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Sydney Water Customer Information and Billing System Case Solution

Solution Id Length Case Author Case Publisher
949 1581 Words (3 Pages) Michael Parent Harvard Business School
This solution includes: A Word File A Word File

The new customer information and billing system (CIBS) is Sydney water’s largest informational technology project. This project was budgeted at $38.2 million; it was a two year project, forecasted to end in February 2002. Nevertheless, the project’s budget was underestimated, so, more than $60 million has been spent. Addition to that, project that was supposed to end in February 2002, was delayed till, at least, the last quarter of 2003. These inaccuracies clearly represent the lack of communication and other inefficiencies prevailing in Sydney Water. This project since its inception was not in the right direction. The project planning and forecasting of total cost and time period required were not reported correctly infect underestimated. This represents a clear lack of research by Sydney Water. Research was not done on market trends like interest rates; proper research was not done on project requirements, as a result, these all underestimations led to underestimation of cost and duration of the project, which put completion of this project on stake.

Following questions are answered in this case study solution

  1. Why have there been delays and cost overruns in the CIBS project?

  2. Who is responsible for these problems and why?

  3. What should Sydney Water do now with the project? Explain.

Case Analysis for Sydney Water Customer Information and Billing System

One can clearly observe a lack of communication and laziness from the management of Sydney Water and PWC. This first happened when demonstration of TPOC was planned to take place in early June, but never took place on time. Management never cared about delaying attitude and signed agreement Problem identification was done, but there is no clear indication whether problem solution was worked out. There were continuous delays in completion of different phases, like R2’s first phase was covered 2 months late then schedule. Despite of these delays, management, apparently was not much concerned and didn’t take necessary steps to put PWC on toes. Instead of getting into the cause of the problem and sorting them out, Sydney water, let the work continue.   

There were some problems on R2, instead of getting into the problem of overflow of cash to R2, Sydney further invested in R2. Furthermore, communication gap can be observed, CIBS director was raising concerns about the viability of the project while, before that, MD was reporting project to be on time and as planned. This can also be connected reporting of false information to the top management. This is usually done to keep one’s positive Repo and dominance. Management attitude was also a question mark as it was accepting new forecasts and, at the same time, was providing funding. It was very flexible with deadlines, and despite a negative NPV, it continued the project and increased budget up to $60 million (Feld & Stoddard, 2004).

Who is responsible for these problems and why?

Always, there are a series of events and reasons for a failure of mega projects like CIBS. So, one can’t blame a single person or a department as a reason for that failure. Same is the case with CIBS there is a series of mistakes, mostly on behalf of Sydney Water that put the implementation of this project on stake. Since the inception of the project, one can observe the lack of proper planning and communication gaps. Communication was very important as this megaproject required 12 major business units to be integrated and 60 third party interfaces. Sydney Water initialized this project with underestimation of cost and time. It represents that Sydney Water lacks market insights about risk management and so, the interest rates trends. These trends were underestimated by Sydney Water, and so it resulted in erroneous overall forecasting of the project. The management never covered up with the flow of the project. It appears that management had a feeling that outsourcing the project will transfer the risk and responsibilities to the other organization. Poor performance of finance department of Sydney Water builds up the bases for underestimation. It seems that the finance department lacked automation and skilled employees. Employees are not techno savvy and also, they are not very much knowledgeable about the project risk management and forecasting (Ross & Weill, 2002).

There was a clear communication gap within the organization and with other stakeholders. The overall governance of the project was under question. The management never provided a clear picture of the proceedings of the project. In addition to that, management was also not providing timely information, nor top management took any strict actions. It never clarified the problems and constraints impeding the successful completion and operation of the project. Addition to that, top management didn’t handle the project as it should have. Many a times, top management provided further funding to project despite it was encountering problems with it. Also, it was not as strict with delaying in completion of the project as it should have been. Over all, one can say that top management was not provided more of needed information, at the same time top management showed a lenient attitude towards stakeholders. The leniency of top management can be observed from the start when demonstration was not done on time. Then, the MD reports were not timely, but no actions were taken. The project was showing a negative NPV with its few parts not yet functional management approved to proceed with the next step. It accepted additional $8.9 million then it again accepted other costs raising the total cost to 60 million. It was also flexible with providing extension, due to project failure. However, top management never pushed for a reason for failure and increase in duration of completion.

Addition to top management issues, the lower management in direct coordination with stakeholder and monitoring the project was not efficient. Over all, there was a lack of planning and coordination among all the stakeholders. Management didn’t provide timely and correct information to top management to make timely and proper decisions. There was no contingent plan. Sydney Water let the events happen one by one but never took some strict actions. The personnel in direct coordination with PWS were quite lazy; testing of the project phases was never timely. Addition to that, lower management mostly provided top management with optimism and dreams of successful project.

What should Sydney Water do now with the project? Explain.

It would be wise for Sydney Water not to continue with this project. With the frequency of giving leverages on time and money, it seems that Sydney Water is supported with no financial and time constraints. However, spending on a project that will be in loss in the future is not wise. As mentioned, this project has a negative net present value; in addition to that, there are many flaws that still need to be corrected and ending time for this project is also not certain. Like before, this project can still be extended that will require additional investments.

There are numerous management flaws in precedence with the occurrence of the events. Even if, the Sydney Water continues with the project, management will continue to make mistakes. It’s much better for the organization to build up management structure that can handle such mega projects. In its financial department, top management and middle level of management are not competitive and efficient enough. It seems that Sydney Water lacks automation. As a result, there were communication, planning, risk management and other gaps within the organization itself and with stakeholders. Because of these gaps, decisions were not timely and accurate, data representation was not correct. Also, the management policies were not stringent. As mentioned earlier, these policies were not backed up by automation. Sydney Water should improve its internal process before taking on a Mega project. In other words, it should start with departmental automation and other necessary changes (Feld & Stoddard, 2004).

Sydney Water should stop the project urgently, and should learn from its bad experience. The forecasting methods need to be upgraded and based on comprehensive market research. If forecasting is not done properly, project will never end up with forecasted cost and time. If the firm continues with the current project, just to complete what it has started; it will incur more cost and time loss. Earlier the Sydney Water realizes its mistake, more, is better for them. If one recognizes mistake early, it’s with the flexibility to amend it.

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