<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-K/A
                                 AMENDMENT NO. 1


FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998

(mark one)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
     ACT OF 1934.
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

     For the transition period from __________ to ______________

Commission File Number 0-23852

                      PROJECT SOFTWARE & DEVELOPMENT, INC.
             (Exact name of registrant as specified in its charter)


          MASSACHUSETTS                                         04-2448516
  (State or other jurisdiction                               (I.R.S. employer
of incorporation or organization)                         identification number)


                    100 CROSBY DRIVE, BEDFORD, MASSACHUSETTS
       01730 (Address of principal executive offices, including zip code)

                                 (781) 280-2000
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $.01 PAR VALUE
                          ----------------------------
                                (Title of class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ ]



<PAGE>   2


As of December 15, 1998, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $207,959,815 based on the
last sale price of such stock on such date.

Number of shares outstanding of the Registrant's common stock as of the latest
practicable date: 10,023,508 shares of common stock, $.01 par value per share,
as of December 15, 1998.

         Total number of pages: 12





<PAGE>   3


       Part III of the Registrant's Annual Report on Form 10-K is hereby amended
by deleting the text thereof in its entirety and substituting the following:


                                    PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

         The directors and executive officers of the Company as of September 30,
1998 were as follows. Mr. Drapeau is a Class III Director, whose term expires in
1999. Messrs. Birch and Daniels are Class I Directors, whose terms expire in
2000. Messrs. Sayre and Stanzler are Class II Directors, whose terms expire in
2001. Mr. Nelson was a Class III Director until his resignation from the Board
on January 4, 1999. Mr. Stanzler consented to be named as a nominee of Robert L.
Daniels and Susan H. Daniels for election as director of the Company at its
Special Meeting in Lieu of Annual Meeting held on May 28, 1998 and was elected
as a director at that meeting.


<TABLE>
<CAPTION>
NAME                          AGE                      POSITION
----                          ---                      --------
<S>                           <C>             <C>

Norman E. Drapeau, Jr.        38              President and Chief Executive
                                              Officer and Director - Class III

Robert L. Daniels             56              Executive Chairman of the
                                              Board - Class I

Paul D. Birch                 40              Executive Vice President -
                                              Finance and Administration,
                                              Chief Financial Officer and
                                              Treasurer and Director - Class I

John W. Young                 46              Executive Vice President -
                                              Research and Development

William G. Nelson             64              Director - Class III

Stephen B. Sayre              46              Director - Class II

Alan L. Stanzler              55              Director - Class II


</TABLE>

         NORMAN E. DRAPEAU, JR. joined the Company in 1982 as an applications
analyst. Since that time, he has held various positions with the Company,
including, from 1984 to 1987, that of Manager of Customer Support and from 1989
through 1991, that of Director, Product Marketing. In 1991, Mr. Drapeau was
appointed Vice President, Corporate Marketing, in 1992 was appointed Vice
President - Americas and in July 1996 was appointed Executive Vice President -



<PAGE>   4

Worldwide Sales and Marketing, serving in that capacity until January 1998. In
January 1998, Mr. Drapeau was appointed Executive Vice President and Chief 
Operating Officer and was also elected a director of the Company. In May 1998, 
Mr. Drapeau was elected President and Chief Executive Officer.

         ROBERT L. DANIELS founded the Company in 1968 and has been a director
since that time. Mr. Daniels served as Chairman of the Board and Chief Executive
Officer from 1968 to 1996 and as President from 1968 to 1995. Mr. Daniels
resigned as an employee of the Company in December 1996. Mr. Daniels acted as an
executive consultant to the Company from this time until August 1997. In May
1998, Mr. Daniels rejoined the Company and was elected executive Chairman of the
Board.

         PAUL D. BIRCH joined the Company in 1991 as Vice President, Finance,
was appointed Vice President, Finance and Administration in 1992 and Executive
Vice President - Finance and Administration in 1996. Since 1992 he has been the
Chief Financial Officer of the Company, and since 1993 has held the additional
office of Treasurer. In May 1998, Mr. Birch was elected a director of the
Company.

