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Portland SAP Project Plagued By Delays, Cost Overruns

The city's planned financial and HR system has cost $47.4 million so far, instead of the planned $14.2 million, and still lacks promised functionality, auditors say.

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The city of Portland, Ore., has mishandled a rollout of SAP's ERP applications, with the project running three times over budget, taking more than double the time to deploy and lacking promised functionality, according to city auditors.

In 2004, the city planned to deploy a new financial and human-resources payroll system based on SAP in 14 months at a cost of $14.2 million, according to a report released by City Auditor LaVonne Griffin-Valade.

Instead, the project has cost $47.4 million to date and taken the city 30 months to get up and running, auditors found. Moreover, some of the promised functionality is not working, and project managers eliminated other planned features as the project developed, according to the report. The city also continues to work to eliminate "shadow" systems that the implementation created.

The audit blames the project's managers for poor execution and claims that city officials could have paid attention to third-party advice and acted to get the project on track sooner but didn't.

"The outside firm hired by the City to provide quality assurance services repeatedly warned the City about concerns around project governance and management," according to auditors. "In addition, the project’s many layers of leadership caused delays in evaluating issues and making decisions."

The project also went off the rails because project managers omitted internal costs from its original budget, resulting in a poor estimation of what it would actually cost. A change in consulting firms and the inconsistent standardization of some city-wide business processes mid-project also hampered the project, causing considerable delays, according to the audit.

Auditors made several recommendations to Portland's IT department as it continues to work on the SAP project, as well as others in the works to replace outdated systems. One suggested that the city evaluate whether the goals of the SAP project are still valid and, if they are, advised project managers to see that the project's most "pertinent" goals are met.

Auditors also advised that project managers work with various city departments to assess and meet employees' SAP training needs; ensure the city's SAP Support Team is equipped to properly operate, maintain and improve the system; and use lessons learned from the project's mistakes to avoid repeating them.

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