November 3, 1998

To:Strategic Policies and Priorities Committee

From:Chief Administrative Officer & Chief Financial Officer and Treasurer & Commissioner of Corporate Services

Subject:Year 2000 Business Continuity Plan

Purpose:

The Year 2000 Business Continuity Plan outlines the following information as requested by Council at the July meeting:

• An inventory of priority one Year 2000 projects for the City of Toronto's Departments, Agencies, Boards and Commissions
• The estimated completion date for each project
• The planned budget required to ensure year 2000 readiness for each project
• The current status of each project
• A status report from the Police and TTC on their Year 2000 program
• The amount and source of funding for the year 2000 program
• The steps required to ensure due diligence in the implementation of Year 2000 solutions.

The report also provides a status update on the following items recommended in the Year 2000 action plan which was approved by Council in July:

• The assignment of a member of Council to the Year 2000 project
• The Solicitor's Year 2000 liability report
• The Purchasing Policy established by the Treasurer.

Funding Sources, Financial Implications and Impact Statement:

The City of Toronto Year 2000 Project report, which was adopted, as amended, by the Council of the City of Toronto at its meeting held on July 29, 30 and 31, 1998, outlined the Year 2000 issues facing the City of Toronto. The potential impacts of Year 2000 failures in the City's buildings, equipment and information and technology systems include:

a. loss of life or personal injury to clients and/or staff due to accidents or diseases;

b. loss of revenue due to an inability to bill and collect money and/or undercharging clients;

c. impaired ability to deliver services to clients;

d. increased cost due to reinstatement of manual processes and/or increased re-work;

e. lawsuits against the City by clients and/or staff who suffered negative impacts; and

f. loss of confidence in the City on the part of clients, staff and/or other partners.

The inventory process identified 84 priority 1 business functions with a high probability of failure due to Year 2000 issues. Of these business functions, it is estimated that at least 10 of them will have a significant financial impact. Examples of business functions with significant financial impact include property tax calculation, billing and payment processing of $4,600 million, water revenue calculation, billing and payment processing of $200 million and parking tag payment processing of $50 million. In addition to collecting revenue, there is also the ability to issue payments. Examples of these business functions include the ability to pay social assistance to the 91,637 active cases (1997) for an estimated total of $765.5 million and the ability to pay child care service providers an estimated $215 million.

An estimate is not available on the potential cost of possible lawsuits against the City as a result of deaths and personal injuries or the costs of collateral damage caused by Year 2000 failures in external organizations.

In July, 1998, Council requested the Year 2000 Program Office to report back in November on specific work required to ensure business continuity through Year 2000 and the projected cost. This report outlines the work identified to date.

The Year 2000 Business Continuity Plan estimate of $149.6 million can be financed through various means. Of the total Year 2000 program costs, $12.4 million associated with water supply and water pollution control will be funded by water revenues. Borrowing for the entire program is within the Corporation's updated Debt and Financial Obligation Limit, and can be financed by the issuance of debentures, if required, for a term of up to 10 years.

The financing of the Year 2000 plan, if financed entirely through debentures, would add approximately $20 million in debt charges beginning in 2000/2001. The 1999-2003 Capital budget financing report being considered by the Budget Committee this month (November) includes recommendations for financing the entire capital budget including the year 2000 costs.

Recommendations:

It is recommended that:

1)project approval in the amount of $149.6 million be approved for the ongoing management of the year 2000 Program and for ensuring that the Year 2000 solutions for priority 1 business functions and city wide initiatives are implemented.

2) the Chief Financial Officer and Treasurer incorporate a financing strategy in the 1999 - 2003 Capital Budget capital financing plan scheduled to be before the Budget Committee in November, 1998.

3) the Program Office report to the Strategic Policies and Priorities Committee by February 1999 on the funding requirements for business functions identified as priority 2 (important) and 3 (when time permits) and the implementation and testing of contingency plans and emergency preparedness plans;

4) the Solicitor's Year 2000 liability report go forward, in camera, with this report;

5) the Chief Financial Officer and Treasurer investigate acquiring the necessary insurance for all City employees with potential Year 2000 liability as addressed in the Solicitor's report;

6) the Executive Director of Human Resources recommend a strategy for streamlining the administrative process relating to recruitment , compensation and retention of staff working on the Year 2000 project.

