IT project failures in Sydney Water’s customer relationship management system

Group members:

932506 劉彥徵 932520 葉佩昀 932539 張芷璐 932540 王櫻婷 932545 黃巧瑛 932547 許郁欣

Teacher: 吳思佩 老師May/13th/2008

About Sydney Water

The largest water services provider in Australia Provides filtered drinking water, treats and recycles

wastewater, provides water and wastewater services Sydney Water has three equal important principal

objectives:

- To protect public health

- To protect the environment

- To be a successful business that shows a sense of

social responsibility

About Sydney Water (Conti.)

In recent years it has completed a number of projects including:

-- the $90 million upgrade of the Cornell sewage

treatment plant

-- the $460 million Alliance for the North side Storage

Tunnel

-- The CIBS project with a final budget of $60 million

was Sydney Water’s largest IT project.

Other IT projects had ever implemented in Sydney Water

Customer Relationship Management System Performance Management System Quality management system Online transaction system

About Customer Information and Billing System (CIBS)

The CIBS project was Sydney Water’s largest IT project

CIBS project was intended to improve service to customers, to fill gaps in existing information systems and to provide business efficiencies

The CIBS project required integrated with 12 existing major internal business systems

Sydney Water contracted PwC in June 2000 to build and implement CIBS

About Customer Information and Billing System (CIBS)

release 1 (R1) – a tool to service major customers release 2 (R2) – electronic interaction with

commercial land developers release 3 (R3) – the substantial phase of the project,

being the core customer information and billing engine

The R1 and R2 components were implemented, although R2 did not achieve its full functionality.

About Customer Information and Billing System (CIBS)

Sydney Water terminated the CIBS project on 30 October 2002.

The CIBS project was not reaching acceptable standards and that there were excessive costs and delays

From Sydney Water Corporation

Sydney Water’s Board concerned that the project was not reaching acceptable standards, and that there were excessive costs and delays. (2002/10/31 terminated)

Sydney Water originally expected the CIBS project to be operational by February 2002, at a cost of $38 million. Before the decision to stop the project, the budget had increased to $60 million, with a further revision pending.

Sydney Water advised in September 2002 that the increase in the budget was due to some scope changes and some underestimation of the time required for system, user acceptance and system integration testing.

Australian IT News reports (2007) : Sydney Water gears for court

Sydney Water launched legal action against PwC over the customer information billing system (CIBS) debacle in 2003.

Sydney Water dumped the CIBS project following lengthy delays and a massive blow-out in the system's anticipated cost from an initial budget of $38.2 million to more than $135 million.

A May 2003 report from then NSW Auditor General Bob Sendt found that the CIBS failure would cost Sydney Water about $61 million and in part attributed problems with the project to poor management and governance.

Australian IT News reports (2003) : Water bill fiasco sends $61m down drain

The board of Sydney Water and its senior executives had failed to effectively oversee or even "understand the complexity" of the project.

Sydney Water had also failed to adequately disclose the status of the Customer Information and Billing System (CIBS) despite the auditor questioning the project in previous reports and clear warnings that it was flawed.

There was a belief in Sydney Water that IT projects of this nature and complexity would inevitably go over budget and be delayed.

A report published by the New South Wales Audit Office

They believed that it did not detail risks, problems, and the reasons for cost increases and delays to the project.

They advised the GM-Corporate Affairs and Corporate Secretary, and GM-Finance that they believed the disclosure was inadequate.

They believe that the commentary on CIBS in the Annual Report did not adequately discharge Sydney Water’s obligations for accountability.

According to papers of "Review of Sydney Water’s Customer Information and Billing System"

The project could not continue because the Board had lost confidence in the ability of its contractor.

The principal cause of the project’s failure is that the contractor, PwC did not meet its obligations under the contract.

Sydney Water’s approach to the CIBS project would stand up well to objective scrutiny, but there were clearly weaknesses in execution by its contractors.

