2009-10 Budget Analysis Series: Transportation

Department of Motor Vehicles—Management of IT Projects

During the past three years, the administration and the Legislature have authorized eight different IT projects for DMV, with a total original estimated cost of approximately $350 million. Figure 17 provides a brief description of each project. These projects range in size and scope, and touch on various different programs and business functions of the department. Currently, five of the eight projects are still being developed. The single largest continuing project is the IT Modernization (ITM) projects, originally estimated to cost $242 million. In this section, we provide an update on the status of these projects, with a focus on the projects’ costs and schedules, and also discuss some of the challenges the department faces in implementing the projects.

Figure 17

Department of Motor Vehicles (DMV)—Information Technology Projects


Project Description

Recently Completed Projects


Document Imaging and Storage Replacement

Replaced the document imaging, storage, and retrieval system with five digital
scanners and related storage capacity.

Remittance System Replacement

Replaced all components of the system with new equipment and new system
hardware and software.

Telephone Service Center Replacement

Replaced the nine independent telephone systems in use in the Telephone Service Centers with a single virtual system.

Continuing Projects


Information Technology Modernization

Will incrementally upgrade the DMV core systems with new equipment and new system hardware and software.

Financial Responsibility

Will develop an in-house system to track vehicle compliance with insurance
requirements, and suspend vehicle registrations for lack of compliance.

Real IDa

Will expand DMV’s driver license and identification card system name fields to
improve security and enhance Web site to enable customers to conduct more business transactions online.

International Registration Plan (IRP) System Replacement

Will replace existing obsolete computer system for processing commercial vehicle registration and electronic payment and distribution of commercial vehicle registration fees among IRP member jurisdictions.

Driver License/Identification/Salesperson Contract

Will select a vendor to continue driver license, identification, and salesperson card issuance, including the addition of various security components.


a    This project does not implement the federal Real ID Act. It is comprised of two projects—the Expanded Name Field and Web site Infrastructure System projects—that would make it easier for California to comply with the act.

DMV’s IT Management and Oversight. The DMV implements and manages IT projects at the executive level and the project level. At the executive level, the department has an IT Governance Committee, which is responsible for department–wide planning and guidance. This group consists of the director, chief information officer, and other executive staff. At the project level, the project management team, which is responsible for carrying out the project, typically consists of a project executive, program sponsor, project manager, and a contract manager (or vendor). The teams may vary somewhat from project to project depending on the size, complexity, and cost of the project.

In addition, most projects also have an Independent Project Oversight Consultant (IPOC) and an Independent Validation and Verification (IV&V) Consultant. The IPOC is responsible for tracking project management activities, such as project scheduling, risk management, and change management. The IV&V consultant is responsible for oversight of deliverables, such as program codes, test scripts, and network configurations, as well as oversight of processes to ensure these deliverables meet industry standards and the requirements of the department’s contract with the IT vendor. The use of both the IPOC and IV&V consultants is a standard practice for managing IT projects in various state agencies.

Due to the number of projects being undertaken by DMV, and the significant level of resources involved, the Legislature in 2006–07 also established an Enterprise Wide Oversight Consultant (EWOC) to oversee the implementation of the projects in DMV’s “project portfolio.” The EWOC’s role is to work with DMV management in overseeing all IT projects and provide periodic reports to the administration and the Legislature on the status and risks of the portfolio projects.

Some Project Delays and Cost Variations

The department has experienced delays in the implementation of most of its IT projects. There have also been changes in the estimated cost of most projects. We discuss these issues below.

Projects Take Longer Than Originally Estimated. Figure 18 shows changes in the projected cost and schedule of each project. It is important to note these projects are in different stages of implementation, therefore, the cost and schedule projections are subject to further change. In general, projects that are further along should have more reliable estimates of cost and schedule. This information provides a snapshot as of the date of the feasibility study report, or special project report, for each IT project.

Figure 18

Department of Motor Vehicles' Information Technology Projects:
Changes in Cost and Schedule

(Dollars in Millions)


Project Cost Estimates








Original Cost

Revised Cost



Delay in







Document Imaging and Storage Replacement





5 months

Remittance System Replacement





10 months

Telephone Service Center Replacement





8 months







Information Technology Modernizationa






Financial Responsibility




Real ID





28 months

International Registration Plan System Replacement





16 months

Driver License/Identification/Salesperson Contract





19 months


a  While the completion date for this project has not been officially changed, recent reports indicate the project is currently about six months
behind schedule.

As shown in Figure 18, all three of the completed projects experienced delays ranging from five months for the Document Imaging and Storage Replacement project to ten months for the Remittance System Replacement project. Of the five continuing projects, two have experienced significant delays. Specifically, the Driver License, Identification and Salesperson Contract (DL/ID) project and the Real ID project are behind schedule by 19 months and 28 months, respectively. The ITM project is now six months behind schedule.

Project Costs Can Increase or Decrease. Figure 18 shows that two of the three completed projects were delivered at a cost that was more than 20 percent below the original cost estimate. Of the continuing projects, the DL/ID and International Registration Plan projects are expected to cost 198 percent and 32 percent more, respectively, than originally estimated. A single project—ITM—is now estimated to come in significantly below the original cost estimate. Because ITM is in its early stages of development, however, there is still a risk of its costs coming in higher than estimated.

While the department has experienced some significant delays and cost variations in the development of its IT projects, we note that such occurrences are common in the IT arena. We would further note that, although some projects are still in the early phases of development, overall costs continue to be below the total amount appropriated by the Legislature.

