Year 2000 Priority 1 Business Functions Status Report

and Identification of Priority 2 and 3 Business Functions

The Strategic Policies and Priorities Committee recommends the adoption of the following report (February 9, 1999) from the Commissioner of Corporate Services:

Purpose:

The Year 2000 Business Continuity Plan Status Report (January 1999) outlines the following information as requested by Council at its November 1998 meeting:

(1)an inventory of priority two and three Year 2000 projects for the City of Toronto's Departments, Agencies Boards and Commissions;

(2)the estimated completion date for each priority 2 and 3 project, where provided;

(3)the planned budget required to ensure year 2000 readiness for each priority 2 and 3 project;

(4)the current status of each priority 2 and 3 project;

(5)the amount and source of funding for the year 2000 priority 2 and 3 projects for the year2000 program;

(6)status report of each priority 1year 2000 function;

(7)status report on the ABC's and their state of readiness;

(8)status report on expenditures for priority 1 year 2000 functions; and

(9)change requests.

Funding Sources:

No additional funding is requested at this point.

Recommendations:

It is recommended that:

(1)the 64 priority 2 and 3 business functions identified by the Operating Departments be approved for remediation;

(2)the Program Office be given the authority to recommend to the Year 2000 Steering Committee that the City extend, re-negotiate, terminate or enter into new contracts that affect priority 2 and 3 business functions to minimize major disruptions of business units doing remedial work on priorities 2 and 3 business functions thereby putting business continuity at risk;

(3)the Chief Administration Officer be given approval to continue to enter into agreements for priority 2 and 3 business functions 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;

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

(5)the Year 2000 Project Office be requested to report monthly to the Strategic Policies and Priorities Committee on the status of priorities 2 and 3 business functions.

Comments:

At its meeting of July 29, 30 and 31, 1998, Council directed the Year 2000 Program Office to report monthly to the Strategic Policies and Priorities Committee on the progress of the Year 2000 plan. At its meeting of November 17, 1998, the Strategic Policies and Priorities Committee adopted the Year 2000 Business Continuity Plan to remedy the 84 priority 1 business functions identified and approved the $149.6 million requested. The report was forwarded to Council at its meeting of November 25, 26 and 27, 1998 and was adopted.

At its meeting of November 25, 26 and 27, 1998, Council directed the Year 2000 Program Office to 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).

In November 1998, the City of Toronto began remediating the 84 critical business functions immediately to ensure business continuity for the millennium. At the same time, operating departments and citywide initiatives were requested to complete the inventory phase of all priority 2 and 3 business functions by February 1999. To date 38 priority 2 and 26 priority 3 business functions have been identified. For each of these 64 business cases, a cost-effective strategy for remedy has been recommended. The Commissioner for each operating department has approved the priority 2 and 3 business cases identified in their area.

The projected cost of ensuring business continuity for the 37 departmental business functions for priority 2 is $11.7 million. In addition, $0.9 million is required for the one citywide priority 2business function. The projected cost for the 26 departmental business functions for priority 3 is $2.2 million. A project contingency fund of $2.2 million, which is 15percent of the projected estimate of $14.8 million has been included as part of the overall total budget. This will cover purchased services and taxes where they exceed the estimated totals. Expenditures from project contingency fund will be managed through a change request process with prior approval from the Year 2000 Steering Committee.

Budget Summary:

Within each of the departments a total of 63 priority 2 and 3 projects have been identified, and one citywide initiative. A total of $2.2 million in contingency funding has been allocated. Appendix 1 gives a summary of each of the priority 2 and 3 business functions and their status.

Contingency Planning:

The City evaluates all critical business functions based on the level of year 2000 compliance coupled with the adequacy of the contingency plans for the 84 priority 1 business functions. The objective is to identify risks, on a predictive basis, so that they can be mitigated. Varying risk levels invoke a variety of actions. For projects that are on target, no action is required. For projects that are at risk, the solution may be to abandon remediation and immediately act on the contingency plan. A contingency plan is required for all priority 1 business functions.

