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  • Predictive Analytics for Improved Cost Management  

Government IT Executives Offer Blueprint to Avoid Failed Projects

PRICE Systems "A Cracked Foundation" Study Finds that More Realistic Cost, Schedule, and Risk Management Baselines Could Save $5.5 Billion of Federal IT Budget

MT. LAUREL, NJ / November 30, 2006 / PRICE Systems, a world leader in Program Affordability Management Solutions, today announced the results of its "A Cracked Foundation" study. Based on a survey of 104 participating government IT executives, the study reveals that despite the importance of solid estimates for the success of major government IT projects, agencies have neither the training, tools, nor processes available to develop and manage realistic baselines, affecting costs, schedules, risk management, and effective IT project management.

A September 7, 2006 Government Accountability Office (GAO) testimony before the U.S. Senate estimated that the U.S. Federal government will waste $12 billion of the fiscal year 2007 IT budget due to poor planning and program performance issues. According to survey respondents, 46 percent of these failed (canceled, over-budget) projects could be avoided if IT project baselines are more realistic, effectively saving the Federal government $5.5 billion annually. Further, only 18 percent of government IT executives express confidence in their IT program budgets with 69 percent reporting that they typically begin noticing problems about midway through projects.

"Agencies require stronger foundations upon which to base government IT program structures in order to avoid the continued rate of collapse," said PRICE Systems Vice President, Government Solutions Larry Reagan. "Better baselines can help fill in these structural cracks—arming agency personnel with the tools, training, and historical data necessary to build projects on solid rock."

Not Ready to Build
A resounding majority of government IT executives responded negatively, saying either no or unsure, when asked about the preparation levels of their teams and program managers. According to the study:

  • 78 percent responded as having inadequate cost estimating training
  • 77 percent have inadequate risk identification and management training
  • 73 percent have inadequate initial baseline development training
  • 67 percent have inadequate technical project management training
  • 60 percent do not have the necessary methodologies to collect historical data to produce realistic estimates when a baseline changes
  • 58 percent do not have the necessary historical data to produce realistic baselines
  • 54 percent do not have adequate tools to manage the cost estimating, control, and reporting processes for IT programs

Compounding government IT executives' low confidence levels in terms of current baseline projections and project management training, respondents indicate low levels of participation in assistive resources, such as the General Services Administration (GSA) Earned Value Management (EVM) Community of Interest, which aims to allow the flow of shared experiences and exchange of public- and private-sector best practices. Only 12 percent of respondents participate in this initiative.

Stronger Foundation Needed
Government IT executives assert that the top reasons programs run over budget are poor program management (61 percent), scope creep (54 percent), the lack of proper baselines (43 percent), and late understanding of risk (37 percent). Respondents indicate that the most important tool for keeping IT projects on budget is a fully-coordinated baseline, followed by training, program management tools, and defined risk management.

When asked to identify the most challenging baseline element for their organizations, government IT executives indicate that all three components go hand-in-hand, with 34 percent identifying schedule management; 31 percent, cost management; and 22 percent, risk management as the most difficult to manage. Underscoring the reasons that program managers fail to establish effective baselines, 64 percent identify a lack of personnel to effectively perform functions; 47 percent, a lack of training; 47 percent, timelines that are often too short; and 34 percent, programs are not given tools and data needed to establish appropriate baselines upfront.

"In these days of heightened Federal fiscal accountability, our government is not in a position to waste billions of dollars that could be redirected toward any number of programs," said Reagan. "Supported by stronger structural foundations—including assigning responsibility for program affordability management; integrating cost estimating, project control, and knowledge management into a single team; providing effective training and certification; implementing a methodology for regularly-scheduled, independent baseline reviews; and establishing the consistent use of a reusable, knowledge-based framework—better baselines can empower agencies to achieve project and program objectives, effectively enabling them to better deliver upon their missions."

Methodology
The PRICE Systems "A Cracked Foundation" study findings are based on an online survey of government IT executives. Within the survey sample of 104 respondents, 67 percent represent Federal civilian agencies and 33 percent represent the Department of Defense. Respondents indicate professional titles ranging from manager to analyst to administrator. Fifty-seven percent of respondents have 10 or more years' service to the government.

Download the full findings of the PRICE Systems "A Cracked Foundation" study.