Yet when Tom Carroll was given the choice of working in the executive branch of the agency or as project director of the imaging project, he chose the latter. Carroll, who is now a senior manager at Andersen Consulting, saw the chance to use some of the management and leadership skills he acquired when he was an intelligence officer in the Navy and later an installer of computer networks for the state.
In fact, Carroll put his project management experience to work immediately. "I told them I'd accept the job on condition that I get to pick anybody from the organization I want to be on the project team, that the budget was mine to control and that I have direct access to the agency's director." With his conditions accepted, Carroll assembled a team of valuable players who worked with Andersen Consulting to plan, design, develop and implement one of the largest imaging systems in state government. When the system was fully implemented at the end of 1994, Carroll and his project management team had finished the project ahead of schedule and under budget.
More importantly, the system met expectations: for the workers who scan, index and retrieve the documents for processing Worker's Compensation claims and for agency executives who have a system that saves the state tens of millions of dollars. Behind the achievements lies a success story about project management in the public sector.
PROJECT BACKGROUND
DLI is the sole provider of
Worker's Compensation insurance in Washington. Because of its monopoly, DLI is one of the largest insurers of Worker's Compensation in the country. The agency covers more than 140,000 firms and 1.5 million workers. It collects over $1.1 billion in premiums and pays out more than $850 million in benefits annually.
With claims processing and adjudication its key tasks, DLI generates an enormous amount of paper documents. Some 500 adjudicators and clerks sort, file and microfiche an average of 26,000 pages per day. Each adjudicator handles an average of 350 cases, of which any single one can contain 200 or 300 pages of documents. According to Carroll, DLI's biggest single problem was the inordinate amount of time it took to process and adjudicate claims under existing conditions. The faster the agency was able to complete the paperwork on a claim and return a healthy worker back to their job, the less premiums they had to pay out. Unfortunately, it was taking the agency as long as three weeks to process a claim and as long as one week to pull a hard copy from the microfiche files.
To weed out the inefficiency of the existing process, Labor and Industries decided to do away with microfiche and much of the paper by installing a document imaging system. When completed, the agency would have a 500-seat system, capable of converting more than 20,000 pages of documents into images daily, and with a 1 terabyte storage capacity.
It was Carroll's task to direct the $20 million project from start to successful completion. On the vendor side, systems integrator Andersen Consulting was directing more than 40 contractors, including Recognition International, Hewlett-Packard and Kodak, to develop and implement the system.
Almost immediately, Carroll found the project in a troubling situation. Because of some past system failures, the original contract negotiations with Andersen had been very onerous with lots of wrangling over third-party indemnification clauses. Having the integrator as an adversary on the project was not how Carroll wanted to proceed. "Onerous negotiations can be very dangerous," said Carroll, "because it's the first thing you do and it sets the tone for the entire project. Project managers need to negotiate with vendors from positions of shared interests, not opposing positions."
To move toward a partnership role, Carroll and his counterpart at Andersen, slowly at first, took steps to build up trust in each other. Eventually the trust between the agency and integrator grew to the point that no change order was ever issued during the entire course of the project.
THE BEGINNING
Besides setting the tone of the relationship with the integrator, Carroll needed to assemble the project management team. The key members included application developers, network staff, system technicians, communications specialists, administration support and a change management representative.
The lead person from each specialty area also worked with a counterpart from Andersen. By having a mirror project team, knowledge about the system was transferred from the integrator to the agency, giving the project team the know-how to maintain, enhance and expand the system after the contractual obligations were fulfilled.
By insisting that he have the power to pick who he wanted for the project team, Carroll was able to select the best people in the agency for the job. If the agency didn't have someone with the right skills, as was the case concerning the UNIX operating system for the project, he went out and hired someone who did.
"It's absolutely vital that you have the right person on the team," commented Carroll. "You can't fake that kind of need. These systems today are very sophisticated. In our case, we were doing some things for the first time. You better have the best people you can find."
Two other essential ingredients at the start of any program are project focus and the cooperation of the stakeholders. Carroll called project focus the concept of investing for success: make sure the project is solving a bottom-line business problem. "These technologies today are not inexpensive," said Carroll. "If you are looking to primarily save money, then the easiest way to do that is not to implement the system. Instead, you should be investing in a solution that provides the best value." At DLI, the goal was to increase the efficiency of how compensation claims were processed, not to build an OCR system, Carroll pointed out.
