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Weathering the Storm

A string of troubled deployments prompts IT project management changes in Colorado. Is reform legislation the answer?

by / October 2, 2006
During the last six years, Colorado braved a blistering storm of IT project adversity.

The trouble started with the deployment of the Colorado Benefits Management System (CBMS), an effort by the state's Department of Human Services and Department of Health Care Policy and Financing to replace several legacy systems with a single integrated program. That system's rocky rollout -- along with several other high-profile IT project difficulties -- prompted state lawmakers to pass a series of project management reforms this year.

A Colorado lawmaker involved in the legislation said the reforms make badly needed changes to the management of major government IT projects. Colorado's state CIO said the bill strengthens oversight and planning by involving his office more thoroughly in the life cycle of IT projects. Others, including the CIO of the Colorado Department of Human Services, said the measures could be a step in the right direction, but their effectiveness will depend on how they're implemented.

The CBMS faltered immediately after its implementation in 2001, doling out benefits to citizens who didn't qualify for them and denying benefits to those who did. Counties pummeled the state Human Services agency with lawsuits, demanding a solution to the growing backlog of needy citizens lacking benefits.

"We had people who were supposed to be getting food stamps," said Colorado Sen. Ron Teck, who has criticized the ability of state agencies to manage deployment of the ambitious, $200 million, integrated-benefits system.

Teck, a member of the Legislative Joint Computer Management Committee and author of some of the reform measures, said some benefit recipients were told to wait six months while state agencies got the new system squared away. "They had children to feed," he said.

Department of Human Services officials said they struggled to satisfy conflicting operational preferences coming from numerous stakeholders in Colorado state and local government. Furthermore, chronic underfunding from the state Legislature led to understaffing, which contributed significantly to the project's difficulties.

The jury is still out on whether the latest reforms will prevent future IT project nightmares. But Colorado's experience with the CBMS illustrates the complexity and difficulty of deploying integrated systems that serve multiple agencies and levels of government.

System Dysfunction
Teck said a gross lack of project management expertise in Colorado government led to the CBMS's dysfunction.

"The plan of attack was just poorly designed," he said. "They didn't have all the right people at the table when they were designing the system. It was apparent that they didn't spend a lot of time talking to the folks at the county level who were going to be responsible for actually using the system."

Ron Huston, CIO of the Colorado Department of Human Services (CDHS), said the project's team consulted the state's 64 counties, but fell into quicksand trying to satisfy numerous conflicting operational preferences simultaneously.

"We had the challenge of building a system to fit 64 different business models, and in essence, having 64 different counties telling us what they wanted. You're never going to get 64 people to agree," Huston said, adding that additional advice from the roughly 3,000 lower technicians in the counties compounded the problem.

In future projects, officials must accept the reality that some decisions won't satisfy all counties, Huston said, adding that to make completing projects livable for all counties, project leaders must develop congenial ways of enforcing that reality.

But Teck contends state agency officials shut down legacy benefit systems before the CBMS was ready for prime time. A planned one-year pilot of the new system was drastically reduced after the project fell behind schedule, he said.

"Instead of a yearlong pilot, they decided to do a 20-day pilot over a handful of counties, which did point out a number of problems -- and they tried to fix those problems on the fly," Teck said. "They went ahead and fired up the new system in September 2004. It was a debacle."

Colorado Gov. Bill Owens hired Deloitte Consulting in the spring of 2005 to audit the CBMS, which resulted in a laundry list of recommendations for salvaging the project. The audit's paramount directive was to hire a project management expert to be the single authority over IT projects. The Department of Health Care Policy and Financing developed the CBMS with the CDHS, which meant their executive directors were at war with each other over turf, Teck said.

The state needed one leader with the authority to approve a resolution that satisfied both agencies.

Enter Witwer
Rep. John Witwer said Owens persuaded him to resign his assembly seat to become the CBMS director in the summer of 2005, reasoning that his term was almost up and he was the most qualified person available at the time.

Having served on the Health and Welfare Committee and the Joint Budget Committee in the Legislature, Witwer was trusted by the governor as having the political savvy to reorganize the troubled CBMS to the Deloitte audit's specifications.

"Believe me, this was not an ego trip," Witwer said, adding that he met with feuding departments and negotiated a common ground on how their administrative processes would be affected by the changes in project management.

