IRS Software System Costs Taxpayers $321 Million
The July 15th Rocky Mountain News article by Mary Dalrymple sites the failure of a software developer to deliver the new IRS tax refund fraud screening system as the reason for their inability to catch the estimated $200-300 million in tax fraud. The IRS has caught only 34% of the fraudulent claims caught the prior year.
While Computer Sciences Corporation was paid $21 million for the project, the IRS has asked them to stop work and restore the original program to operating status before 2007 tax returns are filed.
Why do companies continue to think it's easier to build a new but complex system from scratch than it is to upgrade an existing one that works? Murphy's law says that every complex system will be found to have evolved from a simple system that works. Trying to build a complex system from scratch is doomed to failure and you will have to start over with a simple system that works. The IRS already had a complex system that worked that had evolved from a simple system that worked.
The 4-50 Rule
I'll bet that only 4% of the code contained 50% of the defects and could be rewritten to eliminate the bugs. I'll also bet that only 4% of the code suffers 50% of the enhancements; this code could be rewritten to be table driven, instead of code driven, to maximize maintainability and flexibility. New systems sound sexy, but rarely do what they're supposed to do. Existing systems have so much embedded knowledge that it's almost impossible to capture all of the requirements such that you can build it.
Simplify, Simplify, Simplify
Any simple system will become more complex over time. The trick is to continuously simplify and streamline the simple system as it grows in complexity. That way, you'll never have to try and fail at replacing it.
Jay Arthur, the KnowWare
â Man, works with companies that want to plug the leaks in their cash flow. Jay specializes in Lean Six Sigma for Health Care and Information Systems applications: ordering, billing, purchasing, and payments. He is the author of Six Sigma Simplified and the QI Macros SPC Software for Excel.
mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224
303-756-9144 (888) 468-1537
Welfare Payment Errors Over $90 Million
The
July 3, 2006 Rocky Mountain News has an article on page 4 about improper welfare payments--overpayment, underpayment and fraud--adding up to $90 million handled incorrectly. And it's not the first time. The auditing department found that there have always been problems.
- Medicaid $48 million (3% of payments-3 sigma)
- Food Stamps $36 million (14% of payments-2 sigma). $15.7 million overpaid; $7.5 million underpaid. USDA estimates that Colorado could have saved $8.2 million and served 80,135 new clients.
- Temporary aid $8 million (12% of payments-2 sigma)
Of course, all three welfare agencies questions the audit's findings.
Four years after Congress required states to track improper payments, neither the medicaid or needy family program had set up methods to track payments.
This is the sort of problem that can be easily tackled by Six Sigma's defect reduction efforts.
While automated tracking of these errors will take time to develop, a simple checksheet of errors could easily collect and analyze the types and causes of overpayments, underpayments and fraud for each of these three welfare programs. Then, root cause teams of welfare workers could identify the root causes and solutions to the most common kinds of problems (usually procedural) and reduce the error rates. And I can assure you that it wouldn't cost $8 million to find and fix most of these errors.
Jay Arthur, the KnowWare
â Man, works with companies that want to plug the leaks in their cash flow. Jay specializes in Lean Six Sigma for Health Care and Information Systems applications: ordering, billing, purchasing, and payments. He is the author of Six Sigma Simplified and the QI Macros SPC Software for Excel.
mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224
303-756-9144 (888) 468-1537
