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US' may be a 'black swan'

Patrick Thibodeau | Oct. 28, 2013
One in six IT projects face out of control costs, and bring much disruption, making them 'black swans'

Despite partisan sniping over the Affordable Care Act, members of a U.S. House committee probing the problems at Thursday asked some tough, IT-specific questions that revealed some key facts.

Two members of the House Energy and Commerce Committee, U.S. Reps. Greg Walden (R-Ore.) and Anna Eshoo (D-Calif.), were especially focused on the testing process for the ACA website that's had problems since its launch on Oct. 1.

It turns out that project's 55 contractors had only two weeks to conduct end-to-end testing of prior to launch.

"What's the recommended industry standard for end-to-end testing," asked Walden.

"Months would be nice," said Andrew Slavitt, executive vice president of Optum, one of the contractors that built the site. Cheryl Campbell, senior vice president of CGI Federal and a witness, perhaps the largest contractor on the project, agreed with Slavitt.

The contractors for the site all said they performed their part of the project as required while making it clear that they weren't responsible for the overall outcome of

None could say, with any certainty, when the website will perform as designed. There was no one from the federal government to explain the project's IT decision-making, though federal officials are expected to testify as early as next week.

The problems at may qualify as a black swan event, something that's difficult to predict and is disruptive. A black swan event in Mother Nature might include a solar geomagnetic storm that knocks out sensitive electronics and power grids. In IT, a black swan event is a project with out-of-control costs, and consequences so severe that it may cause a company to fail.

The cost of is rising, but to what extent has yet to be revealed by federal officials.

The disruptive consequences have been severe enough to prompt President Obama to express dissatisfaction with the site. Perhaps more importantly for the Obama administration is whether the IT events at, such as data error and availability issues, will force it to further adjust deadlines of its signature policy project.

Approximately one out of five or six IT projects face exploding costs, according to Alexander Budzier, a researcher at the Said Business School at the University of Oxford. Budzier and Bent Flyvbjerg, a professor at Oxford's business school, have gathered data from 4,300 worldwide IT projects in the private and public sectors whose typical costs range between $1 million and $10 million.

IT projects perform worse than physical projects, such as large dam construction, where one-in-ten may see cost blow-outs, said Budzier. In IT, 18% of projects turn into outliers that "really run out control, and that's a usually high rate," he said.


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