7) the strategies for the City-wide initiatives for Year 2000 readiness as outlined in this report be approved;

8) a contingency plan, approved by both the Operating Departments and the Year 2000 Program Office, be required for each business function identified as priority 1, even if it is Year 2000 ready;

9) the Year 2000 office be directed to work with the Commissioner of Works & Emergency Services Department to develop and test an emergency preparedness plan specifically for Year 2000 failures;

10) the transfer of funds from the City of Toronto to organizations, through means such as grants, be subject in each case to such organizations having a Year 2000 program in place;

11) the Program Office be given the authority to recommend to the Year 2000 Steering Committee extension or re-negotiation or termination of contracts or entering into new contracts that affect priority 1 business functions to ensure that the re-tendering of goods and services and a possible change of suppliers not create a major disruption for business units doing remedial work on these priority 1 business functions thereby putting business continuity at risk;

12)the CAO be given approval to enter into agreements in support of the above for the full amount of expenditures, until June year 2000, reporting on a regular basis to the Strategic Policies and Priorities Committee;

13)the Strategic Policies and Priorities Committee refer this report to Council for approval;

Comments and/or Discussion and/or Justification:

In July, the Year 2000 Program Office requested funds of $85 million dollars to inventory, assess, remedy, test and re-implement systems for Year 2000 readiness. The $85 million was based on an estimate of funds required for the Project Management Office, Departmental initiatives and corporately managed City-wide initiatives.

At the joint Corporate Services and Budget Committee meeting, it was recognized that significant funding would be required to ensure business continuity. The Program Office was granted $5.1 million to complete the inventory and assessment of the priority 1 business functions of the City and to report back on the cost to make these functions Year 2000 ready. This report documents the findings to date.

Of the $5.1 million approved, $4.9 million has been spent or committed leaving $0.2 million funds available. The following table outlines the expenditures to date:

The total projected cost for Year 2000 business continuity is $149.6 million.

During the inventory phase, Operating Departments were requested to identify their critical business functions. In the assessment phase, a business case was developed for each of these priority 1 business functions. The business case contains the results of the investigation and analysis on the current readiness of the systems, which support these critical business functions, and the recommendation on the most cost-effective fix required to ensure year 2000 readiness. As a result of these inventory and assessment steps, undertaken over the last 3 months, 84 priority 1 business functions have been identified and strategies have been recommended to remedy their year 2000 problems.

The projected cost of ensuring business continuity for the 74 Departmental business functions is $43 million. In addition to the funds required for the Departmental business functions, $79.7 million is required to implement the 8 City-wide business functions which provide the enabling infrastructure for all of these systems and $7.5 million is required for the 2 Project Management Office business functions.

Of the projected $130.2 million required to fund the Project Management Office, the Departmental initiatives and the Corporate city-wide initiatives, it is projected that $106.7 million will be spent on fixing the problems and $23.5 million will be spent to confirm that the solution implemented will support business continuity through the year 2000.

With the year 2000 deadline fast approaching, the availability of resources with skills required to address the year 2000 issue is becoming more and more limited. In addition, the resources that are available, are demanding premium rates. Most organizations are looking at incremental rate increases or retention bonuses to retain the resources already on board.

A project contingency fund of $19.4 million, which is 15% of the projected estimate of $130.2 million, has been included as part of the overall total budget. This will enable the Year 2000 Program to cover priority 1 projects where the assessment is not complete, such as the Fleet City-wide initiative, taxes where they have not been applied and scenarios where purchased services exceed the estimated totals. Any remaining funds will be applied towards business functions with a priority of 2 and 3 as they are identified. Expenditures from project contingency will be managed through a change order process with prior approval from the Year 2000 Steering Committee.

Budget Summary

The Year 2000 Program Office was established in July 1998. Council has requested the Program Office to report monthly on the readiness status of mission priority 1 functions to the Strategic Policies and Priorities Committee. These functions include business, operational and information and technology systems for the City's Departments, Agencies, Boards and Commissions.

Project Management Office

The Project Management Office of the Year 2000 Program is responsible for establishing the strategies, standards, processes, communications, contingency planning, and funds required to ensure that these priority 1 functions are Year 2000 ready.

The Project Management Office funding is broken into 2 components: $6.3 million for staffing and tools and $1.2 million for communications and training.

Each of the six Commissioners of the Operating Departments of the City of Toronto was requested to identify a dedicated Departmental Project Manager who would be given the authority to ensure business continuity through the year 2000 for that department, and for related agencies, boards and commissions. An Account Project Manager and a Quality Assurance Project Manager from the Year 2000 Project Management Office, are assigned to work with each of the Departmental Project Managers to ensure that a consistent and auditable approach is taken in the implementation of Year 2000 solutions.

