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Report Number: 2016-125.2

The University of California Office of the President
The University of California Office of the President Increasing Costs and Scheduling Delays Have Hampered the UCPath Project and Originally Anticipated Savings Are Unlikely to Materialize

August 24, 2017 2016-125.2

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the University of California's (university) planned systemwide payroll and human resources system known as the University of California Payroll, Academic Personnel, Timekeeping, and Human Resources (UCPath). This report concludes that the University of California Office of the President has failed to keep UCPath on budget and on schedule, and that originally anticipated cost savings from UCPath's implementation are unlikely to materialize.

In 2011 the Office of the President estimated that the cost to implement UCPath would total $306 million and it would be completed by February 2014. The Office of the President also projected that UCPath's implementation would save the university $753 million, primarily from staff reductions. However, the project's cost has escalated and its schedule has slipped; the Office of the President's current cost projection is $504 million and its planned implementation date is June 2019. Further, the full cost to the university to implement UCPath is much higher than the Office of the President has reported—an estimated $942 million—when including the cost of the campuses' development activities, project financing, and a shared services center. Finally, because the planned staff reductions will not occur, the $753 million in savings that the Office of the President anticipated would result from UCPath's implementation will not materialize.

Despite the significant departures from the originally estimated cost, schedule, and savings for UCPath, the Office of the President has not consistently informed the University of California Board of Regents (regents) of UCPath's challenges. For example, in July 2014, the UCPath project director told the regents that UCPath's cost estimate was $220 million, yet the Office of the President's internal records from one month earlier show the project's cost estimate was $345 million. In July 2017, the Office of the President expanded its project governance approach to establish instances in which it will update the regents. However, in our view, the governance does not go far enough in recognizing the regents' role as an oversight body. Moreover, weaknesses in the Office of the President's project management likely contributed to UCPath's escalating cost and schedule delays. For example, the Office of the President set aggressive schedules that were susceptible to delays caused by project scope changes or staffing constraints.

Respectfully submitted,

State Auditor

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