         JOHN W. YOUNG originally joined the Company in 1985 and served until
1988 as MAXIMO Product Manager. From 1988 to 1992, Mr. Young was Vice President
of Sales of Comac Systems Corporation, a software application company. In 1992
he rejoined the Company as Director of MAXIMO Product Design, was appointed Vice
President - Research and Development of the Company in 1995 and was appointed
Executive Vice President - Research and Development of the Company in 1998.

         WILLIAM G. NELSON was a director of the Company from 1994 through
January 4, 1999. Since 1996, Mr. Nelson has been Chairman of the Board and Chief
Executive Officer of GEAC Computer Corporation Limited. From 1995 until 1996,
Mr. Nelson was Chairman and Chief Executive Officer of HarrisData, a developer
and licensor of application software. Mr. Nelson served as President and Chief
Executive Officer of Pilot Software, Inc. from 1991 to 1994. Mr. Nelson also is
a director of Manugistics, Inc. and serves as a director of a number of
privately- held companies.

         STEPHEN B. SAYRE was elected as a director in September 1998. Mr. Sayre
is currently the Senior Vice President of Marketing at Lotus Development
Corporation, a subsidiary of IBM Corporation. Prior to joining Lotus in 1994,
Mr. Sayre was President of Boston Treasury Systems and has held other senior
executive level positions with Cullinet Software and Easel Corporation.

         ALAN L. STANZLER was elected as a director in May 1998. Mr. Stanzler
served as a director of the Company from 1992 to 1994, and as Clerk of the
Company from 1990 to 1996. Mr. Stanzler is a member of the law firm of Maselan
Jones & Stanzler, P.C. From 1995 to 1998, Mr. Stanzler was a member of the law
firm of Davis, Malm & D'Agostine, P.C. and from 1978 to 1995 he was a partner in
the law firm of Finnegan & Stanzler, P.C. 



<PAGE>   5


         All directors hold office until the expiration of their respective
terms as described above and until their respective successors are duly elected
and qualified. Executive officers of the Company are appointed by and serve at
the discretion of the Board of Directors.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater-than-10% stockholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.

         Based solely upon review of Forms 3 and 4 and amendments thereto
furnished to the Company during fiscal 1998 and Forms 5 and amendments thereto
furnished to the Company with respect to fiscal 1998, or written representations
that Form 5 was not required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-10%
stockholders were fulfilled in a timely manner, with the exception of one late
Form 5 by Mr. Daniels in his individual capacity (relating to a gift of shares
and a withdrawal from the 1996 Daniels Voting Trust); and one late Form 4
(relating to one transaction involving the sale of shares) and one late Form 5
(relating to a gift of shares and a withdrawal from the 1996 Daniels Voting
Trust) by Mrs. Daniels. After investigating these matters, the Company has
concluded that any omissions were inadvertent, and that none of the transactions
gave rise to liability under Section 16(b) of the Exchange Act for recapture of
short-swing profits.

         ITEM 11. EXECUTIVE COMPENSATION.

         Summary Compensation Table. The following table sets forth certain
information concerning the compensation earned by the Company's Chief Executive
Officers and the four other most highly paid executive officers of the Company
(collectively, the "named executive officers") for services rendered in all
capacities to the Company during fiscal 1998.


                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                    Long-Term   
                                                                                   Compensation 
                                                                                   ------------ 
                                                                                      Awards    
                                    Annual Compensation                               ------
                              --------------------------------                      Securities        All Other
                              Fiscal                              Other Annual      Underlying      Compensation
Name and Principal Position    Year     Salary($)     Bonus($)    Compensation     Options(#)(1)       ($)(2)   
---------------------------    ----     ---------     --------    ------------     -------------       ------   
<S>                            <C>      <C>                       <C>                 <C>              <C>   

Norman E. Drapeau, Jr.         1998     $224,375          --      $ 30,241(3)         30,000           $2,375
President and                  1997      152,500          --        95,885(3)         24,999            2,250
Chief Executive Officer        1996      120,833          --       184,517(3)         50,000(4)         2,250


David M. Sample(9)             1998     $277,059          --      $118,900(5)             --           $2,375
Former Chairman of the Board,  1997      167,146     $96,250(6)    101,778(7)        350,000(8)            --
Chief Executive Officer,       1996           --          --            --                --               --