The Project Management Office reviews every business case to ensure that what it proposes are solutions to year 2000 issues and not new Departmental initiatives. As a result, year 2000 funding only applies to upgrades or replacements of existing business, information and technology or operational systems.

Due Diligence

The City of Toronto must demonstrate due diligence in addressing the Year 2000 issues. The City Auditor has provided guidelines which are emergency industry standards for due diligence. Attachment 2 is a copy of the Audit Guidelines developed by the City Auditor to ensure accountability. These guidelines address areas such as the establishment and role of the Steering Committee, the Project Office, the departmental program, the problem identification process, appropriate resourcing and funding, the creation of project plans and schedules, project execution, testing and contingency planning.

The City Solicitor submitted a report dated September 7^th, 1998, to the September 24^th Strategic Policies and Priorities Committee meeting on the potential liability of the City as it relates to year 2000 issues. The report was referred back requesting the Year 2000 Project Office, in consultation with the Chief Financial Officer and Treasurer (Risk Management), City Solicitor and City Auditor to report on the steps necessary to achieve due diligence. The Year 2000 Program Office has implemented the following actions, which address the City Auditor's guidelines, to demonstrate due diligence in the resolution of year 2000 issues and to mitigate these liabilities:

• Councillor O'Brien has been appointed to represent Council on the Steering Committee with the Commissioner of Corporate Services and the Executive Director of Information and Technology. The Steering Committee reports to the Strategic Policies and Priorities Committee on a regular basis;
• Project management structures with defined roles and responsibilities have been put in place;

• Year 2000 methodologies have been adopted and customized to meet the City of Toronto's requirements; these were developed by LGS for operational systems, and by IBM for information technology and business systems;

• Priority 1 business function identification and analysis processes have been established;

• Departmental project control framework is in place;

• External expertise and knowledge has been assigned to each project: a Quality Assurance Project Manager, from IBM and LGS, as appropriate, has been assigned to work with each Operating Department.

• A governance structure is in place that includes reporting to a Steering Committee, the Senior Management Team, Strategic Policies and Priorities Committee and Council;

• The City of Toronto's external auditor is included in the workplan;

• Benchmarking on key indicators such as project budget, structure of project, lessons learned, etc. has been conducted with similar public sector organizations, in some cases, was included: meetings with the City of Calgary, discussion with Ottawa/Carlton and meetings are planned with New York City;

• External review process by subject matter experts has taken place;

• Contingency planning processes have been established; and

• External partnership management processes form part of the workplan.

The Strategic Policies and Priorities Committee also requested the City Solicitor to consult with the Year 2000 Project Office to determine whether a case can be brought forward on a piece of equipment that fails, as to whether there is an obligation by the computer company. The City Solicitor will submit an addendum to the Solicitor's report to address this request.

This report recommends that the Solicitor's Year 2000 liability report go forward in camera with this report.

The Solicitor's report also indicated that the municipal officers may be subject to a statue that imposes liability upon directors and officers of a corporation for a breach of their duties under the statute. This report recommends the Chief Financial Officer and Treasurer investigate acquiring the necessary insurance for all City employees with potential Year 2000 liability.

Contingency Planning

The City of Toronto is addressing high-impact priority 1 business functions first to ensure that they are Year 2000 ready. Even though every measure will be taken to ensure that the solutions implemented will make the business function Year 2000 ready, it is recommended that for each priority 1 high-impact business functions a contingency plan be required. In the cases where contingency plans may already exist, they will need to be reviewed to ensure that the planning assumptions are valid under the various Year 2000 scenarios. The plan should focus on acceptable workarounds to the existing automated solutions. For example, if the City was unable to generate social assistance payments, an acceptable alternative may be to generate payments based on the previous month's calculations and handle the differences through manual adjustments.

The funding for a contingency planner to identify/review contingency alternatives for each operating department is included in the estimates in this document. If further work is identified as necessary, the business units will be required to develop business cases to request any funding necessary to implement the alternative.

Emergency Preparedness

The City of Toronto currently has an emergency preparedness plan that is maintained and tested on a regular basis. The Year 2000 Program office will be working with the Works and Emergency Services Department to ensure that the planning assumptions reflect the various Year 2000 scenarios. Upon clarification that the plan reflects the year 2000 issues, it is recommended that the City conduct a test of the plan for confirmation.

Communications

A communications strategy has been developed that addresses specific objectives, scope, audience characteristics, and identifies specific areas that must be addressed such as training requirements, potential risks, and unique requirements. A Communications Plan to support the strategy addresses the tactical execution plans and specific deliverables, and identifies target dates for each deliverable within the scope of the entire project. The Communications Plan addresses the needs identified in the Communications Strategy.

