Fl \-e.,

2/lo/20\ s- /\"\.x::LIT CoNJmii-\eQ__ {\\QQ::tln9 of~..Q.. wh.o\e.., lfe. SA? QA1' ~. .J1-e..UJ ~~\j\-t-s

Zco Synergy Project Performance Audit Assembly Report February 13, 2015

Page 1

ZCo Consulting © ZCo Consulting LLC 2015 All rights reserved.

Synergy Project Audit Assignment o Examine Project Management o Examine Project Resources o Examine Project Scheduling o Examine Project Budget

o Develop Assessment o Develop Recommendations

ZCo Consulting Client Confidential

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Work Performed o

Individual Interviews • • • •

o

Members of Executive Steering Committee Members of Functional Steering Committee Program Manager Project Managers (13)

Functional Team Interviews •

Finance o o

•

Projects/Grants/ Assets/Budget General Ledger/FERC

Logistics Order to Cash o Procure to Pay o

• •

Payroll Human Resources

a Systems Integrator Interviews a SAP Discussions a Systems Integrator Discussions a Project Document Review (50) a Project Staff Survey Client Confidential

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Documents Reviewed a SAP Draft Design Report a MoA SAP Response a 50 Project Documents (samples of periodic reporting, milestone reporting, plans, schedules, design analyses, project control) a Overall many of the approaches from a document perspective are appropriate such as tracking issues, planning the changes, conducting all hands meetings, test planning, risk management, and contractor time reporting ZCo Consulting Client Confidential

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Selected Comments on Documentation o Assembly status reports do not include project outlook or recommendation actions. o Change Order Log does not track all contractor changes, just the major Systems Integrator. o Project Cost does not track change orders specifically. o The Organization Change Management and Training Group does not report to the Synergy Program Manager. o The Issues Log is inconsistent re assignment, target dates and closure. o The Blueprint (Business Requirements) was left as 'draft', incomplete. o Process flow diagrams were developed for major flows only (as agreed). o The Master Workplan is not broken down to Team Leader level. o Many Master Workplan assignment are to groups rather tha n to an individual. o The SAP Design QA report lists work effort for 'high risk' items is imprecise, indicating 500+ hours instead of the range used for 'low risk' and 'medium risk' items. ZCo Consulting Page 5 Client Confidential

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Consulting LLC 2015. All rights reserved.

PROJECT ORGANIZATION COMMENTARY ZCo Consulting Page 6 Client Confidential

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Project Governance Position o Recent shifts in the Synergy project structure are in the rig ht direction. • Addition of the Functional Steering Committee. • Addition of skilled project managers reporting to the Program Manager.

o The execution of the revised project governance structure has been weak and can be improved. o Project planning and scheduling-has not been effectively delegated to project manager and team leaders. o Overlapping oversight committees exist with inconsistent and unclear responsibilities as they relate to the Synergy Project: Executive Team, Executive Steering Committee, Technology Steering Committee, Synergy Functional Steering Committee. ZCo Consulting Page 7 Client Confidential

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Project Organization 0 bservations o Consensus seems to be that MoA has not committed resources 'full-time'. Backfill promised but slow to happen (even after 4 years). o Consensus seems to be that the presumed 'peer' consultant time for some of the teams is limited or not present at all to some of the teams due to 'consultant sharing'. o Utilities participation appears 'defensive' rather than 'participative' (protecting their needs) and are following a parallel project organization chain. o The project has experienced turnover in critical functional roles. o The project structure has excessive layers. o The project organization chart does not reflect the various advisors and their involvement. o Full project team not shown on summary chart (missing training/change mgmt). ZC'o Consulting Page 8 Client Confidential

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Project Governance 0 bservations a Functional Steering committee has granular, controlling approach. a Executive Steering Committee has experienced turnover over past 4 years. a Executive Steering Committee facing another round of turnover in a few months. a Executive Sponsor position facing potential second turnover within a year.

Z Co Consulting Page 9 Client Confidential

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od SURVEY RESULTS

Client Confidential

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Survey Results - Summary o Overall Response • Dates of Survey: 1/22 _ 2; 4115 • 248 Surveys Issued • 146 Total Responses a MoA: 128 (87.70/0) a Contractors: 18 (12.30/0)

Municipality of Anchorage ...

Contractor

0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

ZCo Consulting Page 11 © ZCo Consulting LLC 2015. All rights reserved.

Survey Results Summary D

Summary of Project Roles Answer Choices

~ ®

~ ~ Exper1

AsRequ;,ed r;;;;)f

~;(-; ; ;\chn~~G)-

V ; \\

_ I echrncal)

2( \

(?u9 j

'2)~~~\3>""

() \\) V llfechnkal)

~

~®~~.. \ ) \) v

4

~~

~(\\~\())® \'r \\

, . . . .___

5A'\ \

\'?§

§@,\> 63

l.05%

10

6.85%

29

19.86%

4

52.74% .4S%

8 7

\)\>

h•nge Champ;on

4.19% 9.59%

14

0.68%

Super User

56

38.36%

146

ZCo Consulting Page 12 ©ZCoConsuttingLLC2015. All rights . reserved.