</TABLE>



<PAGE>   6

<TABLE>
<S>                               <C>      <C>        <C>                  <C>      <C>          <C>

and President 

Robert L. Daniels(12)             1998     $110,625          --            --           --           --
Executive Chairman of the         1997       64,773          --            --           --      $29,167(13) 
Board and Former Chief            1996      293,750   $ 459,443(10)        --           --        1,188 
Executive Officer and President                                                                         
                                                                                                        
Paul D. Birch                     1998     $188,250         --             --       20,000      $ 2,375 
Executive Vice-President          1997      166,500   $ 13,655(11)         --       20,000        2,250 
Chief Financial Officer,          1996      146,500    140,802(10)         --       40,000(4)     2,250 
and Treasurer                                                                                          
                                                                                                        
John W. Young                     1998     $160,000         --             --       20,000      $ 2,375 
Executive Vice-President          1997      135,000   $  7,686(11)         --        9,999        2,250 
Research and Development          1996      115,000     40,000(10)         --       20,000(4)     2,250 
                                  
</TABLE>

----------

(1)  Represents shares of Common Stock issuable upon exercise of stock options
     granted under the Company's 1994 Stock Option Plan.

(2)  Except with respect to Mr. Daniels in 1997 (see footnote 13), the amounts
     reported represent contributions made by the Company pursuant to the
     Company's 401(k) Plan and Trust for fiscal 1998 and for the fiscal years
     ended September 30, 1997 and 1996 ("fiscal 1997 and "fiscal 1996,"
     respectively).

(3)  Represents commissions paid under Mr. Drapeau's individual incentive
     compensation plan as Executive Vice President Worldwide Sales designed to
     reward him for achievement of quarterly and annual revenue and contribution
     targets.

(4)  These options were cancelled in exchange for options issued in 1997.

(5)  Includes $112,500 representing partial forgiveness by the Company of an
     interest-free loan to Mr. Sample. Also includes $6,400 representing a car
     allowance.

(6)  Bonus paid pursuant to Mr. Sample's offer letter from the Company dated
     January 30, 1997.

(7)  Includes $75,000 representing partial forgiveness by the Company of an
     interest-free loan to Mr. Sample. Also includes $22,778 representing
     reimbursement of moving costs and $4,000 representing a car allowance.

(8)  Includes a grant of a nonqualified option to purchase 200,000 shares of
     Common Stock which was cancelled at Mr. Sample's election on July 31, 1997.

(9)  Mr. Sample resigned from his employment by the Company in May 1998.

(10) Represents bonuses paid under the Company's 1996 Executive Bonus Plan.

(11) Represents bonuses paid under the Company's 1997 Executive Bonus Plan.

(12) Mr. Daniels resigned from his employment by the Company in December 1996. 
     Mr. Daniels rejoined the Company as Executive Chairman of the Board in May 
     1998.

(13) Represents fees related to an executive consulting agreement.
<PAGE>   7

         Option Grants in Last Fiscal Year. The following table sets forth
certain information regarding stock options granted during fiscal 1998 by the
Company to the named executive officers.


                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                              Potential Realizable  
                                                                                                Value at Assumed      
                                  Number of                                                   Annual Rate of Stock  
                                 Securities    Percent of Total                               Price Appreciation for
                                 Underlying     Options Granted     Exercise                      Option Term(4)        
                                   Options      to Employees in       Price      Expiration   ----------------------      
            Name               Granted (#)(1)  Fiscal Year(%)(2)    ($/Sh)(3)       Date      5%($)           10%($)
            ----               --------------  -----------------    ---------    ----------   ----------------------
<S>                              <C>                 <C>             <C>          <C>   <C>   <C>        <C>       

Norman E. Drapeau, Jr ......     30,000(5)           8.6%            $25.875      10/08/07    $488,100   $1,237,200

David M. Sample (6).........         --               --                  --            --          --           --

Robert L. Daniels ..........         --               --                  --            --          --           --

Paul D. Birch...............     20,000(5)           5.7%             25.875      10/08/07     325,400      824,800

John W. Young...............     20,000(5)           5.7%             25.875      10/08/07     325,400      824,800

</TABLE>

----------

(1)  Represents shares of Common Stock issuable upon exercise of incentive stock
     options granted under the Company's 1994 Stock Option Plan.

(2)  The Company granted to employees options for the purchase of an aggregate
     of 350,200 shares of Common Stock in fiscal 1998 pursuant to the 1994 Stock
     Option Plan.