The communications strategy document is attached as Attachment 3.

Reporting

Every week, the Project Management Office hosts workshops which include training and development of team members and information sharing with the members of the Year 2000 project team.

On a weekly basis, each departmental project team reports on the status of each initiative to the Year 2000 Program Office. This information is consolidated to form a weekly corporate status report which is available for reporting to the Project Director and/or Senior Management Team of a regular basis.

The Year 2000 Project is a standing agenda item for the City's Senior Management Team and for the Strategic Policies and Priorities Committee. A progress report and a budget report will be forwarded to both meetings on a monthly basis, with a quarterly report to Council.

The Year 2000 Program will be required to enter into agreements to implement solutions to ensure year 2000 readiness on a timely basis to enable the City to meet the immovable deadline. These requests will be forwarded to the Year 2000 Steering Committee for review. Based on its recommendation, the CAO will enter into the necessary agreements. This information will be reported to Council on a regular basis.

Human Resources

Staff with City of Toronto business-specific knowledge and skills are limited. As the year 2000 draws closer, the demand on these staff will get higher and the cost to maintain them will rise as envisaged by many Year 2000 analysts and experts. The ability to retain staff once they have been trained will be difficult. In recognition that this project has a fixed target date, the Year 2000 Program Office requires a streamlined process to enable the recruitment of staff on a timely basis to ensure that business continuity is not negatively impacted.

The Year 2000 Program Office is requesting Human Resources to recommend a strategy for streamlining the administrative process relating to staff recruitment, staff retention and compensation to the Year 2000 Steering Committee as quickly as possible.

City-wide Initiatives

Functions which are common to all operating departments, agencies, boards and commissions are being managed through the Year 2000 Program Office on a corporate City-wide basis. Since the problems are common, consistent solutions are being applied. Operating departments have been instructed to assume that the enabling infrastructure will be put in place to support their operational, business and information and technology solutions. Having one team performing the identification and assessment steps instead of six Departmental teams is saving a tremendous amount of time and effort. The Account Project Managers, assigned to each Department, work with the Corporate Project Managers to define the departmental requirements and provide adequate lead time and user-based information in order to implement a Year 2000 ready infrastructure. The six corporate City-wide initiatives are: networks, server platforms, desktops, facilities, fleet, and external partnerships and agreements. This report recommends that the following strategies for addressing these City-wide initiatives be approved and implemented.

The City of Toronto is undergoing a major transformation of its organizational structure, business processes, and service delivery model as the amalgamation of its constituent municipalities continues. A major challenge of this initiative is determining how to communicate effectively across departments and to our stakeholders.

Each former municipality had its own set of tools (work methods, staff, data, and computer systems) that it used for its daily business. As we try to amalgamate these disparate systems we are faced with support problems, training costs, licensing issues, and reduced efficiencies. To compound matters further, a number of computing devices are not capable of functioning beyond the year 2000 either because of their inherent design limitations or the restrictions of the software applications residing thereon.

In order to eliminate the vulnerability associated with year 2000 and, collaterally, to effectively advance our business vision, a common but flexible information and information technology infrastructure based on standards must be established. The City cannot afford to keep a multitude of products running where one will suffice. A common, standards-based infrastructure results in better service and lowers unit costs for all users.

The Year 2000 effort will necessitate the replacement or refurbishment of the City's computing infrastructure. In order to facilitate this process a set of working standards is being proposed to ensure business continuity and take the City into the next millennium. The Interim Information and Technology Standards, established by the Information and Technology Division of Corporate Services, outlines the proposed standards to be adopted in the Year 2000 implementation.

Networks

Data:

The networks include the hardware and software and support requirements for all data and voice telecommunications. The projected cost to ensure that the data network is year 2000 ready is $5.5 million.

The existing network facilities of the City of Toronto consist of various types of hardware and software that must be made Year 2000 ready. These network components have been acquired over a number of years and vary in complexity from simple end user connectivity equipment to large scale Multi-Protocol Routing Systems and Network Management Systems. Components have come from a variety of vendors and are in varying states of readiness for the Year 2000. This budget is an estimate of the costs associated with the assessment of current infrastructure components, the rationalization of Year 2000 compliance specifications, the process of repair and/or replacement of components to meet Year 2000 compliance and the testing/verification of current network functionality for the Year 2000.

The data network must be the first function that is tested and certified Year 2000 ready due to the configuration of the processing environment at the City of Toronto. The major application servers for City administrative systems and for many of its operational systems (e.g. property tax, parking tags), are located at the City Computing Center (703 Don Mills Road), and the client desk top equipment is distributed throughout the various civic centers and other buildings operated by the City. This places the network in the primary role of delivering service to the public by enabling every electronic transaction produced in the daily operations of the City.