The Emergency Preparedness Organization within the City's Works and Emergency Services Department is entrusted with the development of the City's Emergency Preparedness plans. The Year 2000 Program is working closely with this group to ensure year 2000 scenarios are identified. Changes required to the City's Emergency Preparedness plans to address year 2000 scenarios will be identified.

The Year 2000 Program Office will be reporting on proposed contingency plans for priority 1business functions and year 2000 emergency preparedness plans and requesting any funds required to implement or execute these plans.

Status report on priority 1 business functions:

Departmental critical 1 business functions:

All Departments are on track and well into the remediation phase with the exception of Finance. However, hiring project resources and the identification of a contingency plan has mitigated the risk associated with Finance. Test plans are being developed to ensure all systems are functional following the current remediation phase. Appendix 2 is attached indicating the current status of each of the critical 1 business functions.

Status report on the Toronto Transit Commission (TTC):

Project plans to remediate business applications, technology infrastructure, and embedded systems are in place. Seven major teams reporting to the Y2K Project Office have been created and staffed with technical resources. User resources for testing have been identified and commitments made. The seven teams, supporting approximately 45 project areas, include:

Financial;

Transportation;

Work Order Maintenance and Materials;

Engineering;

Corporate;

Technology Infrastructure; and

Embedded Systems.

A Y2K Project Charter has been finalized and published, defining program scope, approach, responsibilities, and budget.

A final Assessment Report will be produced in February. Some fine-tuning of initial project plans is expected.

Current remediation efforts are scheduled and expected to be completed by September. Exceptions to this include a small number of replacement business applications, such as Scheduling, Timeline, and Engineering Document Control. On balance, the project is tracking 2-3 weeks behind schedule, with no further slippage expected.

The TTC has initiated contingency/continuity planning, to accommodate both IT application failures and external problems related to power supply, communications, and water which will significantly impact service. The TTC is working with the City and Police in support of a consolidated Emergency Services planning effort.

Higher than expected costs are being realized due to the scope of application and infrastructure concerns. The technology infrastructure in particular is quite obsolete and a greater replacement than initially budgeted will be required to create a stable and compliant environment. An internal review of project costs and sources of funding is underway. Additional funding is not requested at this time.

A chart has been provided in Attachment 3.

Status report from Toronto Hydro January 28, 1999:

Of the seven areas that have been identified for tracking Y2K progress (Electrical Distribution, Facilities, Meters, Customer and Energy Services, Corporate Services, Telecommunications, and I/TInfrastructure), Hydro has completed the inventory and assessment phase for all but one. Planning and performance of remediation and testing work is progressing well.

The top priorities for Toronto Hydro's Y2K readiness work are:

(1)The safety of the public and their employees,

(2)The continuity of electrical supply to their customers, and

(3)Maintaining critical business functions, such as accurate billing.

Items in the inventory of possible Y2K exposure have been assessed as 'A', 'B', or 'C' items, depending upon their impact on the Y2K readiness goals. 'A' items are those which have a significant impact on the Y2K goals, 'B' items are those which are important to an area of the business but do not significantly impact the Y2K goals, and 'C' items are those others which would be nice to have. All items in the Y2K inventory have been categorized by the Y2K team, in concert with the responsible manager, and listings have been provided to each Senior Vice-President for confirmation of completeness and categorization. The Y2K team will continue to monitor and follow up on progress on the 'A' items. The 'B' and 'C' items will be addressed in the normal course of business.

The Toronto Hydro Executive Committee has approved a testing policy for Y2K items. The 'A'item must be tested, and the responsible Senior Vice-President will approve the test results. The responsible Senior Vice-President must approve exceptions to this testing requirement. The 'B' and 'C' items may be tested for Y2K readiness, within the context of business as usual.

Additional consulting staff have been utilized to assist in the inventory, reporting, and test planning for Y2K items. IBM is Toronto Hydro's consultant for Y2K, and is assisting in project management and methodology.