What Have Been Some of the IT Project Challenges?

In various reports on the status of DMV’s IT projects, as well as in our discussions with department representatives, the department and independent oversight consultants have identified several reasons for changes in the schedule and cost of DMV’s projects. These factors include staff turnover and a lack of internal IT expertise. We discuss the key problems that have contributed to project delays and cost variations below.

Ineffective Planning Contributed to Problems. Our review suggests that the department failed to do the initial strategic planning required to successfully launch and deliver multiple major IT projects at the same time. Although the department has had an IT Governance Committee whose role is to look at the big picture—in terms of the department’s IT goals and resources—and to set priorities, our review suggests this committee has not been effective. For example, one of the major obstacles to DMV delivering IT projects on schedule and within their original budgeted cost has been a shortage of IT staff and expertise. We believe that, if the department had initially engaged in effective strategic planning, it would have identified these constraints and either (1) obtained the resources needed to deliver the projects or (2) scaled back the number of IT projects it requested in recognition of its resource constraints. The department, however, did neither, resulting in it taking on more IT projects than it could effectively handle at one given time.

Unclear Policy on State’s Use of Oversight Consultants. As mentioned above, one strategy the state employs to reduce the risks associated with costly and complex IT projects is to contract with outside consultants—the IV&V and IPOC consultants—to oversee project progress and provide technical assistance to the department. Our review found that the state is not effectively using these consultants. One key ongoing issue, noted in several progress reports on DMV projects, is a difference of opinion within the administration as to when the consultant services should begin.

The department prefers to bring its consultants on board early in each project to assist with procurement. This allows the consultant to review and provide technical assistance in the development of the request for proposals (RFPs), a critical component of the vendor procurement process. (Procurement refers to the process of purchasing goods and services. Typically, it involves developing and issuing an RFP to solicit bids from vendors, evaluating bids, and selecting a vendor and awarding a contract.) The benefit of this approach is that the consultants can assist the department in proactively addressing any potential deficiencies in RFP, particularly since the consultants typically have a level of expertise about technology solutions which the department may not have.

The Department of General Services (DGS), which oversees procurement for the state, takes a very different view. The DGS perceives the involvement of independent consultants in the development of RFP as a conflict of interest that could lead to protests by vendors not selected for the job. Consequently, under the DGS approach, any problem in RFP would be addressed, not at the outset in the development phase, but rather through subsequent addendums (modifications) to the document after it has been released. However, the addendum process frequently causes delays in IT projects. In most projects that have been caught up in such delays, the oversight consultant had not been allowed to assist in procurement activities because of DGS’ concerns, even though all other stakeholders agreed that there would be a significant benefit to having the independent consultants involved at some level during the procurement stage.

The DL/ID project, for example, was significantly delayed at the procurement stage and the vendor contract awarded more than a year later than planned. While the delay in this procurement was the result of a number of factors (including some changes in DGS’ IT procurement processes), a main contributing factor was deficiencies in RFP for the project. These deficiencies were caused by a lack of expertise within DMV regarding the technological solutions required to meet the department’s needs. Those deficiencies required the department to clarify the details of the project for prospective vendors and then make numerous, time–consuming addendums to RFP.

Some Project Managers Not Using Enterprise Oversight Tools. As noted above, an EWOC was retained to assist the DMV in its management of multiple IT projects. Specifically, EWOC was commissioned to establish an “enterprise oversight process” within DMV, as well as to provide monthly reports detailing the risks and status of each project in the portfolio. An enterprise oversight process essentially refers to management tools designed to assist the department in tracking IT projects, including schedules and IT resources needed to complete them, so that management can make informed decisions about them.

Our review finds that EWOC has assisted the department in establishing a database designed to facilitate enterprise oversight. However, recent reports indicate that some project managers are not using the enterprise management tools, such as the database of the status of each project and resource needs.

Legislative Oversight— Require Department to Report At Budget Hearings

While the department has experienced some delays and cost variations, based on our review and discussions, we concluded that the department has done a relatively good job in implementing its IT projects. The projects are still within the total amount appropriated by the Legislature. Moreover, at the time this analysis was prepared, none of the projects appeared to be at risk of failure. Nonetheless, given the number of continuing projects, and the fact that the most costly project (ITM) is still several years from completion, it is important that the department use all available tools to assure these projects stay on schedule and budget. Accordingly, we recommend the department report at budget hearings on actions it is taking to address the issues discussed above. In particular, the department should report on (1) the steps it is taking to manage its staff resources so that different projects within DMV are not competing for staff resources, (2) any recent or planned changes in its IT management approach to encourage better planning and coordination of IT projects among affected programs, (3) its use of oversight consultants and potential improvements in this regard that could achieve better IT project outcomes, and (4) efforts it will make to encourage staff to use the enterprise tools developed by EWOC to improve project oversight.

As regards DGS and its concerns related to the use of consultants for the development of IT requests for proposals, we recommend that the Legislature require DGS and the Office of the Chief Information Officer (OCIO) to report on their respective points of view and identify options the state may pursue to alleviate potential conflicts of interest, so that the Legislature can determine the best policy for the state. We note that OCIO is currently reviewing the state’s IT approval process, including what constitutes effective project approval documents. We recommend that this review also include a look at the RFP process and the appropriate timing and use of consultants to reduce project risk. The situation at DMV regarding these projects could serve as a case study to help inform this review.

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