Information Technology:

Agencies and OMB Should Strengthen Processes for Identifying and Overseeing High Risk Projects

GAO-06-647: Published: Jun 15, 2006. Publicly Released: Jul 17, 2006.

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In August 2005, the Office of Management and Budget (OMB) issued a memorandum directing agencies to identify high risk information technology (IT) projects and provide quarterly reports on those with performance shortfalls--projects that did not meet criteria established by OMB. GAO was asked to (1) provide a summary identifying by agency the number of high risk projects, their proposed budget for fiscal year 2007, agency reasons for the high risk designation, and reported performance shortfalls; (2) determine how high risk projects were identified and updated and what processes and procedures have been established to effectively oversee them; and (3) determine the relationship between the high risk list and OMB's Management Watch List--those projects that OMB determines need improvements associated with key aspects of their budget justifications.

In response to OMB's August 2005 memorandum, the 24 major agencies identified 226 IT projects as high risk, totaling about $6.4 billion in funding requested for fiscal year 2007. Agencies identified most projects as high risk because their delay or failure would impact the essential business functions of the agency. In addition, agencies reported that about 35 percent of the high risk projects--or 79 investments--had a performance shortfall, meaning the project did not meet one or more of these four criteria: establishing clear baselines, maintaining cost and schedule variances within 10 percent, assigning a qualified project manager, and avoiding duplication with other investments. Although agencies, with OMB's assistance, generally evaluated their IT portfolio against the criteria specified by OMB to identify their high risk projects, the criteria were not always consistently applied. Accordingly, GAO identified several projects that appeared to meet OMB's definition for high risk but were not determined by agencies to be high risk. In addition, OMB does not define a process for updating high risk projects. As a result, agencies had inconsistent updating procedures. Regarding oversight of these projects, agencies either established special procedures or used their existing investment management processes. OMB staff stated that they review the projects' performance and corrective actions planned. However, OMB has not compiled the projects into a single aggregate list, which would serve as a tool to analyze and track the projects on a governmentwide basis. High risk projects and Management Watch List projects are identified using different criteria. The former is meant to track the management and performance of projects, while the latter focuses on an agency's project planning. Both sets of projects require attention because of their importance in supporting critical functions and the likelihood that their performance problems could potentially result in billions of taxpayers' dollars being wasted if the problems are not detected early.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to our recommendation, in 2008, OMB clarified and expanded the high-risk project criteria. Specifically, OMB provided agencies with eight criteria for identifying high-risk projects, which was an expansion from its original list of four criteria. Additionally, in June 2009, OMB publicly deployed a Web site, known as the IT Dashboard, which displays information on federal investments' cost, schedule, and performance information. As part of the IT Dashboard, agency CIOs are required to evaluate and rate their investments' performance using eleven key criteria specified by OMB. As a result of OMB's efforts, it has provided a consistent means by which agency CIOs can evaluate performance and identify high-risk investments.

    Recommendation: In order for OMB to take advantage of the potential benefits of using the quarterly performance reports as a tool for identifying and overseeing high risk projects on a governmentwide basis, the Director of OMB should direct federal agency Chief Information Officers to ensure that they are consistently applying the criteria defined by OMB.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Comments: In response to our recommendation, in June 2009, OMB publicly deployed a Web site, known as the IT Dashboard. It displays information on federal agencies' cost, schedule, and performance information for the approximately 800 major federal IT investments at 28 federal agencies. OMB requires agencies to update investments' cost and schedule ratings on a monthly basis, and to add and remove investments on an annual basis. This guidance establishes a consistent process for agencies to update the status of their investments, including high-risk investments, as well as ensure that the list is current and complete. As a result, OMB and Federal agencies have gained additional insight into the performance of investments across the Federal Government.

    Recommendation: In order for OMB to take advantage of the potential benefits of using the quarterly performance reports as a tool for identifying and overseeing high risk projects on a governmentwide basis, the Director of OMB should establish a structured, consistent process to update the initial list of high risk projects on a regular basis, including identifying new projects and removing previous ones to ensure the list is current and complete.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: In June 2009, OMB deployed the IT Dashboard, a Web site that displays cost, schedule and performance information for major federal IT investments. OMB uses the Dashboard as central repository for tracking the performance of all major IT investments, and identifying investments that are high-risk (i.e. needing significant attention). Additionally, certain high-risk investments are selected by OMB officials for a TechStat review session, which is a meeting for Federal IT leaders to review the management of the investment, examine program performance data, and explore opportunities for improvement. OMB has reported to Congress on its TechStat initiative in its fiscal year 2009 Report to Congress on the Implementation of the E-Government Act of 2002.

    Recommendation: In order for OMB to take advantage of the potential benefits of using the quarterly performance reports as a tool for identifying and overseeing high risk projects on a governmentwide basis, the Director of OMB should develop a single aggregate list of high risk projects and their deficiencies and use that list to report to Congress progress made in correcting high risk problems, actions under way, and further actions that may be needed.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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