Toronto Hydro is continuing to participate on the Canadian Electric Association (CEA) Year 2000 Working Committee, and thereby is gaining access to the work done by other major Canadian utilities, including their supplier, Ontario Hydro. Toronto Hydro participated in a periodic survey on Y2K readiness that was developed by the North American Electric Reliability Council (NERC) and distributed through the CEA. Canadian information from that survey is used by the CEA to advise federal and provincial government agencies about the current state of the industry.

Ontario Hydro continues to report that its Y2K program is on track. Operational readiness is scheduled for mid-1999. Toronto Hydro has met with representatives from the transmission group within Ontario Hydro, and has jointly inspected nine of their stations to verify readiness at the interface between Ontario Hydro's equipment and theirs. Toronto Hydro is also working with Ontario Hydro on a test of one of Ontario Hydro's major stations. They plan to move the equipment clocks ahead, so that "January 1, 2000" will appear to happen soon after the start of the test. The equipment will be allowed to continue in this way for a couple of months, to check the leap year functionality.

The station to be tested serves Toronto Hydro customers in the southwest area of the City of Toronto. The highway 401 bound this area to the north, Spadina to the east, Lakeshore to the south and Eglinton to the west. A communication plan has been developed to minimize any negative impact from the test, and to maximize the positive aspect. No date information is passed between the Ontario Hydro equipment and the Toronto Hydro equipment. As long as there is no interruption from Ontario Hydro, Toronto Hydro customers will be unaffected by this test.

Customers or other organizations that have asked about Toronto Hydro's Y2K readiness program have been sent a Y2K Statement, which is attached to this report in Appendix 4.

Contingency planning for Y2K was scheduled by Toronto Hydro to be done in the second quarter of 1999. Toronto Hydro has found that this schedule would not keep pace with the electricity industry as a whole, and they are therefore starting to develop contingency plans immediately, although the scheduled completion date, for this and for Y2K readiness of critical items remains June30, 1999. Toronto Hydro anticipates that most contingencies will be covered by plans that already exist in the context of normal operations.

Toronto Hydro continues to operate within the budgeted cost to the company for Year 2000 readiness. In many cases, Toronto Hydro has achieved a collateral benefit within the amalgamation project, by eliminating a system that was not Y2K ready, and utilizing one that is.

Status report on the City of Toronto's expenditures:

Attached is a status report on the $149.6 million allocated to the Y2K project to remedy all critical 1 business functions. As of January 31, 1999, $11.2 million has been committed or spent. The majority of this expenditure is for resources, hardware, servers, and network equipment. See attachment 5.

Change requests:

Project Management Office:

Council has requested, based on a recommendation by the Budget Committee, the Year 2000 Program Office to review, assess and report on the Year 2000 action plan of the City's agencies boards and commissions. If any issues are identified which could impact the City of Toronto's Year 2000 readiness, the Program Office will escalate these items to the Strategic Policies and Priorities Committee for action. A change request was issued and approved by the Year 2000 Steering Committee in the amount of up to $750,000. These funds will be utilized to fund a Project Manager and 3 staff to take on this pro-active role. This amount will be drawn from the project contingency fund.

Project Management Office Tools:

The office space available to house the Year 2000 project team did not meet the team's requirements, and the Year 2000 Program Office is working with Facilities Management to implement the necessary modifications to provide a suitable working environment for the team. A change request was issued and approved by the Year 2000 Steering Committee in the amount of up to $400,000.00. This amount will be drawn from the project contingency fund.

Communication:

Communication consultants have been retained to work with Corporate Communications and the Year 2000 Project Office to implement a pro-active public communication campaign on the City of Toronto's Year 2000 action plan, status and contingency plans. This firm will also interact with Toronto Hydro, TTC and Toronto Police to ensure that the City provides accurate and consistent information to the public. This firm will also participate on the communications team for the City's emergency preparedness committee. All information to be distributed will be reviewed and a copy retained by the Year 2000 program office to ensure due diligence. The public communications plan, currently being developed, will be brought forward to the SPPC once complete. A change request was issued and approved by the Year 2000 Steering Committee in the amount of up to $300,000.00. This amount will be drawn from the project contingency fund.

