Case Study 8:

Pennsylvania’s Unemployment Compensations

Modernization System : Unfinished Business

Done by:
Abdulrahman Dhabaan

ID: 62210226

Supervised by:
Dr.Ahmed Taqi

School of business
2022
 Summary of The Case:

Pennsylvania Department of Labor and Industry (DLI) is responsible for the state's
unemployment compensation program. In 2006, DLI awarded IBM a $109.9 million contract
to replace an antiquated mainframe system. The project was 45 months behind schedule and
$60 million over budget. A study found many flaws in the systems development process. DLI
lacked sufficient staffing and experience for effective oversight and management of the
project.

The vast majority of software defects were serious, and 50 percent were not discovered
until the User Acceptance test. Thirty-six JAD subcontractors were prematurely removed
from the project. A project of this magnitude requires a high degree of continuity in
knowledge throughout the system development cycle. System design and testing staff were
not included in the JAD process, running counter to sound business practice. The majority of
the project workforce spent less than one year on the project. A total of $178.4 million was
authorized and spent during calendar years 2013 through 2016.

Auditors found that DLI did not use proper accounting methods to record specific SIIF
expenditures. DLI was forced to cut $57.5 million from its UC administrative budget for
2017, causing the immediate closure of three of the state's eight UC service centers and the
elimination of 521 positions. Geographic Solutions specializes in designing, developing, and
maintaining web-based systems for the workforce development and unemployment insurance
industries and has developed over 80 workforce systems for state and local agencies across
the United States.  Cost savings from the project are estimated to range from 5 to 10 percent
of total UC administrative costs. In 2015, DLI had hired Chicago-based CSG Government
Solutions for $6.1 million to assist with planning for and monitoring this project. 
 Questions:

1. Assess the importance of the unemployment compensation modernization system

project for the state of Pennsylvania.

There is a need for the State to replace its antiquated system with a more comprehensive, 
integrated, modern, and effective technology and business mainframes because the
Unemployment Compensation Program held significant importance in Pennsylvania as it
was responsible for providing temporary income to restore the wages that were lost for qu
alified workers. 

The state's "Department of Labor and Industry" was in charge of administering it. 
It assisted workers at least in managing their essential living expenses.

2. Why was unemployment compensation modernization a risky project in

Pennsylvania? Identify the key risk factors.

DLI processed unemployment benefits using a legacy mainframe system that was more
than 40 years old. Even though it was a tried-and-true technique, modernizing it became
difficult and expensive, so they had to transition to a different approach.

The modernization system (UCMS), which would replace the outdated mainframe
system, is extremely important and requires high reliability, accuracy, and consistency.
However, there were additional risks to its implementation in the state, including:

 Its limited case management functionality and rising maintenance costs.

 They needed to incorporate more modern tools and technology to increase productivity.
  DLI lacks the personnel and experience necessary to effectively oversee and manage the 
project and the contract. 
 There has been no official delegating of project management roles and tasks. 
 There is no accountability.

3. Classify and describe the problems encountered by the UCMS projects. What
management, organization, and technology factors were responsible for these
problems?

UCMS encountered numerous issues processing it as well.  For this system renewal, different
persons bring up different problems. Despite having a budgeted budget of $109.9 million, this pr
ojctended up costing approximately $180 million due to severe delays and cost overruns. 

 Management factors : 

Effective governance and program management were lacking from the beginning since DLI did 
not provide enough personnel and funding to oversee the project. 
No decision-makers existed who could have reduced the hazards when they were highlighted. 
Because of IBM's workforce's extreme unpredictability, there has been a break in the flow of inf
ormation or knowledge. 
In the JAD process, they did not supply any testers or developers of application code.
There are no suitable accounting procedures to report certain SIIF expenses. Federal funding, ad
ministrative funds, and interest from the unemployment insurance tax were all combined. No risk 
assessment that could address problems, worries, and presumptions was conducted. 

 Organization factors:

DLI did not specify any quality system needs or characteristics. They relied on IBM's suggestion 
instead. Regarding the project's planning and implementation.DLI and IBM both have different p
erspectives and goals.
  Technology factors:

Lack of quantitative and qualitative system metrics and performance measures resulted in the
absence of measurable standards and supporting data that determine the validity and efficacy of a
system.
lacks a systematic, exacting testing approach. A stress test, which is crucial for supplying crucial
planning data and identifying the UCMS system's performance limits, was not carried out by
IBM. Also tardy was the User Acceptance Test, for which IBM did not hire IT test specialists.

4. What could have been done to mitigate the risks of these projects?

The following actions may have been done to address the difficulties encountered during system
modernization:

 An appropriate IT specialist is needed to fix the challenges in order to finish the project
on time, hence skilled labor force should be employed.
 Adequate Planning. The objectives must to be precise. Measuring metrics and
performance will help you find proof of your successes. DLI should establish standards
rather than relying on the Contractor's initiative.
 Appropriate task delegation and management. Should designate a team or experts who
are knowledgeable about every facet of the project. There should be a capable leader who
can make prompt, decisive decisions.
 Proper assessment and monitoring. Monitoring and testing should be done for all phases
and deliverables.
 An evaluation and assessment by a third party. to enable a deeper level of comprehension
in the project that will be carried out by individuals or groups outside the business. The
assessment's key results should be conveyed, and pertinent problems should be
effectively handled.