Seattle City Light and Seattle Public Utilities started planning a new billing and customer information system back in 2012. Like so many other software projects, this one went wrong. And the wrongs have been compounding ever since.
The current customer information and billing system, known as CCSS, dates back to 2001. In 2012, the Mayor and City Council approved funds to build a replacement, known as NCIS, and work started in earnest in 2014 at a projected cost of $66 million. It was scheduled to be completed in October of 2015.
To be fair, it’s wrong to think of NCIS as just a billing system. It does a lot of additional things:
- more than 80 customer service business processes, including billing, metering, collections, and field work;
- support for customer self-service including payment processing and account information;
- underlying foundation work to support advanced metering;
- business analytics and reporting;
- interfaces with more than 40 other applications across SPU, SCL, the City of Seattle, and external vendors.
The system is being built partly by Price Waterhouse Coopers under a contract with the city, and partly by about 100 city staff members.
Anyone who has worked in software can tell you all the ways this could go wrong. The specification is big and unwieldy, which makes it both difficult to implement and open to “scope creep” where an unending stream of small changes to just add one more thing accumulate into a lot more work and complexity than originally envisioned. The team is large and spans multiple organizations with rigid boundaries, both of which are impediments to good communication. From day one, the odds were against this project finishing anywhere near on time and on budget.
And to no one’s surprise, it didn’t. By last summer, SCL and SPU had revised the budget to $85 million and pushed out the completion date to April 2016. Last week they informed the City Council announced that they were pushing the launch date out again to fall of 2016, and they now estimate the cost at over $100 million — $34 million more than the original budget (more than 50% overrun).
But let’s back up to last summer, when the City Council was starting to collect requests for the 2016 budget. Since SPU and SCL share the costs of the project 50/50, they each asked for additional funds to cover their part of the addtional funds needed as part of their Capital Improvement Plan request. (aside: it’s a Capital Improvement Plan (CIP) project, and not a general fund project, because it’s creating an asset that will depreciate over many years) But they didn’t coordinate with each other on how they were going to do that, so the descriptions are inconsistent. Worse, because SPU splits the costs across its three divisions (wastewater, sanitation and water) you had to look across four different places to find all the details.
Here’s SCL’s CIP request spreadsheet from last year. To their credit, they did actually say that it was overbudget and late, even if they did play it down:
In 2016, additional funding of $6.1M was added to the Customer Information System budget to account for recommended increases in project implementation costs. The go-live date has been extended from 10/2015 to 4/2016.
But SCL Interim Director Jim Baggs’ presentation says nothing about the multi-million dollar cost overrun.
Here’s SPU’s summary spreadsheet. Their explanation:
The New Customer Care Information System (NCIS) will go live six months later than previously estimated. This will push costs into FY2016 and increase the total project costs.
Unfortunately, the presentation SPU Director Ray Hoffman gave to the Council also didn’t mention any of that — it merely asked for more staff positions to manage the new system. And together SPU and SCL never made any effort to deliver a joint message to the Council about their joint project.
So last week when newly-confirmed SCL Director Larry Weis, whose confirmation process was rocky and currently has a deficit of goodwill with the Council, delivered a memo saying that it was further delayed and even more expensive, he caught the Council completely off guard; they hadn’t even internalized that the bill had risen to $85 million, let alone $100 million. When the city issued a press release at the same time alerting the whole city to the issue, the Council members woke up.
In yesterday morning’s Council briefing, Hoffman and Weis were called in, along with City budget director Ben Noble and City CTO Michael Mattmiller, to explain what had happened. Council member Kshama Sawant, chair of the Energy and Environment Committee which oversees Seattle City Light (and who tried to torpedo Weis’s nomination) was fired up. She accused the group of intentionally burying the details — even bringing out a full 875-page copy of the 2016 city budget as a prop to demonstrate how difficult it would have been for the Council and their staff to have found the details on their own. Council members Burgess and Gonzalez pushed back on Sawant’s accusation of intent in hiding the details, but all the Council members were upset that it had been communicated so poorly to them. Noble admitted that they had done a poor job of communicating the issue, and expanded on that by describing all the ways that the standard budget format is nearly impossible to understand. He spoke to efforts he is making to change the way budget requests are submitted and presented to try to improve the situation. Burgess, the Budget committee chair, agreed to work with Noble on changes to processes and communications related to capital projects and areas of risk.
Gonzalez stated that she believes the executive branch has the responsibility to “elevate information to Council in a form that is digestible and accurate.” She also wanted to know what lessons have been learned, how the situation will be rectified, and most importantly “how we will explain to ratepayers where the financial consequence is going to come from.”
The Council was left with many questions, including Council President Harrell’s questions about when the scope changes were approved; the City staff agreed to follow up with additional information. And Harrell also pointed out that the changes precipitated by this (budget, communications, processes, etc.) will involve legislation, so “committees will have an opportunity to take another bite of the apple.” Burgess’s budget committee certainly will have more to say, and I’m sure Sawant will want to grill Weis and his staff some more — even though the entire debacle predates Weis (though that didn’t prevent Sawant from asking him why he didn’t include it in his first report the day after he was confirmed). Council member Herbold, whose committee oversees SPU, will likely have her turn as well in holding Hoffman’s feet to the fire. So this is far from the last we’ve heard about NCIS.