsible and delivers full value for Manitobans. We are not wasting one more dollar.”

Wiebe said more details on how MPI will improve its technology platform post-Project Nova will be forthcoming once the Crown insurer’s board approves a plan.

MPI declined to comment on the $145-million cost-estimate hike or the decision to wrap up the project in its current form.

In an email statement, an MPI spokeswoman said that following the “discovery phase for Release (stage) 3 of Project Nova, MPI reviewed the results and has determined an appropriate path forward.”

Two months ago, senior MPI officials were confident the project could be completed for $290 million. However, behind the scenes work was being done to verify that what MPI had been saying publicly could still be delivered. It is unclear when the Crown corporation realized it could not stay within the $290-million project cost.

Following a “pause” in 2024 to re-assess the remaining two phases of the project, Wiebe held a news conference to celebrate the completion of the second phase of the project in June 2024. “We are now starting to see the corporation get back on track,” Wiebe said at the time.

Project Nova was first announced in 2020 at a cost of $107 million. It was expected to be completed in three years. Officials promised Nova would bring MPI into the 21st century in terms of digital technology, allowing its customers to renew or amend auto insurance and driver’s licences online. It was also supposed to provide seamless connectivity between MPI and repair shops.

Within two years, the timeline and project costs expanded to five years and $290 million.

MPI officials said at the time consultants hired to design the project did not fully account for some of the bells and whistles needed to serve a government-monopoly automotive insurer.

At the same time Project Nova costs were exploding, then-MPI chief executive officer Eric Herbelin was awarding himself and others bonuses and spending more than three months away from Winnipeg on business trips. Herbelin also oversaw a massive hiring spree, adding more than 400 new staff without a clear idea of what they would be doing for the corporation.

Interveners at the PUB who provide oversight to MPI rate applications had been arguing for years the Crown insurer had allowed its administrative costs to balloon without providing a rationale for why additional staff was needed.

Herbelin was dismissed by the MPI board in May 2023. In January 2024, the NDP government released an independent operational review that found MPI suffered from profound mismanagement and confusion under Herbelin’s stewardship.

There was hope MPI and Project Nova would get back on track with the hiring of a new CEO in February 2024. Satvir Jatana, who had served for years as the vice-president and chief customer officer, promised a “reset” to rebuild trust with Autopac customers.

Last July, MPI applied to the PUB for a three per cent rate increase to help cover the costs of Project Nova, a months-long strike, increased claims from hailstorms and the impact of inflation on parts and repairs. However, interveners pointed out MPI’s own actuarial calculations showed it required a much larger rate hike, perhaps as high as six per cent.

When the PUB finished analyzing MPI’s numbers, it ordered the insurer to raise Autopac rates by an average of 5.7 per cent. Along with a $10 increase in the basic insurance premium charged to all drivers, the final result was a nearly seven per cent increase.

» Winnipeg Free Press