Integration Costs Have Increased and Expected Completion Has Been Delayed

While HUD revised its FSI plan in 1993 and again in 1997, its primary objective—implementing an integrated financial management system to meet the department’s program and financial management needs—remained unchanged. HUD’s strategy for achieving the FSI objectives was to replace about 100 separate financial and mixed systems with nine new fully integrated systems. The department estimated that it would cost about $103 million to develop and deploy the nine systems called for in the 1991 FSI plan by September 1998. Therefore, HUD had no assurance that it had selected the most cost-beneficial solution for FSI. In 1995, the department estimated that the development and deployment cost of the 1993 strategy would be about $209 million. FSI Revised Again in 1997

In 1997, HUD again revised its FSI strategy after concluding that (1) it could not fully deploy HUDCAPS—the core financial system—by September 1998 and (2) the systems integration effort had to conform to the HUD 2020 Management Reform Plan. Until HUD finalizes its plans and cost and schedule estimates to complete the 1997 strategy, the expected FSI cost will remain uncertain. HUD has been working to implement the 1997 FSI strategy. Further, HUD lacks an adequate process for monitoring and controlling its FSI investments and does not have a process for evaluating FSI information technology investments once they have been completed. As a result, HUD may continue to invest in a system without knowing whether costs or benefits have changed enough to warrant discontinuing further investment. Year 2000 Computing Crisis May Further Impact FSI

FSI cost and schedule estimates may be impacted by HUD’s Year 2000 program, a priority effort that must be completed on time. HUD has not yet implemented a disciplined investment management process to select, control, and evaluate FSI projects in accordance with industry best practices and as required by the Clinger-Cohen Act and the Paperwork Reduction Act. In addition, HUD should finalize the detailed project plan for the core financial management system (HUDCAPS) to establish the milestones, tasks, task dependencies, a critical path, and staffing requirements and demonstrate that it is cost-effective to meet the October 1999 scheduled implementation date called for in HUD’s 2020 Management Reform Plan and finalize detailed project plans for individual FSI projects (mixed systems) that establish the milestones, tasks, task dependencies and critical paths, and staffing requirements to complete the 1997 FSI strategy. Objectives, Scope, and Methodology

Our objectives were to identify (1) the initial objectives, development, deployment and maintenance costs, and completion dates for HUD’s FSI effort and how they have changed, (2) the factors that have contributed to FSI cost increases and schedule delays, and (3) whether HUD is following industry best practices and has implemented provisions of the Clinger-Cohen Act of 1996 and the Paperwork Reduction Act of 1995 required to manage FSI projects as investments. 3. 4.
Why GAO Did This Study

Pursuant to a congressional request, GAO identified: (1) the initial objectives, development, deployment and maintenance costs, and completion dates for the Department of Housing and Urban Development's (HUD) Financial Systems Integration (FSI) effort and how they have changed; (2) the factors that have contributed to FSI cost increases and schedule delays; (3) whether HUD is following industry best practices and has implemented provisions of the Clinger-Cohen Act of 1996 and the Paperwork Reduction Act of 1995 required to manage FSI projects as investments; and (4) whether HUD's Year 2000 program will impact its FSI activities.

What GAO Found

GAO noted that: (1) while HUD's primary FSI objective of implementing an integrated financial management system has remained the same, the underlying strategy for achieving this objective and completion dates have changed significantly; (2) in 1991, HUD approved a plan to replace about 100 financial and mixed systems with nine standard integrated systems, estimating that it would cost about $103 million to develop and deploy the systems by September 1998; (3) in 1993, HUD abandoned its plan to develop nine new systems and significantly revised its FSI strategy; (4) HUD estimated that it would cost about $209 million to develop and deploy the new system by December 1998; (5) in 1997, HUD revised its FSI strategy again, extending the date for fully deploying the core financial management system to October 1999 and incorporating the development and deployment of additional new systems required to meet the department's latest management reforms and organizational changes; (6) the department did not adequately assess the costs or benefits of the 1997 FSI strategy; (7) as a result, HUD has no assurance that it has selected the most cost-beneficial solution to accomplish its FSI objectives; (8) until HUD finalizes its plans and cost and schedule estimates to complete the 1997 strategy, the expected FSI cost will remain uncertain; (9) nine systems included in the 1997 FSI strategy are in various stages of development and deployment; (10) revisions to the systems integration strategy and management and oversight problems associated with individual projects are factors that have contributed to FSI cost increases and schedule delays to date; (11) HUD has not yet fully implemented a complete, disciplined information technology investment management process, which includes selecting, controlling, and evaluating FSI projects and conforms with best practices and related requirements in the Clinger-Cohen Act and the Paperwork Reduction Act; (12) in addition, HUD has not implemented: (a) an adequate process to control information technology products once they have been selected for implementation; or (b) a process to evaluate information technology projects and determine whether they have achieved expected benefits; and (13) HUD's Year 2000 program, a top priority effort that must be completed on time, may further impact the FSI effort.