A conservative figure of 15,000 client computers and servers was used to calculate the budget estimates for hub and switch equipment: 1,500 at North York, 1,500 at Scarborough, 2,000 at City Hall, 2,000 at Metro Hall, 1,000 at 703 Don Mills, 500 at East York, 500 at York, 500 at Etobicoke, 500 at Fire And Ambulance Headquarters, 100 at the Records Center and approximately 4,900 at various other buildings throughout the City. There are more than 450 buildings connected by the network throughout the City.

The router and switch component is based on replacement and upgrades both to hardware and software. Approximately fifteen percent of the cost is labour. The network management component is made up of two new processing platforms, the operating systems and management applications and again, fifteen percent labour costs. This component has operated continuously for the past six years without upgrades or additional costs. The other components of the network are minor maintenance issues and deletion of older services that will no longer be supported.

Voice:

The projected cost to ensure that the voice network is year 2000 ready is $4 million.

Similar to the data network the City has many and diverse voice telecommunication networks and systems that must be either replaced or made year 2000 ready. The telephone systems include integrated voice mail, interactive voice response (IVR), informational services, telephone interfaces to computer applications, cellular and pager services, and circuits used to control priority 1 systems such as traffic lights and alarm systems. There is a requirement to replace or upgrade the 7 voice mail systems and the 10 IVR systems and their circuits.

The majority of telephone services in the City are provided through Bell Canada's Centrex and plans are in place to ensure the system is Year 2000 compliant. The other services have been acquired by the various agencies and municipalities over time and comprise many and varied technologies. There are six private branch exchange (PBX) systems and approximately 200 key systems that have to be either upgraded or replaced. A complete inventory and possible replacement of all the hardware associated with the Centrex system has not been completed so the costs are not available at this time

Servers

Included in this area are all the computing platforms which support business applications, databases and file and print services. These platforms collect, store, process and distribute all data in support of service delivery to the public. The primary clients are every current user connected to a server or mainframe within a City of Toronto department or any fully supported agency, board or commission.

Mainframe:

Currently the City of Toronto owns three mainframe computers in addition to the purchased mainframe services provided by EDS of Canada Limited. The EDS mainframe computing environment, which hosts all mainframe applications from the former Municipality of Metropolitan Toronto and the former City of Toronto, is the City's most significant processing platform. This platform has hundreds of programs and approximately 8.5 millions lines of application code in a variety of languages. The EDS mainframe hardware and operating system is Year 2000 ready. The City-owned mainframe hardware and operating systems are not Year 2000 ready. A significant effort and cost would be required to make these platforms ready. Therefore, the mainframe strategy is to migrate all essential mainframe applications and data currently running on the City-owned mainframes to either the EDS mainframe or to mid-range servers.

As EDS has significant knowledge of the City's existing mainframe environment, the intent is to leverage this knowledge to expedite the implementation of Year 2000 mainframe-based solutions. The mainframe strategy calls for the creation of a parallel mainframe computing environment at EDS in which the existing production applications and data can be converted and unit tested by EDS and then tested, using both regression and Year 2000 testing, by City staff to ensure business continuity.

The projected cost for all mainframe services is $15 million.

Mid-range servers:

In addition to the mainframe services, the City has 1100 mid-range server platforms running operating systems such as UNIX, NetWare and NT. The year 2000 readiness of the hardware and operating systems varies significantly. Wherever possible, the existing server assets will be leveraged and only those that may be deemed obsolete or too costly to repair will be replaced. Wherever necessary, operating systems and system products will need to be upgraded to a level, which is defined as year 2000 ready by the manufacturer. To minimize the effort required to migrate business applications that run on these server platforms, the proposed strategy is to replace server platforms with "like" platforms from the same manufacturer. Wherever multiple servers are being used for the same business function (e.g. one for each of the former Cities), if possible, the replacement platform will be consolidated to a larger platform and housed at the City of Toronto Data Center, instead of maintaining multiple, smaller platforms. The services required to migrate and consolidate or upgrade the platforms will be purchased from the manufacturers or their partners.

In order to permit the implementation of consolidated platforms, logical network changes have to be implemented to enable clients to access these platforms from any location. The plan for implementing these changes has been included in this business case. These revised architectures have been reviewed and approved by the Information and Technology division of Corporate Services and are incorporated in the Interim Information and Technology standards.

