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ARCHIVED - An Enhanced Framework for the Management of Information Technology Projects

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2. Background and Problem Definition

The government is committed to deliver its programs and services more efficiently and effectively through the use of information technology. However, recent cancellations of major information technology projects together with indications that other projects may be experiencing difficulty have raised concerns for the achievement of this goal.

In recognition of these concerns and as part of its ongoing responsibility for advising Ministers on major projects, the Treasury Board Secretariat carried out a review of a sample of 25 of the government's information technology projects, with a total estimated cost of two billion dollars, to identify business, project management, risk management, and human resource issues influencing their outcome.

The Auditor General also reviewed four large government information technology systems under development as described in the Report of the Auditor General, Chapter 12 - Systems Under Development - Managing the Risks, released on October 5, 1995. The Auditor General's findings concurred with those of the Treasury Board Secretariat's review.

In addition, in 1992 Public Works and Government Services Canada initiated a series of Common Purpose Procurement pilot projects in an attempt to improve project success through procurement reform. In January 1995, the department published a summary of findings(1) from audit reviews of this method of procurement and its relation to the success of information technology projects. In addition to procurement issues, these reviews also identified a number of deficiencies in departmental project planning, e.g., risk analysis and business-case.

While problems with information technology projects are not new, their impact seems more pronounced. Their underlying cause seems to be related to significant changes in the project environment that have occurred in the last few years. These changes include: the decentralization of the management of information technology; the transformation of the way the government does its business (business process re-engineering); and rapid technological evolution from mainframe-based systems to more complex distributed client-server systems.

The Canadian government is not alone in this regard. A recent study(2) of 8,380 projects in government jurisdictions and the private sector in the United States indicated that a staggering 31% of all information technology projects are cancelled before they are completed; 53% of those that are completed cost an average of 189% of their original estimates and average only 42% of the originally-proposed features and functions. Only 9% of projects are completed on time and on budget. The lost opportunity costs from project delays and cancellations could not be measured but could easily be in the trillions of dollars, e.g., the delay of the baggage-handling software for the Denver airport cost the city $1.1 million per day.

Applying these Standish findings to the sample of twenty government information technology projects reviewed by the Treasury Board Secretariat would predict that seven would be cancelled and project overruns would total over one billion dollars. It is clear that the government must change to ensure that this prediction does not come true.

The challenge for the government, therefore, is to enhance its framework for managing information technology projects to resolve this situation and ensure greater success. A Treasury Board Secretariat Project Management Office has conducted research in government and private sector organizations that are successfully implementing information technology projects and, with departments, has identified enhancements to the current framework based on the successful practices discovered.