"I find when you sit these folks down, both sides are very cooperative," he said. "They want to cooperate. They just see things differently."

Witwer said the organizational changes required extra funding and staff, and he summoned his knowledge and connections to get funding increases from his former legislative colleagues. He added 26 employees to the roughly 40-person team already existing, which steadily led the CBMS into working order. Witwer's team worked with the vendor, EDS, to resolve logic errors that were misdirecting benefits eligibility. They also enabled the system to follow benefits recipients when those individuals moved to other counties and completed several other improvements.

The CBMS is now mostly stable, said Witwer, adding that the team was shifting much of its attention to making the program easier to use.

Although Colorado's November gubernatorial election likely will lead to Witwer's replacement as CBMS director, he predicts a smooth transition. Because most of the reorganization is complete, political skills won't be as crucial, Witwer said. The new director will merely continue what the current project team started.

Recent legislation passed in response to the CBMS's highly publicized troubles mandates several project management best practices.

Colorado CIO John Picanso said part of the legislation directs his Office of Information Technology (OIT) to participate in projects throughout their life cycles to ensure success, rather than its past practice of participating only after problems erupted.

"We're now sitting on evaluation committees; RFP committees; contract, negotiation and development committees," Picanso said. "We're working more closely with the vendors on those projects so we're able to get the same information the state agency gets at the same time, and we'll bring that information back into my office."

Huston said conflicting views of what constituted a successful project were at the heart of Colorado's dysfunctional IT projects, and legislation is directing the OIT to establish metrics for gauging success.

"This is going to be a long path, but we're started in the right direction," Huston said, adding that he is encouraging the OIT to base its metrics on a project's size and risk level instead of developing a single standard for all projects. Some legislators and government executives, he said, take a cookie-cutter approach to establishing metrics, which misguides project managers on some types of projects. And the OIT, Huston said, is in the process of defining what skills a project manager should possess.

The CBMS team originally put most of its faith in EDS's guidance while planning the CBMS project because state executives didn't have experience implementing such a large program.

Colorado shares blame with the vendor for the project's difficulties, said Huston. On one hand, he said, the state's inexperience with large integration projects put the operation behind schedule. But Colorado hired EDS -- an experienced global technology services company -- to compensate for the state's lack of expertise in that field, he said.

William Ritz, manager of public relations for EDS U.S. Government Solutions, said Colorado governments did a good job responding to problems in a complex project. "State and county users deserve credit for making major progress in addressing early-state challenges, as do the governor and agency directors for their leadership," Ritz said.

Picanso said part of the recently passed legislation requires the state to put project management experts in the governor's office, ensuring that Colorado will have experts whose sole interests are the state's, not the vendor's. The OIT will employ four of those experts, who will also spend time among the departments, training and mentoring government executives to be better project managers themselves, Picanso said, adding that the OIT is still exploring what those experts' jobs will entail.

Taking on the Vendor
Huston and several other state government executives recently completed a new contract template they say will hold vendors more accountable for their responsibilities by tightening contract provisions. The CBMS contract, he added, was vaguely written, leading to numerous disagreements with the vendor, putting the project behind schedule.

Colorado canceled two major IT contracts around the time of the CBMS's difficulties -- one for a project called Genesis, an effort to integrate two separate computer systems that tracked unemployment taxes and benefits for the Colorado Department of Labor and Employment, and another to build a centralized voting system for the secretary of state.

Former Colorado CIO Robert Feingold, who is now a senior fellow with the Center for Digital Government, said clearer contract provisions served the state well when those two projects -- both awarded to Accenture -- ran into trouble.

Colorado used the tightly written Accenture contracts to unequivocally show that the vendor failed to meet some of its obligations, saving the state from any undeserved blame for the cancellations, said Feingold. Tighter contract provisions would have helped when the CBMS project ran into trouble, he added.

"When you recognize that someone has performed on a certain portion of [a project], and now they're not going to perform, then you cut your losses," Feingold said. "That happens in the private sector."

Peter Soh, spokesman for Accenture, said the vendor and the state mutually terminated both contracts.

"The state expressed appreciation for Accenture's work completing three of the five Genesis subsystems -- wage detail, benefits payment control and unified desktop -- all of which are currently used in daily operations," Soh said. "Both Accenture and the state expressed disappointment that they could not come to terms on a revised implementation timeline for that election management system."