Priority will be given to platforms that support those functions deemed critical and high-impact. The implementation date for the installation of priority 1 systems is April 1999. Secondary systems will be replaced on a continuous basis after the April 1999 deadline until April 2000. As the implementation of both phases require a very aggressive schedule, a team consisting of seventeen technical and management staff is being established.

The projected cost for addressing the mid-range servers is $16.9 million.

Desktops

Included in this area are all personal computing devices, including desktop computing hardware, operating system software and productivity tools used by City staff to access corporate, departmental or personal applications and data either stored either locally on their desktop computer or on a server platform. The primary client is every current user within the City's departments and its fully supported agencies, boards and commissions.

The existing desktop assets will be reused where applicable, and only those that are deemed obsolete or are too costly to repair will be replaced. Printer technology will be replaced accordingly.

The assumptions used are that all non-pentium machines and non-compliant Pentium clones must be replaced due to the cost and the time required to make these machines Year 2000 ready. Low-end pentiums will require minor hardware upgrades. All devices will be replaced where remedy cost will be more than $1,000. To reduce the cost of desktop replacement the monitors and keyboards from existing computers will be re-used wherever practical.

In most cases, the operating system needs to be upgraded to NT 4.0 for readiness. In some cases, this operating system upgrade forces mandatory hardware upgrades.

Through the inventory and assessment phase of this project, an automated inventory of all personal computers has been performed to identify the equipment currently deployed. To date the inventory is 90% complete and in excess of 13,000 devices have been identified.

The replacement desktops will conform to the Interim Information and Technology Standards. In addition to the standard desktop products, a Year 2000 testing and remediation tool will be rolled out to enable the Program Office to demonstrate the readiness of all desktops on an ongoing basis. This is required to ensure that if subsequent changes are made to a desktop, they do not make the desktop non-compliant.

Priority will be given to those systems deemed priority 1. Implementation date for the installation of priority 1 systems is April 1999. Secondary systems will be replaced on a continuous basis after the April deadline. A dedicated team of six technical and management staff will be established to oversee the implementation, with implementation services contracted from service providers. The strategy will be to use the City's vendors of record for these services.

The projected cost for addressing the desktop computing hardware is $20.8 million and the desktop computing software is $14.4 million.

Facilities

Since the Year 2000 issues related to facilities (city buildings) are common to all departments and agencies, a strategy has been developed to ensure that all buildings used by the City are Year 2000 ready. There are close to 1700 City-owned buildings, and they contain between four and five thousand building systems that are either computer-operated or may contain embedded chips which might be vulnerable to a year 2000-related failure. The approach is to identify, then test, remediate if necessary, then certify all priority 1 building systems. Priority 1 building systems are those that may create life / safety risks, those which could cause $1 million or more of damage or revenue loss if they failed, and those which are required to operate if one or more of the City's essential business functions is to continue. Under this approach, for example, all fire alarm systems are priority 1, but elevators are only considered priority 1 if they are in a building of more then three storeys which houses a priority 1 business function or if the elevator is critical for access requirements. The project will also certify at least half of all City photocopiers and fax machines as year 2000 compliant. In addition, the project will work with landlords of the 225 premises leased by the City, and with the owners of other properties it uses under various agreements (such as the numerous Toronto District School Board premises used for daycare and recreation programs) to ensure that all those facilities considered priority 1 are certified as Year 2000 ready.

There are 3 business cases for Facilities: building systems for an estimated total of $1 million, faxes and other business machines for a total of $0.6 million and non-city-owned properties for a total of $0.3 million.

Fleet

The vehicles of the City of Toronto provide a variety of essential and support services. Essential service vehicles include fire engines, police cars and ambulances. Support service vehicles would include vehicles used for snow and garbage removal and salt trucks. Then there are other vehicles used for general transportation. An inability to provide essential services could endanger lives.

Vehicles in all areas of the fleet typically contain one or more computer chips necessary to be able to run the vehicle. The computer chips may handle dates and if so, may not be able to do so after the millennium change.

There are over 5,000 vehicles, supporting at least 100 business functions in approximately 50 areas, which require evaluation to determine their degree of importance to the provision of essential or support services, and certification or modification to be Year 2000 compliant.

The process requires the separation of vehicles supporting essential services and estimation of the cost to make them compliant as a first priority. Vehicles serving other functions and vehicles will be examined after the first priority vehicles to estimate the cost of making them compliant.

The project covers, with varying degrees of direct involvement, the vehicles operated by the six operating departments of the City of Toronto, its agencies, boards, and commissions, and third party service providers. The assessment phase, which is partly complete, will deliver a detailed project plan, business cases, and cost estimates including resource plans and is targeted for completion by November 30^th. Funding for the remedy of fleet year 2000 problems will be provided out of the allocation of funds requested.

