Four information technology projects alone are expected to cost New Mexico $456 million more than state leaders originally expected to pay, a program evaluator of the Legislative Finance Committee told lawmakers.
The projects, which include efforts to develop an interagency health and human services system and to overhaul an outdated child welfare case management system, have experienced years of delays and have failed to deliver the functions they promised, program evaluator John Valdez said during a meeting Tuesday in the state Capitol.
He argued the state should shift its strategy for developing large-scale software programs away from its current method of spending years preparing to launch fully-complete systems, and toward a more incremental approach.
“The scale of these investments, the importance of each of these investments to agencies, and the extent to which they exceed initial cost estimates strongly suggest there’s room for improved efficiency and cost savings,” he said.
The costliest delayed information technology project the state is working on is the New Mexico Health Care Authority’s seven-year effort to replace its decades-old Medicaid management information system, according to Valdez’s report.
So far, New Mexico has spent more than $379 million on the project, which was originally expected to only cost about $176 million. The total cost is now estimated to be $493 million, according to the report.
Health Care Authority spokesperson Tim Fowler wrote in an email that the agency’s system represented a broad approach designed to “improve Medicaid operations, data services, quality assurance, financial services and public interfaces.”
All of the system’s modules had been deployed and were in use, Fowler wrote. So far, three have been certified by the U.S. Centers for Medicare & Medicaid Services, and the state Health Care Authority expects the remaining ones will be certified in the next four months.
Valdez also noted a case management and information system under development by the New Mexico Children, Youth and Families Department for nearly a decade among the four most troubled projects.
That system, known as New Mexico Impact, has been projected by committee staff to cost more than $90 million. CYFD in August had set a deadline for itself of Oct. 13 to make New Mexico Impact the system of record for its frontline foster care caseworkers, but said last week it postponed that timeline indefinitely amid software defects, data validation and system functionality issues.
“The October 13 transition was postponed because technical and operational issues required additional remediation and validation before NM IMPACT could safely become the system of record,” spokesperson Matthew Mitchell wrote in an email last week. “Transitioning prematurely could create risks to case management operations, data accuracy and the agency’s ability to effectively support vulnerable children and families.”
Valdez acknowledged that New Mexico is not alone in its struggles to complete large-scale information technology projects. In fact, of 25,000 projects nationwide, only 6% with budgets over $10 million have been completed, he said. Meanwhile, more than 60% of projects costing less than $1 million were successful, according to his report.
“Very large projects have low chances of succeeding across the country. This is not just a New Mexico issue,” he said.
He also cautioned against a common criticism of some state projects: that other jurisdictions have found success in purchasing pre-built systems rather than developing them. Valdez said New Mexico should be “skeptical of commercial off-the-shelf software, which, despite claims to the contrary, is often more costly and time-consuming to customize than the vendor claims.”
Still, he also identified gaps in the way New Mexico goes about working with vendors and developing software.
The state has often resorted to a “waterfall” approach, which is to say it attempts to lay out a number of requirements for its program at the outset of the project and develop a fully fleshed out product by its end, Valdez said.
However, he argued the state should simplify the requests for proposals it publishes and reduce risk mitigation clauses in contracts. He urged lawmakers to favor a strategy of building large-scale software in “sprints” — that is, gathering a large amount of feedback from users and using it to incrementally roll out features and fixes during development cycles that last two months or less at a time.
Essentially, he suggested the state make a cultural shift toward maintaining long-term relationships with companies contracted to develop software, in an effort to build programs one step at a time and avoid suffering massive setbacks that draw their timelines out even further.
“What we would want to do is identify particular user needs, and the sprints kind of would be shaped around those individual user needs,” Valdez said. “And so, rather than looking at a phase that takes a year to complete, we would want to be addressing user needs in a time frame of somewhere between two to eight weeks — much longer than that, and it stops being a sprint, and you start to lose the benefits of holding vendors accountable in the way that best practices envisions.”
Lawmakers had mixed reactions to the idea. Rep. Nathan Small, D-Las Cruces and chair of the committee, said the approach was worth considering given the high costs of overdue projects already.
“The four IT projects that you outline … are ones for us to consider and perhaps ask how we can approach in a more sprint type of model,” he said.
However, Rep. Randall Pettigrew, R-Lovington, argued the state already has the ability for greater oversight and efficiency in these projects, and questioned if the sprint approach would indeed increase efficiency without compromising the state’s vision for how systems should look.
“I think that you’re correct, it is definitely a shift,” he said. “It does concern me. I would love to see a sprint contract — what the thought process is behind that — because I want to see what the guarantee is.”
Esteban Candelaria is a corps member with Report for America, a national service program that places journalists into local newsrooms. He covers child welfare and the state Children, Youth and Families Department. Learn more about Report for America at reportforamerica.org.