Huston said the legislative reforms fail to address a key issue in contract negotiations for major projects -- an imbalance in IT contracting expertise between state agencies and vendors.

Huston said the state should hire private-sector procurement lawyers who specialize in negotiating IT contracts to avoid vaguely written provisions in the future, and it was unfair to expect the state's in-house lawyers to take on EDS's attorneys who specialized in negotiating IT projects.

None of the recently passed project management bills mandate hiring such lawyers, Huston said, but agencies should still seek funding for them when pitching their next project to the Legislature.

Show Me the Money
Legislation mandating better project management was a useful first step, Huston said, but many decision-makers in the process aren't zealous about implementing the dramatic changes required.

"Even today," he said, "I still feel like a lot of the issues that are raised fall on deaf ears."

The Legislature has consistently underfunded projects in the past, Huston said, adding that he once compared the dilemma to receiving $20,000 to build a $40,000 car.

Teck said he agreed with Huston.

"That's been a big problem," Teck said. "The Legislature sees a project that is estimated to cost $200 million, and they say, 'Yeah, go ahead and do the project, but do it for $100 million.' Unfortunately people [in state government] say, 'OK, we'll try,' and that's a foolish thing to do."

One challenge is the political difficulty of funding IT projects instead of more visible programs.

"Unfortunately computer programs are hard to see. They may serve people, but frankly the people this system serves are not the strong voting blocs that some legislators are concerned with. Providing service to that voting bloc may not be a high priority," Teck said. "If you've got somebody who's in charge of putting $10 million into a new computer system or putting $10 million into a highway in their district, the inclination is to put the money in the highway."

Feingold said agency executives are unprepared to counter the joint budget committee's attempts to shortchange projects, and agencies must enter joint budget committee meetings with documentation of the problems similarly underfunded projects endured in the past.

Fully funding a project, Feingold said, involves funding its total cost of ownership, which often requires expenditures for five to 10 years in the future -- and that's something Colorado legislators hate doing.

"Here in Colorado, there's a tradition of one session of the General Assembly not wanting to impose a burden on a future set of elected officials," Feingold said, prompting agency executives to only request funding for the first year of multiyear projects, and then return every year for each following phase. After a few years, those executives find themselves in front of new legislators who weren't privy to the project's genesis. The new legislators resent feeling ambushed, having no choice but to continue funding that project at the risk of wasting the tax dollars already spent on it, he said.

Feingold recommends agencies do a feasibility study of a project's needs, which would irrefutably back up the agency's funding requests and formally establish the needed futures funding in the legislative record.

"Let's be open about it," Feingold said. "If it requires incremental funding, at least you have some basis for doing that. And then it's incumbent on the administration doing that project to stay within those guidelines."

Agencies should also practice better change management, he said, consulting the Legislature early on when a project's scope changes and new requirements emerge that require extra funding. He said agencies typically try to swallow those extra requirements, assuring inquiring legislators that everything is fine.

"Insufficient attention is paid to what the impact of that new requirement will be on cost schedule and system performance," Feingold said. "The thing starts creeping up, and then schedules aren't met, budgets are overridden, the thing doesn't perform well."

What the Future Holds
Huston said he would cautiously wait to see how decision-makers in both state agencies and the Legislature follow through on what the project management legislation started. The next major IT project will tell the tale, and Witwer said many projects are forthcoming.

Also, staff shakeup in departments resulting from November's gubernatorial election will show whether Colorado's wave of project management changes continues. Several of the legislation's supporters will be eliminated by term limits, including Teck, Feingold said.

The positive side of term limits is that new blood in the Legislature makes support for technology more likely, according to Teck. "One of my colleagues in the senate who served on the budget committee, took great pride in the fact that he didn't have a computer or e-mail."

"I've still got colleagues in the General Assembly who don't even use voice-mail. Their phone calls roll over to a receptionist who takes handwritten notes for them, which I think, in this day and age, is a terrible waste of personnel time," Teck continued. "That kind of attitude doesn't bode well for being realistic about the implementation of new systems. I think with the passing of some of this old guard -- moving along and getting some younger folks in there -- we may avoid those kinds of problems in the future."

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Andy Opsahl

Andy Opsahl is a former staff writer and features editor for Government Technology magazine.

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