External Partners and Agreements

In order to provide essential services the City is dependent on obtaining information and support from suppliers and other government agencies. To ensure that information and sources of supply are available through the year 2000, the External Partners and Agreements team will develop supplier compliance standards. A policy has been developed which requires that the purchase and acquisition of all goods and services by the City be contingent on the supplier demonstrating that both the supplier and its products are Year 2000 compliant.

To successfully conduct its normal business operations the City of Toronto relies heavily on the continued smooth delivery of services and supplies from external organizations, the Government of the Province of Ontario, Banks and other organizations (referred to collectively as external entities). External entities contribute to the management, supply or the operation of priority 1 services such as utilities, traffic control, health services, outsourced services, sewage treatment, water supply, ambulance supplies, and other City services. Most major external entities are adopting similar Year 2000 certification standards as the City. Unless certified to be Year 2000 compliant, many products and services may fail, or malfunction, temporarily or completely, or cause data to be corrupted, misinterpreted, lost or destroyed. The City of Toronto has both a civic and municipal responsibility to go through a Year 2000 certification due diligence process with its external entities to guarantee minimal impact on the daily smooth operation of the administration. Any routine service could be interrupted or even fail totally based on the failure of a third party supplier. Two examples of potential service failure where external entities are essential to service delivery are traffic lights, causing severe traffic disruption or even accidents resulting in bodily harm, and ambulances or fire engines being unable to respond to an emergency. The assurance that external entities are Year 2000 ready is therefore vital for the continued delivery of services by the City of Toronto to its citizens. It is estimated that there are in excess of 15,000 different business relationships in existence with external entities.

The City of Toronto provides financial grants to several organizations. The City of Toronto will require that organizations receiving financial grants have an appropriate year 2000 program in place to ensure that these organizations will be able to continue operating after the year 2000.

To govern the delivery of these services and to ensure a consistent management process of establishing Year 2000 compliance, a set of compliance guidelines has been compiled based on internationally approved industry standard. If an external entity is not Year 2000 ready it can possibly result in the failure of a business function for which City officials will be held responsible and accountable. The External Partners and Agreements Team will work with and employ the services of the Legal and Internal Audit departments to plan, manage and direct all Year 2000 related issues associated with these external entities. Specifically, the Partners and Agreements section will act as the Year 2000 central control point of review for all contracts, agreements and Year 2000 compliance certification for external entities doing business with the City. The result of the review may be a requirement to extend the existing term of a contract, re-negotiate the terms and conditions of an existing contract or terminate an existing contract and enter into new contracts for the terminated services. To fulfill this mandate, the External Partners and Agreements section is responsible for: collecting and inventorying all contracts and affected by year 2000 and providing Legal with a copy of the same where a year 2000 failure has been identified; managing all contracts and agreements for Year 2000 compliance; reviewing all Requests for Proposal before being issued; managing all communication with external entities as governed by the Communications Strategy; reviewing all compliance certificates issued by external entities; liaising with the provincial government of Ontario, external commissions and boards for which no contract exists; creating any new agreements and contracts that address year 2000 compliance. In addition, this section will also be responsible for tracking compliance for packaged "Off the Shelf" software.

The projected budget for addressing all partners and agreements is $1.2 million.

Agencies, Boards and Commissions

In the July report, Council approved the recommendation that the Year 2000 Program Office also be responsible for the Year 2000 readiness of the agencies, boards and commissions of the City. Currently Agencies, Boards and Commissions liaise through Commissioners of the 6 operating departments. The Year 2000 Program Office works with the City's agencies, boards and commissions through the Project Managers of the department with which they are most closely associated to ensure that these authorities are aware of all year 2000 issues. For all but the largest of them, the priority 1 business functions for the agencies, boards and commissions will be included in the relevant department's Year 2000 program.

The Year 2000 Program Office will relate in different ways to different agencies, boards and commissions depending on their relationship to the City, their staffing and their size. A list of the agencies, boards and commissions with their proposed relationship to the Year 2000 Program Office is attached as Attachment 4. The three relationships described are full support, co-ordination and notification.

Full Support

This applies primarily to smaller agencies, boards and commissions that rely on a City department for staff and equipment and are usually fully funded by the City. They will receive full support from the Program Office.

