Corporate Finance

Ambiguous requirements means a massive IT contract must be scrapped

A story that chief financial officers hiring managed application service providers should consider: Pennsylvania has canceled a services contract w...
Keith ButtonAugust 15, 2013

According to InfoWorld, the Pennsylvania Department of Labor and Industry had contracted with IBM in 2006 to help build a modernized unemployment compensation system for $106.9 million. But by 2011, the project had significant cost overruns, and by August the cost had risen to nearly $170 million, according to a study by Carnegie Mellon University’s Software Research Institute.

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The Carnegie Mellon study, commissioned by the state Department of Labor and Industry, also had some criticism for state officials, InfoWorld reported.

Among the study’s criticisms: The original solicitation for the project had “major weaknesses,” including “unprioritized and often ambiguous requirements,” InfoWorld reported. Also: State officials failed to delegate project roles, which led to a situation where no one from the state was accountable or responsible for the program.

Here is the InfoWorld article, and here is ZDNet’s take, including a link to the Carnegie Mellon study.

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