Survey Results - Highlights o Adequacy of Training of MoA Project Staff: • 75°/o said training was limited to none. Active Project Team Members Responses 61 None Broad Brush Limited Depth Adequate Overkill No Response Total

4 21 21

14 0 1

23% 0% 2%

61 ZC'o Consulting Page 13 © ZCo Consulting LLC 2015. All rights reserved.

Survey Results - Summary o Adequacy of Training of MoA Super Users: • 53°/o said training was limited to none. Active Power Users Responses 37 None Broad Brush Limited Depth Adequate Overkill

0 18 14 4 0

7% 0%

[?) [J ~o@~n~e@ITU ~ otal

37 ZCo Consulting Page 14 ©ZCo Consulting LLC 2015. All rights reserved.

Survey Results - Summary o Years of SAP or Project Management

Experience: • 18 Contractors responded to the survey. • The combined total years of experience of all contractors is 207 years. he a rage number of years of experience is 11. 5.

@@@@ ZCo Consulting Page 15 © ZCo Consulting LLC 2015. All rights reserved.

Communications with Users o "Rate the effectiveness of

communications between the project team and the system's future users''. o Over 70°/o of all active team members

responded that communications between the team the system's future users 'ineffective' ·or only 'somewhat effective'. ZC'o Consulting Page 16 Client Confidential

© ZCo Consulting LLC 2015. All rights reserved.

o ''Rate the effectiveness of

communications among the project team members". o Over 70°/o of all active team members responded that communications among project team members were 'ineffective' or only 'somewhat effective'.

ZGo Consulting Client Confidential

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Lack of Effective Work Assignment o ''Do you have specific deliverables clearly identified for your delivery each week?'' • Over 50°/o of all project team members answered 'No'. • Nearly 70°/a of MoA staff members answered 'No'.

ZCo Consulting Page 18 Client Confidential

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Additional Tools Needed a "What additional tools do you need to be successful in your role with this project?" • Training • Clearer specifications (from a business perspective). • Overtime from the city for my team to get the work done that is expected of them. • Improved communication, including sharing information ·with all project stakeholders • Clarification of expectations • More time with ERP experts with deep experience • Consultant knowledge transfer • A dedicated, knowledgeable consultant (part time commitment). • A set of task assignments driven by a project plan • Clearly identified tasks, goals, time allotment per task • Ergonomically designed furniture, not make-shift tables ,aBd . . ZLo onsuitwg d ISCa rded Cha IrS. Client Confidential Page 19 1

.1 .

© ZCo Consulting LLC 2015. All rights reserved.

Some Common Threads from Survey Comments "Poor communication" "Need clarity of plan and schedule" "Need clarity of responsibilities and expectations" "No confidence in finishing since it has gone so long" "Worried about having ongoing internal support - · comparison to the PeopleSoft failures" o "Lack of confidence" a "Existing ERP is not sustainable" a "Walls between MoA and systems integrator - teaming is not very good"

o o o o o

ZCo Consulting Client Confidential

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Selected Comments o o

o o o o o

o

From a super user: "No one has come to look at what we are dealing with on a daily basis". "I am encouraged by the new CFO's involvement with the project now. Before this it seemed to be run by personalities and no compass." From a super user: "I don't know what the status is or when I would be expected to train other employees in my department." "Not much information is given from the top." "this is without a doubt the most poorly managed project I have witnessed in my life". "It is difficult to maintain motivation to participate in training when system implementation keeps getting moved back." "No clear indication how Kronos will communicate with SAP and how employees will be able to labor level transfer between grants/projects." "the Muni's Center of Excellence should be staffed as soon as possible to maximize the knowledge transfer from functional consultants to municipal employees. ZCo Consulting Page 21· Client Confidential

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so ...WHAT HAPPENED? ZC'o Consulting Client Confidential

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Resources Cost

Staff

Result

x

__j

Inputs

The Three Project Attributes are in Balance: the Inputs are Able to Generate the Result.

ZC'o Consulting Page 23

Client Confidential

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MoA's Synergy History

Result: • • • •

Cutting Corners on Design Leading to Design Issues Late in Project Completion Cycle, Inadequate Staffing, Elongated Decision Cycle, Multiple Failed 'Go Lives'. ZCo Consulting Page 24 Client Confidential

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PROJECT BUDGET REVIEW

ZCo Consulting Page 25 Client Confidential

© ZCo Consulting LLC 2015. All rights reserved.