Co-ordination

This relationship applies to agencies, boards and commissions that have their own staff and resources and tend to operate on an independent basis from the operating departments with which they are most closely associated. The largest commissions, the Police Board, the Toronto Transit Commission, and the Toronto Hydro Commission, have each taken responsibility for preparing and executing their own Year 2000 action plans and budget estimates. These Commissions have had their programs previously approved by Council. A status report has been submitted and reviewed by the Year 2000 Program Office and progress reports will be provided to the Program Office on a regular basis. These organizations will be subject to the same due diligence and audit requirements as the Operating Departments.

Notification

There are a series of other authorities with which the City has a special relationship. The Year 2000 Project Office will contact each of these authorities, advise them of the City's workplan and offer advice if needed, but will play no direct role in ensuring their Year 2000 readiness.

Police

The Project Management Office has received a status report (see attachment 5) from the Police outlining their initiative. At this point, the Police are requesting $1.7 million in their Capital Budget Submission for Year 2000. This will enable the Police to make their existing Financial System Year 2000 ready as Finance will not be in a position to roll out the SAP system by April, 1999. In the case of Police buildings, which are maintained by the City, actions required to ensure year 2000 readiness of their building systems form part of the City-wide year 2000 workplan rather than the Police action plan. The Project Management Office is recommending that these funds be approved, as requested.

TTC

The Project Management Office has received a status report (see attachment 6) from the TTC outlining their initiative. At this point, the TTC are requesting an additional $10.6 million in their Capital Budget Submission for year 2000. The Project Management Office is recommending that these funds be approved, as requested.

Toronto Hydro Commission

The Project Management Office has received a status report (see attachment 7) from Toronto Hydro outlining their initiative. At this point, Hydro is not requesting any additional funding from the Year 2000 program office.

Departmental Initiatives

Business functions

Each Departmental team identified its business functions and assigned a priority to each. For each priority 1 business function, all system elements and interfaces were identified and prioritized based on the severity of the impact of not being ready.

Corporate priority-setting process

The triage method approved by Council in July required each business function to be assigned a priority based on the type of impact and the probability of failure. As a result, each function is identified with a priority of 1 through 4:

1 = must be fixed

2 = important

3 = when time and resources permit

4 = no work required

This report deals primarily with the functions with a priority of 1, to enable the Corporation to focus on the business functions that must be fixed first. The team is continuing to identify and assess projects which fall into priority 2 and 3 category and will report back at the February 1999 Council meeting on the findings. The funding requested in this report is for the priority 1 projects that are identified in Attachment 8.

In order to assess the impact of the 84 business functions identified with a priority of 1, a severity factor of 1 through 8 was identified. The severity factors and some definitions and examples follow:

1. Corporate-wide Initiatives

Impacts on all other business, e.g. telephones, network, etc. These services are assumed to be in place by all operating departments either in support of their Year 2000 solutions or as a requirement for the contingency plans.

2.Public Impact

Significant immediate impact on a large segment of the public e.g. clean water,

3. Financial/Legal Impact

Significant expense, legal liability or an inability to collect revenue, e.g. property tax collection.

4.Corporate Support/Staffing

Significant impact on service provision or support for a function, e.g. payroll.

5. Financial Management

The ability to acquire products, pay suppliers and ensure financial stability of the corporation, e.g. accounting systems.

6.Maintenance/Support Services

The ability to schedule the use and availability of resources. The ability to collect and distribute information regarding services e.g. fleet management, complaint management and work order issuance

7. Information Management Systems

The ability to provide access to important corporate information, e.g. public health, financial reporting, performance statistics.

8.Administrative/Governance Systems

Licensing systems, by-laws, Council minutes and agendas, etc.

The priority 1 business functions are at varying states of readiness. The table included as Attachment 8 is a list of the priority 1 projects by department, their estimated "year 2000 ready" date, the estimated budget required to implement the year 2000 solutions and the current status of the systems.

The actual business cases provided for each priority 1 project approved by the Commissioner of the appropriate department, the Account Project Manager and the Quality Assurance Project Manager are all on file in the Clerk's Division. Due to the proprietary information in the business cases, this document is only available for review by City staff and councillors.

Conclusions

Many of the services provided by the City to members of the public are essential, and therefore the potential impacts of not being year 2000 ready are significant. As a result, funding must be provided to mitigate the risk both to members of the public and corporately to the City. This requires demonstration of due diligence through adherence to audit guidelines and must focus resources on making the priority 1 business functions Year 2000 ready.

Contact Name:

Lana Viinamae

Director, Year 2000

M. RodriguesW. A. Liczyk

Commissioner of Corporate ServicesChief Financial Officer and Treasurer

M. R. Garrett

Chief Administrative Officer