A project to streamline benefit administration ran £17m over budget and missed a series of deadlines before it was halted.
The Jobs and Benefits Office scheme sought to co-locate Social Security offices and job centres.
However, officials pulled the plug in 2011 with just 27 of a planned 35 offices complete.
The total cost for the 27 offices was £60m - £17m more than the original estimate to complete all 35 offices.
Despite the time and cost overruns, officials later claimed the project delivered value for money.
The matter is discussed in a report published today by the Northern Ireland Audit Office.
It concludes that future projects to modernise benefits administration here must seek to make the system more efficient.
Other key findings from the report include:
Auditor general Kieran Donnelly said: "Whilst the Social Security Agency has implemented a number of welfare reform and modernisation programmes in recent years, the primary focus of these have been meeting the requirements of legislative and policy change, not the efficiency of benefit administration.
"In the future, it is important that efficiency considerations are to the fore."
Mr Donnelly's report focuses on the 2012/13 financial year, when 558,000 claimants in Northern Ireland received £4.65bn.
Administrative costs for processing social security benefits were £196m, relating to around 4,260 staff.
The report states that over the last 12 years, the Social Security Agency has undertaken a small number of complex modernisation schemes. Among them was the Jobs and Benefits Office project, which began in 2001. It was aimed at creating a "one-stop shop" for work-focused services.
But after a series of missed deadlines, the project finished early in 2011, having completed just 27 of the 35 offices.
The final cost was £60m, up from the £43m previous estimate - and more than five times the initial budget of £11m.
In 2010 the Department for Social Development said it was satisfied the project had delivered value for money. However, auditors questioned the methods it used to measure its value.
A second project, Customer First, ran from 2006 to 2013 and consolidated services into 16 benefit processing centres.
A more ambitious project, completed by the Department for Work and Pensions in Britain, finished within budget and slashed 15,000 staff - around 18% of the workforce, the report stated.
It also notes the Belfast Benefit Delivery Centre, which deals with claimants in London, processes benefit claims more efficiently that the local office network.