| FHA IT Improvement Cost Estimates Deficient: HUDÂ criticized in government report
Feb. 8, 2017 By Mortgage Daily staff |
| A new government report indicates that cost estimates for the automation and modernization of the Federal Housing Administration have been deficient.
Technology investment cost estimates developed by the Department of Housing and Urban Development have been unreliable, the report says. The shortcomings have reportedly led to cost estimates that lacked a sound basis for informing the department’s investment and budgetary decisions. That was according to the Government Accountability Office’s Information Technology – HUD Needs to Address Significant Weaknesses in Its Cost Estimating Practices. The GAO is headed by the Comptroller General and reports its findings directly to Congress. In addition to investments in FHA automation and modernization, HUD is making technology investments in its customer relationship management, enterprise data warehouse, and enterprise voucher management systems. “Critical to the success of such efforts is the department’s ability to develop reliable cost estimates that project life-cycle costs and provide the basis for, among other things, informed decision-making and realistic budget formulation,” GAO’s report states. HUD requested $36 million for IT investments in fiscal year 2017. But the GAO found that HUD didn’t follow best practices outlined in GAO’s Cost Estimating and Assessment Guide. HUD fell short on four characteristics that are required for a reliable estimate: comprehensive, well-documented, accurate and credible. The FHA project’s estimate did not meet the characteristic of being credible, and minimally met the remaining characteristics. “The significant weaknesses in the cost estimates for the selected investments can largely be attributed to the department’s lack of guidance for developing reliable cost estimates,” the report said. “HUD officials responsible for the selected investments stated that the department had not required the development of estimates that exhibit the four characteristics of a reliable estimate. “As a result, according to these officials, cost estimating practices have been decentralized and inconsistent across the department.” The GAO is recommending that HUD finalize and implement guidance incorporating best practices called for in GAO’s cost guide. HUD agreed. |