Budget Category

Operatin2

Contract Labor MOA Labor Software Software Maintenance Hardware Training

563,287. 3,329.

Total

Capital 18,857,997. -8,630,369. 1,347,228.

194,941. 29,263,181.

01,284. 8,633,699. 1,347,228. 224,800. 232,644. 230,178. 662,376. 30,752,212.

1,973, 761.

1,973,761

~ ~ ~ ~

Other

TOTAL Actuals

467,434. 1,489,030.

Open PO's - Encumbrances

----

Total Actuals I Encumbrances

1,489,030.

31,236,942.

Total Budget

2,151,800.

32,538,412.

U1J mJ CID M cQJ D~@"@ .I . .

6_62-,7-6 9_. _

-

- -

32,725,973

1_,3_0 1,_46-9. ____.

ZCo Consulting Page 26

Client Confidential

@ZCo Consulting LLC 2015. All rights reserved.

Contractor Costs Name

PO Amount

$10,538,782 ----1----$21,000 1

Original Systems Integrator !st aff Contr~or___ 1

Technology Contractor

Business Services Contractor

1

$9,538,782.00 - $23,172.00 1

$5_?6,350_1 __$380,875.00 _i690,40C>j $461,80_!._00 $131,458 ; $131,458.00 I $133,674 $121,916 1

- - - + -_ _ _

~roject Manager Cont!~ctor . -=__ I Individual PM Contractor

Spent

_ ___.___

- -Bus Svcs -C-o ntra-c-to-r Ch~nge- 0-rder - -- $i,ooo,oo~

-'

- --

I

$7,750,000 1 $6,9~2,760.00 1 Project Ma~a=ge_ ~ent Contracto ~ ~~=+---$40~~6ooJ _ ~~97,560.~0 I Individual Contractor $109,980 $74,852.00 ----+--Software Vendor Services $750,000 1 I ~mp SupportServic-es- -------'---_ _$49,400 ______ ] Degree Applicable to ZCo Consulting Page 27 Synergy Unk.n own client confidential Second Systems Integrator

1

© ZCo Consulting LLC 2015. All rights reserved.

Budget Conclusions a The expenditures are not completely surprising for an SAP implementation given its degree of complexity and the extensive, very tight integration and other 'troubled municipal implementations. a The balance of budget remaining will not come close to addressing implementation completion. a There is an instance of confusion re tracking contractor charges from a Municipal-Wide contract to the Synergy Project. a The delays have created the need for some additional expenditures for product support and maintenance (version upgrade and related hardware infrastructure enhancements). ZCo Consulting Client Confidential

Page 28 © ZCo Consulting LLC 2015. All rights reserved.

ASSESSMENT CONCLUSIONS

ZC'o Consulting Client Confidential

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The Bottom Line (1) · a The project is salvageable but must ensure 'asbuilt' documentation so there is a solid platform for continuing use of the product and future upgrades (which all become 'mini' projects due to the sheer complexity and tight integration of the SAP solution). a Given the project's 'pause', there is a risk of opening 'Pandora's box' and extending the project. Increasing scope at this time should be avoided if at all possible.

ZC'o Consulting Client Confidential

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The Bottom Line (2) a The project team must establish accountability

a a ·

a

a

at the team member level. The project team must establish consistency and diligence at the project manager level. The project plan must subdivide the implementation to achievable 'chunks' for each project manager. The project plan must identify tasks for team members that have a horizon short enough to see the completion. Project results tracking must be based on completions, and only completions. ZCo l onsulting Client Confidential

Page 31 © ZCo Consulting LLC 2015. All rights reserved.

The Bottom Line (3) o MoA must provide the necessary subject matter expertise as required by the staffing plan. o MoA must forward schedule the project. o MoA must define 'early victories' (nearterm completions) and celebrate them.

o MoA should apply the SAP recommendations regarding configuration and documentation. ZC'o Consulting Client Confidential

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The Bottom Line (4) o MoA should use the SAP low risk items to define an achievable project 'chunk' so it can create an 'early victory.

o MoA's project plan needs to include external dependencies. o MoA should manage all of its contractors with deliverables. o MoA must 'Revitalize' the project.

ZCo C'onsulting Client Confidential

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Revitalize the Project (1) a The project momentum has virtually halted. • Project morale is very low. • Turnover has begun, the team is losing some of its 'corporate knowledge'.

a Need to re-energize and re-vitalize.

a Focus on defining relatively quick successes (subdividing to whatever degree achieves the quick success). a Celebrate successes, focusing on MoA staff participation and their recognition. a Build team spirit again - physical proximity, team identification (idea, tear out some of the walls on the 7th floor, make the space more acceptable, provide top notch equipment, white boards, projectors, high quality chairs)

ZCo Consulting Page 34 Client Confidential

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Revitalize the Project (2) o Get project managers with their teams, mixing contractors and MoA staff. o Encourage st aff and management continuity. o Be consistent with staff. o Re-establish effective communications throughout project team. o Re-establish effective communication throughout the Municipality. o Provide additional in-depth team member training. o Continue organization change management activities. o Plan super-user training, conduct their training at appropriate times.