As for stakeholders, Carroll said that data processing departments often will design a system to meet a specific requirement, only to find that other people in the organization have entirely different expectations. A project leader must make sure data processing and the integrator understand the expectations of the system's stakeholders before too much work is done. Sponsorship of the system by executive stakeholders is absolutely essential, according to Carroll. "When staff see executives showing support in a concrete way, then they are more willing to get on the bandwagon and not treat the project as something that's just here today and gone tomorrow."
CHANGE MANAGEMENT
Working with the user-stakeholders was one of several jobs assigned to Sara Spiering, the project team's customer/ change management representative. Spiering, a 19-year veteran at DLI, which includes 14 years in claims adjudication, had the responsibility for the project's change management, business process reengineering, workflow and communications.
Initially, change management was supposed to play a small role in the overall project. When work began on the imaging system nearly five years ago, change management was a new concept to technology projects. "Traditionally, the data processing department worked with the users by having them define their requirements," explained Spiering. "Later, DP would head for a back room, work with the developers for a year, then come out and say, 'Here you go, here's what you asked for. Have a nice day.'"
But as Spiering, Carroll and the others on the project team found out, without getting the user-stakeholders to believe they had ownership in the system, the project was not going to succeed. The importance of change management surfaced during the initial phase of the project, a 40-seat pilot that was developed in 1993. Carroll recalled that some of the clerical staff who worked in microfiche felt threatened by the new system. Other issues also exposed the importance of change management to the team. It soon became clear that managing change was a critical factor, and by the time rollout of the project was completed a year ago, it ended up being more than one-third of the entire project budget. With her responsibilities expanding, Spiering eventually had to manage deliverables for:
* Designing workflow.
* Redesigning the organization to incorporate electronic document management.
* Providing workers with new skill sets.
* Developing training materials.
* Assisting workers with their transition to new tasks.
* Designing and developing an organization for scanning, indexing and retrieving document images.
* Handling all labor-management issues related to the project, and much more.
CONTROLLING THE PROJECT
When one aspect of a project changes size and scope, it can throw the schedule and budget into turmoil. Carroll was able to avoid such a situation through careful planning and preparation. "Your opportunity to build a good schedule is at the beginning of the project," he said. "You've got to plan that things are going to take longer than you think, and that you will always have problems, particularly in the area of technology."
Realistic schedules and budgets, added Carroll, are those that have a built-in contingency that the project manager owns. "You must have specific activities and tasks on the project plan called 'contingency,' which you own and dole out as you see appropriate," he said. "I've never been on a project where I didn't use all the contingency I planned in."
Contingency for change management was liberally doled out during the pilot phase of the project. Carroll and Spiering both singled out the phased approach to the project as a key factor in keeping the project on schedule and headed toward success. Aiding them was the fact that the system's architecture is client/server, which, unlike mainframe systems, does not have to be built all at once.
The size of a pilot project need only be approximately 10 percent of the entire system, but it must be industrial-strength with all the bells and whistles, advised Carroll. With client/server, the agency was able to build a small version of the planned system. "The pilot gives people a check point to make sure this is what they really want. It also brings a certain momentum to the project. People see what they are getting and suddenly want it."
THE RESULTS
In late 1994, DLI completed installation of the 500-seat document imaging system at its headquarters in Olympia. The initial project was completed under budget and ahead of schedule. More importantly however, it began reducing the time it took to process claims from weeks to barely a day. As a result, cases are being processed faster, returning workers to their jobs quicker.
The net result is that the agency has been able to shrink its premium payments by as much as $10 million annually, which translates into a return on the system's investment within two years. Taking the knowledge she picked up during the initial phases of the project, Spiering is now the department's imaging system customer lead representative for a new phase of project management, one that will eventually put imaging into DLI's 20 district offices around the state. As a project manager, Spiering is working with users in the district offices and the project team to look at different ways of delivering services with the aid of imaging. "We're looking at what business process, workflow, etc., should be changed when we expand imaging out into the field, with the focus always on improving customer service."
As for project management itself, Spiering is an enthusiastic believer in its use for systems development. Personally, she finds the work rewarding. "Project management is exciting because it has a beginning and an end," she said. "There are key decision points and accomplishments all along the way. For me, project management is both rewarding and challenging because every project is new."
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