Federal Agencies Struggle to Control IT Costs

November 10, 2009 By Tod Newcombe, Editor

Attempts by federal agencies to control IT costs and keep projects on schedule are falling short. A study released on Nov. 9 by the Government Accountability Office (GAO) of eight agencies and 16 major IT projects found that most are experiencing cost and scheduling shortfalls. The total life-cycle costs of the projects examined by the study have increased by $2 billion and are likely to grow by another $1 billion without "timely and effective management action." Agencies in the study include NASA, and the departments of Homeland Security, Commerce and Transportation.

The problem, according to the GAO, is the inconsistent application of a project management approach called earned value management (EVM), which can provide public CIOs with objective reports on project status, as well as produce early warnings of pending cost overruns and schedule delays.

The GAO found that of the eight agencies it studied, all are using EVM, but implementation varies. Problems include the improper sequencing of activities, which can impact project performance. The report attributed the inconsistency to weak policies and lack of oversight. "Until key EVM practices are fully implemented, these investments face an increased risk that managers cannot effectively optimize EVM as a management tool," warned the GAO.

To remedy the problem, the GAO recommends that the eight agencies under review "modify existing EVM policies to be consistent with best practices that address identified weaknesses, and manage negative earned value trends." Agencies that commented on the report agreed, in general, with the findings.

In 2005, the Office of Management and Budget directed federal agencies to use EVM to control IT costs and schedules, as well as to generate unbiased estimates of costs at the completion of a project.

According to Robert Marshall, an EVM expert, EVM also has long-term benefits for government. "CIOs can expect to further the organization's business objectives by ensuring that their project portfolios are properly, consistently and systematically managed, and that portfolio values are maximized while risks and costs are minimized," he wrote in a November 2008 article in Public CIO magazine. "EVM offers IT executives a common platform for planning, executing, monitoring, measuring and controlling one or more projects simultaneously."

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