Audit Slams Information Technology Cost Overruns | Eastern North Carolina Now

A new report from State Auditor Beth Wood's office scolds the state's Information Technology Services division for having cost overruns nearly double original estimates.

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    Publisher's note: The author of this post is Barry Smith, who is an associate editor to the Carolina Journal, John Hood Publisher.

Projects were more costly than estimated, took too long to complete

    RALEIGH     A new report from State Auditor Beth Wood's office scolds the state's Information Technology Services division for having cost overruns nearly double original estimates.

    The report also says that projects took about 65 percent longer to complete than originally estimated. And it chides the agency for not having policies and controls in place to prevent such overruns.

    "ITS doesn't monitor them to see if they come in on budget," Wood said in an interview Monday. "And they don't see if they come in on time."

    The audit report says, "The initial estimates are not reliable predictors of the final cost and time schedules."

    Among the 84 projects the auditor's office reviewed, costs were $356.3 million more than originally estimated, or about twice the cost. Projects took about 389 days longer to complete than state agencies originally estimated, the report says.

    In its response to the audit, ITS Chief Information Officer Chris Estes wrote that his agency agreed with the findings and plans to implement the auditor's recommendations.

    "ITS is making plans to begin addressing these issues and others in the management of information," Estes wrote. "These initiatives will be included in the Statewide IT Plan, which will be implemented by Oct. 1."

    During his first week in office, Gov. Pat McCrory noted that he'd spoken with Wood about the ITS audit under way and noted that the information technology system had many problems.

    "We need to fix it as quick as possible," McCrory said at the time. That's when he announced Estes as his new chief information officer.

    The audit outlined some of the more extreme examples of cost overruns:

    • A $96.8 million budget increase for the Department of Revenue's Tax Information Management System project. The original estimate was for $525,000. It ended up costing $97.3 million.

    • A $23 million budget increase in the Office of the State Controller's Criminal Justice Data Integration Pilot for a project in Wake County. Originally budgeted for $2.1 million, the price tag ended up being $24.7 million.

    • A $23 million budget increase in an IT system for the Department of Health and Human Services. The initial budget was $25.2 million. It ended up costing $48.2 million.

    There were delays in getting new technology systems in place. Those include:

    • A 1,307-day delay for the Department of Health and Human Services' Vital Records and Statistics Automation System project.

    • A 1,237-day delay in the Employment Security Commission's initial claims call center project.

    • A 1,184-day delay in that Criminal Justice Data Integration Pilot for Wake County.

    Wood acknowledges that no one expects initial estimates to be exact. But she says IT estimates should be much closer than that.

    The report recommends that ITS come up with written guidance for developing IT project costs and schedules. The report also suggests that agencies obtain independent validation of the accuracy of its project estimates.

    "The bottom line is the cost estimates up front are not accurate and reliable," Wood said.
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