Partnership and Agreements:

The legal firm of Fasken Campbell Godfrey has been retained by the City Solicitor to provide legal support to the Year 2000 Program Office. The services will include the review of all year 2000 information including contracts and communication documents for the public and other partners to be distributed by the City, the provision of legal advice on year 2000 issues and contract services for the new and re-negotiated contracts of the City. Due to the volume of work, the Year 2000 Program Office projects a requirement for two dedicated resources and additional resources as required. A change request was issued and approved by the Year 2000 Steering Committee in the amount of up to $750,000.00. This amount will be drawn from the project contingency fund.

Community and Neighborhood Services:

Children's Services:

A change request was issued and approved to increase the budget for the Children Services business function from $5,000.00 to up to $75,600.00 to hire resources to complete the required Year 2000 testing, documentation and contingency planning. The previous estimate of the effort was inadequate to complete the work required. The Year 2000 Steering Committee approved the request. This amount will be drawn from the project contingency fund.

Conclusion:

The City of Toronto's Year 2000 readiness program is moving forward as anticipated. Council will continue to receive program reports as requested.

Contact:

Lana Viinamae, Director Year 2000

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Appendix 4

Toronto Hydro Y2K Statement:

At Toronto Hydro, we have been aware of the Year 2000 problem for several years now and have been actively working on a solution since 1997. Our Y2K Plan has been given high priority, with support from our Executive Committee, and we have dedicated both personnel and resources to address the problem. Currently, our Y2K Team is assessing all computer and electrical distribution systems and components for their ability to provide an uninterrupted supply of electricity to customers as we pass the millennium.

Because we meet record peak demands during heat waves and quickly restore service in the aftermath of all kinds of weather, preparing for and dealing with operating risks is an ingrained part of our business. Our Year 2000 preparations centre around three major priorities:

(i)the continuity of electrical supply to customers;

(ii)the safety of the public and utility employees; and

(iii)the ability to maintain critical business functions.

Our Y2K initiatives are consistent with the electricity industry timeline suggested by the North American Electric Reliability Council (NERC), a coordinating body charged with ensuring the smooth transition of the North American power industry into the new millennium. Through participation in the Canadian Electric Association committee on Y2K readiness, we've also been able to review the initiatives and benefit from the experience of other utilities right across the country. Our Y2K planning is on schedule with, and in some areas ahead of, the Y2K planning of other utilities. We believe that our timeline is ambitious but achievable:

(i)team members now have a plan in place to address all computer systems and components that are not Y2K-ready;

(ii)all critical systems and components that are not Y2K-ready will be replaced, or upgraded and fully tested for readiness by June 30, 1999;

(iii)a contingency plan addressing "what ifs" is already being developed; and

(iv)less critical items such as internal functions, which have no customer impact, will be dealt with on or after June 30, 1999.

Our Y2K team of computer and utility industry experts reports monthly to our Executive Committee. A database has been developed to help track progress on the more than 1500 item types that have been identified and the team has given priority to areas which could affect customer service.

The Y2K problem, however, does not only affect Toronto Hydro; it also affects our suppliers. We're working with industry associations and with Ontario Hydro to assess the impact of Y2K on their generation and transmission operations. Part of our plan involves obtaining assurances from them that their Year 2000 plans are on track to provide us - and our customers with - an ongoing power supply.

At Toronto Hydro, we feel that we are well under way in addressing Year 2000 issues. While no utility can ever guarantee electrical supply at any time due to the nature of electricity, preparing for and dealing with operating risks is an ingrained part of our business. While the Year 2000 problem is of universal concern, we believe that a well-defined action plan will enable us to meet the challenge successfully.

(A copy of the attachments to the foregoing report were forwarded to all Members of Council with the February 23, 1999, agenda of the Strategic Policies and Priorities Committee, and a copy thereof is also on file in the office of the City Clerk.)