Sidney Waters Customer Information Billing System - Case Study Example

 Sidney Water’s Customer Information Billing System Discuss the pre-contract planning, specifying of business requirements and functional requirements Sidney Water’s $ 60m budget for its CIBC IT Project Budget was the largest in that division of the company at the time Price Water House was selected as the most qualified of the six bidders to the tender with the lowest risk, lowest price, and the possessor of the highest compliance response to its equipment requirements. The company generates $1.5 b in revenue annually, has assets worth$ 13b, manages large scale programs of capital works and maintenance regularly, and prior to the CIBC Project completed the $90m upgrade of the Cronula sewage plant, and the $460mAlliance for the Northside Storage Tunnel, so it was no novice in contractual operations and negotiations. Limitations was placed on the scope of the auditors work in terms of detailing the work of Price Water House mismanagement of the project, due the fact that there were pending litigations, and publication may affect the outcome of the case. The purpose of the project Price Water House was given responsibility for, was to provide Sidney Water with an improved Customer Information Billing System that will fill all information gaps in the existing system, and to make the overall operations achieve higher levels of efficiency compare to the past. Functionally, at the end of the project; which was estimated to be February 2002 with a cost not exceeding $ 38.2m but had an over run of approximately $ 60m before it was halted, preventing Sidney Water from integrating the billing system with its 12 existing major internal business and 60 external party preferences. However, Price Water House ran into implementation difficulties and overran the $ 60m Budget assigned to the project. These difficulties were a direct result of their failure to develop the correct architecture the company need by evaluating what it has and then acquire them. It seems also that Price Water House lacked the technical expertise to take the project forward, in that several contingencies were made, including hardware and software that were not in the original budget. Had they had these experts in place additional, these additional expenses would not occur, and the budget would not have escalated to such high levels. Sidney Water had carefully followed the tender process in selecting Price Water House as the winner, but should have done background checks on its past performances with other companies. It should also have brought in IT experts within the organization, and externally, to timely perform Technical Proof Of Concept (TPOC) to help guide its decision in the correct direction. It seems Sidney Water was looking only at keeping the project cost below the budgeted and not at its feasibility. This is due to the fact that companies in a tender process will give information they cannot guarantee, in order to win bids, and they often hope the bid recipients will be impressed and make hastily uninformed decisions. In this case Sidney Water fell for the bait when it selected the company with the lowest risks and the lowest, and the best match to its equipment requirements. The company after selecting Price Water House called in the company after three months to begin work, without visiting other facilities that had similar systems to see what levels of efficiency they were achieving, and be able to make comparisons to it goals and objectives. Poor contract administration led to the transfer of responsibility for certain aspects of the project back to Sidney Water from Price Water House. This seems unethical, in the sense that no specific reasons were forwarded, the Board was not informed, and could serious repercussions before the courts, should the Price Water House be sued for breach of contract, negligence, or gross mismanagement. These functional deficiencies in interventions, procedural control and risk management at the management and board levels, jeopardizes the chances of excellent quality work being delivered at the end of the project, as well increasing the likelihood of budget overruns. Task No.2 Discuss the tracking of the project against the business case, i.e. whether the project was aligned with the project business case. Price Water House was mandated to deliver to Sidney Water what it signed for as the company business case which is an improved information billing system that will meet all the requirements stipulated in the contract, by efficient project management. However, the project planning and specifications were inadequate, in that there were several change requests which only inflated the cost of the project and led to a number of delays, which definitely extends the completion time beyond the February 2002 deadline. The level of professionalism by the project manager was poor, in that when these changes were made in the business case of the company, they were not documented and the entire plan updated so that timely information can be available to effect informed decision making regarding the project cost against the timeline. Culturally and psychologically, Sidney Water was not ready for the changes that they were paying millions to develop, in that during the implementation stage, it reverted to the old system, thereby making it difficult for Price Waterhouse to assess the impact of the system tit was installing. The fact that the board was not informed showed that the level of communication necessary to take the project forward especially from the users perspectives was grossly inadequate. The problem was compounded further by the fact that the Price Water House team of workers did not have the technical competence to insert their influence and authority on the proceeding, so that the level of cooperation among the company workers could improve. Sidney Water Management was highly inefficient in the they approved a budget of $60m to improve the information billing system, which would surely generate greater levels of revenue, and make the company more profitable, but did not make sure that it engage the services of a qualified project manager. A qualified and competent project manager would have made sure, (a) all internal providers were brought on stream, (b) an integrated project plan was maintained, (c) timely and comprehensive tests were done, and (d) budget levels were monitored and reported especially with respect to the contingencies that plagued the project. These negative impacts on the outcome of the project, once they are reported, would have alerted the management of the company that