Why IT project (CIBS) fail?

We are going to re-examine each phase in the System Development Life Cycle and factors that also contribute to a project’s success to find out what went wrong in the CIBS project.

Now let’s review what SDLC is.

SDLC consists of 5 phases, they are: Project planning phase Analysis phase Design phase Implementation phase Support phase

Project planning phase

Define the problem.

(To identify the scope of the system) Produce the project schedule. Confirm the project feasibility. (Such as

economic, organizational, technical, resource, and schedule feasibility.)

Staff the project. Launch the project.

Analysis phase

Gather information. Define system requirements. Build prototypes for discovery of

requirements. Prioritize requirements. Generate and evaluate alternatives. Review recommendations with management.

Design phase

Design and integrate the network. Design the application architecture. Design the user interfaces. Design the system interface. Design and integrate the database. Prototype for design details. Design and integrate the system controls.

Implementation phase

Construct software components.

(This means coding.) Verify and test. Convert data. Train users and document the system. Install the system.

Support phase

Maintain the system. Enhance the system. Support the users.

Other factors that affect a project’s success

project governance project maintenance project management

Combine phases in SDLC with factors that help IT project become successful, such as project governance, project maintenance and project management, to find out what actually went wrong and contributed to the failure of the project.

In the project planning phase

What should be done are: Confirm the project feasibility. (Such as

economic, organizational, technical, resource, and schedule feasibility.)

Turn out to be: Technologies selected to make up the system

have been too complex and incompatible.

In the project planning phase (Sol.)

Do the feasible analysis It is necessary for Sydney Water and PwC to do a

complete understanding about Sydney Water’s hardware equipment and IT infrastructure

Consider all the possible problems mat occur after implementing the system before they construct the system.

Consider the need for additional budget for the purchase of new hardware equipment to meet the system.

In the analysis phase-A

What should be done are: Gather information. Define system requirements.

Turn out to be: PwC admitted that insufficient time having

been spent in analysis.

In the analysis phase-A (Sol.)

Each stage of the project management should be completed, so as any phase in SDLC

Sydney Water should know whether the system can meet their requirement.

PwC should do more on analyzing the system.

In the analysis phase-B

What should be done are: Build prototypes for discovery of

requirements. Define system requirements.

Turn out to be: Project specifications were inadequate.

In the analysis phase-B (Sol.)

At initiation stage of the project, PwC should evaluate the system and design appropriate activities and milestones.

PwC and Sydney Water should have full discussion on the Project Charter and definition of the scope.

In the design phase

What should be done is: Prototype for design details.

Turn out to be: PwC did not build prototype, as they should

have, to test the possibility for the establishment of the system.

In the design phase (Sol.)

PwC build a prototype to Sydney Water and let Sydney water know that if the system meet their goals or discover another requirement.

PwC and Sydney water can discuss the scope or system.

In the implementation phase

What should be done is: Verify and test

Turn out to be: PwC did not have a complete test plan.

In the implementation phase (Sol.)

After developing the system, PwC should have another people who didn’t code for the system test the system to find bugs and see whether this project meet the requirement (user’s needs)

After testing, the people should give the project manager a testing report. Project Manager should determine how to improve or don’t need to improve.

In the support phase

The 3 activities in the project analysis phase are: Maintain the system. Enhance the system. Support the users. Sydney Water terminated the CIBS project on

30 October 2002. Therefore, 3 major objectives for the support

phase have never been performed.

Project governance

The board did not oversee the project effectively as it might have. Its understanding of the project, in light of its complexity, was limited.

Knowing that IT architecture for the Sydney Water group was not in place but the Board still approved it.

Do not start the project with careful thought. An external auditor was not engaged to review the

performance of Sydney Water and PwC.

Project maintenance

PwC did not have integrated project plan maintained well.

Project management

Sydney water project team lacked experience in large, fixed price IT contracts.

Poor communication between project team members.