HUD Information Systems: Improved Management Practices Needed to Control Integration Cost and Schedule

HUD agreed that it should have complete and reliable estimates of its Financial Systems Integration (FSI) strategy and individual projects and contracted for an analysis of the 1997 FSI strategy. Arthur Anderson, LLP completed a benefit-cost analysis for the 1997 FSI strategy and identified options for completing the FSI project. HUD's acting Chief Financial Officer used this analysis to narrow the objective and scope of the FSI project to provide a core general ledger system by November 30, 2000. Other individual FSI projects, such as the Departmental Grants Management System and Enterprise Data Warehouse, were removed from the project and transferred to the Chief Information Officer for completion. These, and future software projects, must have benefit-cost analyses to be considered for funding under HUD's new information technology investment management process. After HUD completed its core general ledger, it determined that its financial management systems, developed largely under the FSI effort since 1991, did not meet all of its needs and plans to replace them. According to the acting Chief Financial Officer, HUD's financial management systems created burdensome manual reconciliation activities, increased the complexity and cost of systems maintenance, could cause diminished data control and integrity, and had inefficient system interfaces. From 1991 through 2000, HUD estimated that it spent $239 million to develop systems under FSI. This estimate does not include at least $132 million in software maintenance costs.

The acting Chief Financial Officer told GAO that after the Financial Systems Integration effort was rescoped to only include HUD Central Accounting and Program System (HUDCAPS), a project plan was developed for HUDCAPS. The plan established milestones, tasks, task dependencies, and resource requirements to complete the project by November 30, 2000. HUDCAPS was completed by this deadline, and used to help prepare HUD's fiscal year 2000 financial statements.

All mixed system projects (systems that are both information and financial management systems) were removed from the Financial Systems Integration (FSI) effort. Project plans are required for all system projects under HUD's new information technology investment management process. Therefore, projects formerly a part of the FSI effort are now required to have project plans.

HUD has implemented this recommendation. The Department has developed and institutionalized the select and in-process review processes, and has begun to conduct post-implementation reviews. Since fiscal year 2000, HUD has routinely assessed and scored proposed projects against department-wide project selection criteria and the Technology Investment Board Executive Committee used the process to select IT project investments. Also, HUD has been conducting quarterly in-process reviews of all information technology projects to determine whether the projects were achieving the approved objectives, milestones, and budget targets. HUD has ordered corrections to projects that fall short of the targets, reallocated project funding where appropriate, and stopped projects that were not making sufficient progress or properly managing their risks. In January 2002, HUD completed a pilot post-implementation review of a project. HUD is working to standardize the review criteria and has scheduled reviews for projects starting in October 2002. According to the Director of Information Technology Investment Management, HUD intends to accelerate the number of post-implementation reviews until they are being conducted routinely on all implemented projects. According to HUD's policy, the post-implementation reviews are intended to show whether IT initiatives have attained the desired results, and met the predicted strategic outcome measures, within the planned cost and schedule. The reviews also provide a forum for identifying and disseminating best practices and lessons learned.

HUD developed, and has been using, defined processes for estimating the costs of all IT projects as part of its new IT investment management program. HUD has adopted a project estimation guideline that provides a standard process for estimating and updating costs and making them available for the capital planning process. Use of the cost estimation guidelines has been mandated for all projects since fiscal year 2000. The department has taken action to make its cost models reflect actual costs for completed projects, develop audit trails that record and explain the cost model input values used, and develop a corporate database of historical cost and schedule estimates, revisions, actual costs, etc.