Price Water House would not be able to deliver the project according to the business case, and may have led to an earlier termination of the contract, and possible preventing the payment of the $29m to them. Task 3 Discuss whether there was an adequate project plan, key milestones and if these were managed adequately The Project Plan was very inadequate for the magnitude of expenditure the companies decide to engage in. In the first place the quality of human resource personnel as well equipment requirements were not employed in the project and no incentives seems to be in place to motivate the internal providers to participate in the process The numbers of contingencies that plagued the project and led to constantly rising cost were signs that the plan was inadequate. Communication is a key component in any project management operations, but this was severely lacking in this one. Changes were made in the implementation of the system, and the board was not informed. According to the Treasury Audit Report, management did not always report important issues in details to the Sidney Water’s Board in clear, complete and timely manner. A typical example was the change that was made in the contract between the two entities with respect to responsibility of certain activities, and no formal report was made to the Board. Individual Project Schedules were not consolidated into one master schedule and made available for all to see, and also to facilitate better coordination with the use of materials and human resources. This prevented the project from flowing smoothly towards achieving its various milestones with high degrees of efficiency and consistency. Key Milestones became difficult to celebrate due to the frequency of changes and extensions, as well the absence of a properly trained Project Manager who would recognize the significance of the moments, and how they could be used to motivate the teams. The culture of the company was not taken into consideration when the project was approved, so that milestones could be celebrated. Very large and complex projects were expected to be fraught with delays and changes, rescheduling of completions times and budgets overruns, and based on what happening from the start, there was nothing different about the present one. This reality was confirmed when the old system was revived while Price Water House was in house striving to install a newer version. Sidney Water House was guilty of a major management blunder by commencing the project without ensure that the Technical Proof Concept (TPOC) was valid and operable, and only found out several months later that it was not. Had they waited, they could make modifications which may even result in a change of company by reopening the tender process, or inviting the companies that were on the short list to look at the project. A Technical Proof of Concept could also be used as a motivational tool to the internal providers who isolated themselves from the project and prevented Price Water House from getting the vital cooperation it needed to advance the project. The fact that there were six time extensions between R2 and R3 resulting in two months time loss and millions of dollars in expenditure, points to very poor management oversight by both Price Water House and Sidney Water. Sidney Water House management personnel made no effort to understand the project, because they too must have regarded it as too complex, and left the technically incompetent Price Water House to operate independently. Interactions between the project management team, the end users, suppliers, customers, and the sponsors of the company is critical to the success of any project. The break in link was hindering progress, and the managers were doing nothing to change these unproductive behavior patterns. Had there been good management in place, Price Water House would have to resubmit another scope statement as well as project charter. The Project Sponsor would also have to sign off on all additional budgetary expenses, and from a cost saving point of view, Price Water House should have been fired when it requested the second extension of R3, its incompetence was greatly highlighted by a recurrence of what transpired during the R2 implementation phase. Nothing worthy of milestone celebration was happening within the $60m project, which was forecasted to reach $114.5m, and the different understanding between the finance, customer service, project director, and the Board, as to the true status of the project on a month by month basis, made it even more difficult . Overall the management of the company regarding the project was weak from the Board level down, and this was why Price Water House was able to extract millions of dollars for doing very little. Task 4 Planning and managing IT projects (criteria) Process Group Section Evident Not Evident Comments Initiating Develop Project Charter & Develop Preliminary Project Scope Statement X Improving the company Information Billing system and facilitating internal and external integrations were outlined. Planning Develop Project Plan/Execution Plan X The plan was developed without a proof of concept and was doom to fail Scope Planning X Scope Definition X Activity Definition X Activity Sequencing X Activity was sequenced but only Price Water House had a master copy of it. Activity Duration Estimating X This was evident but was poorly done and resulted in frequent changes Schedule Development X Cost Estimating X Poorly done Cost Budgeting X Quality Planning X Human Resource Planning X Price Water House did not have the personnel to do the job Communication planning X Management of finance, customer service and the project director often at variance Risk Management Planning X Risk Identification X Qualitative/ Quantitative Analysis X Risk Response planning X Purchases and Acquisitions planning X Excessive number of contingencies including acquisition of hardware and software that were not on the budget Contracting planning X Executing Direct and Manage Project Plan/Execution Plan Execution X Quality Assurance X Project Team development X Information Distribution X Poorly done. The Board was given incomplete information at times. Solicitation X Source Selection X Unsatisfactory Contract Administration X Controlling Integrated Change Control X Scope Verification X Scope Change Control X Cost Control X Quality Control X Performance Reporting X Risk monitoring & Control X Closing Administrative Closure X Poor timing Contract Closeout X Poor timing Reference 1. Walker, A. (2003). Review of Sidney Water’s Customer Information Billing System Auditors Report to Parliament 2003 Vol.1 Read More