ZCo Consulting Page 35 Client Confidential

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RECOMMENDATIONS ZGo Consulting Page 36 Client Confidential

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SOLIDIFY/ CLARIFY PROJECT GOVERNANCE ZCo Consuldng Client Confidential

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Executive Steering Committee (E SC) Suggestions a The committee's charter should be clarified: • • •

Will the committee address only the Synergy Project? Should the committee consider other major technology initiatives and strategies? Does the committee oversee other major initiatives and projects for MoA such as new MoA-wide initiatives, programs, and projects?

a Focus should be placed on oversight, MoA Alignment, and budgetary approval. a Meetings should be monthly a Any major project's Executive Sponsor would be a member of the ESC and, as the chairmen of a major project's Steering Committee 'reports' to the rest of the ESC regarding their respective project/program. a Recommendation: the ESC should become a Municipality-wide steering commi ttee that oversees the Synergy Project as one of the many other Municipality initiatives. ZC'o Consulting Client Confidential

Page 38 © ZCo Consulting LLC 2015. All rights reserved.

o

The committee's charter should be clarified: • • • • •

Focus on business decision conflict resolution. Focus on resource need resolution Focus on change management, budget/schedule/resource impacts Focus on program priority resolution The committee should become the 'Synergy Project Steering Committee'

o

Focus should be placed on oversight and avoid micro managing.

o

Synergy Project Executive Sponsor should be the committee chairperson, and, as a member of the ESC reports to the ESC. Additional members should include:

o

• • • •

o o o o

The Program Manager (reporting but non-voting) The Systems Integrator Program Manager (reporting but non-voting) Potential: An SAP Delivery Expert (advisory/reporting but non-voting) Potential: The IV&V contractor (reporting but non-voting)

Independent advisor (ZCo) should be observer. Meetings should be weekly for project revitalization period and then biweekly. The members should plan on a minimum of 1 hour. Recommendation: the FSC should become the Synergy Project Steering ZCo Consulting Committee (SPSC). Page 39 Client Confidential

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Refine Project Oversight Responsibilities

Synergy Project Steering Committee • Reviews Project Progress • Resolves Configuration Conflicts • Resolves Resource Needs •Oversees Project Program Manager •Resolves Program Priorities •Reviews/Approves Major Program Changes (Scope, Schedule, Resources) •Provides Action Recommendations to Executive Steering Committee

Client Confidential

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Refine Project PM Responsibilities

Page 41 Client Confidential

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Reconstitute the Program Management Office (PMO) o The Program Management Office (PMO) should be reconstituted and reformed to reflect/apply best practices: • All project managers associated with the Synergy project should report to the Program Manager on a weekly basis in a PMO meeting and at crucial project times. • All project managers associated with the Synergy project should be members. • The contract administrator for all related Synergy contracts should attend PMO meetings in order to stay on top of change orders contractually. • The system's technology architect should be a member of the PMO. • The meetings can, and should be held to 2 hours (presuming there are about 12 attendees - each gets 10 minutes)· ZCo Consulting Page 42 Client Confidential

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Program Management Office Members a Chairperson should be Program Manager. a System Integrator should have their overall project manager in a

attendance (and reporting to the Program Manager as well) Following Project Managers should be members: • Technology: Development, Environment • Organization Change Management • Human Resources (HR, Pay, Time) • Finance (Inbound Grouping) • Finance (Outbound Grouping) • Data Migration • Integration/Cutover/Reporting, Workflow, Testing

o Following should attend: • • • •

Project Scheduler Project Administrator Contract Administrator Systems Architect

• Independent QA (ZCQ)ient confidential

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IMPROVE CONTRACTOR USAGE ZCo Consulting Client Confidential

Page 44 © ZCo Consulting LLC 2015. All rights reserved.

a Assure SI Accountability • Adherence to Deliverables with pricing by deliverable • Manage T&M very carefully • Enable SI at Appropriate Levels for Advisory/Guidance

a SI Client Executive should attend Executive Steering Committee for Synergy Project top.ics. a Consider a not-to-exceed contracting approach with the Systems Integrator. a Use an attorney that is familiar with contracting systems integrators (perhaps from one of the uti Iities or Conoco Phi Ii ps). a Try to have an SI consultant matched up with each MoA Team Leader. ZCoC'onsulting Page 45 Client Confidential

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Providing Project Management Expertise with Contractors

m