(3)  All options were granted at exercise prices not less than the fair market
     value of the Common Stock on the date of grant.

(4)  Potential realizable value means the value of the shares of Common Stock
     underlying the option, at the specified assumed annual rates of stock price
     appreciation, compounded over the option term (10 years). Actual gains, if
     any, realized on stock option exercises are dependent on the future
     performance of the Common Stock and overall stock market conditions. There
     can be no assurance that the values reflected in this table will be
     realized.

(5)  All such options expire ten years after the date of grant, and first become
     exercisable as to 25% of the shares covered on the first anniversary of the
     date of grant and as to a further 25% annually thereafter.

(6)  Mr. Sample resigned from his employment by the Company in May 1998.





<PAGE>   8

         Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information concerning stock options exercised during fiscal 1998
and stock options held as of September 30, 1998 by each of the named executive
officers.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                          Number of Unexercised          Value of Unexercised    
                              Shares                        Options in the                   Money Options       
                             Acquired     Value             Fiscal Year-End              at Fiscal Year End($)(2)
                                On       Realized   --------------------------------  -------------------------------
         Name              Exercise(#)    ($)(1)    Exercisable(#)  Unexercisable(#)  Exercisable($) Unexercisable($)
         ----              -----------    ------    --------------  ----------------  -------------- ----------------
<S>                            <C>          <C>         <C>             <C>             <C>               <C>

Norman E. Drapeau, Jr. ...     --           --          33,874          45,875          $  501,944        $269,453

David M. Sample(3) .......     --           --              --              --                  --              --

Robert L. Daniels ........     --           --              --              --                  --              --

Paul D. Birch.............     --           --          60,000          37,500          $1,082,082        $256,563

John W. Young.............     --           --          14,749          27,250          $  196,522        $150,469

</TABLE>

----------

(1)  Value is based on the last sale price of the Common Stock on the exercise
     date, as reported by the Nasdaq Stock Market, or the price at which shares
     acquired upon exercise of the option were actually sold (in the event of a
     concurrent exercise and sale), less the applicable option exercise price.

(2)  Value is based on the last sale price of the Common Stock on September 30,
     1998, as reported by the Nasdaq Stock Market ($29.875 per share), less the
     applicable option exercise price. These values have not been and may never
     be realized. Actual gains, if any, on exercise will depend on the value of
     the Common Stock on the date of the sale of the shares.

(3)  Mr. Sample resigned from his employment by the Company in May 1998.


         Employment Contracts. In connection with the employment of Mr. Sample
as President and Chief Executive Officer of the Company, the Company entered
into an offer letter with Mr. Sample dated January 30, 1997 (the "Offer
Letter"). The Offer Letter provided, among other things, that Mr. Sample would
be paid a base salary of $22,917 per month, subject to annual review after
September 30, 1997, and would generally be entitled to receive up to one hundred
percent (100%) of his base salary as a bonus under the Company's Executive Bonus
Plan depending upon the Company's performance. For fiscal 1997 any such bonus
was to be pro-rated, but was guaranteed to be at least sixty percent (60%) of
the maximum payable after such pro-ration. Mr. Sample's actual bonus for fiscal
1997 was $96,250. Pursuant to the terms of the Offer Letter, the Company granted
to Mr. Sample a non-qualified stock option to acquire 200,000 shares of Common
Stock, which would have vested in four equal annual installments. However, that
option was cancelled at Mr. Sample's election, and a new option to acquire
100,000 shares was granted to Mr. Sample in its place, pursuant to an offer
extended to all employees of the Company who received option grants between
August 1, 1996 and July 31, 1997. The replacement option also vested in four
equal annual 



<PAGE>   9


installments. The Offer Letter also provided that the Company would pay one
year's severance pay in the event of the termination of Mr. Sample's employment
under certain circumstances and that the Company would reimburse certain moving
costs and extend to Mr. Sample an interest-free loan of up to $300,000 for use
solely to acquire a new residence, which loan was to be forgiven with respect to
one eighth of the amount thereof at the close of business on the last business
day of each calendar quarter if Mr. Sample was still employed by the Company.
The Company forgave $75,000 of such loan during fiscal 1997 and $112,500 during
fiscal 1998. Mr. Sample resigned from his employment with the Company in May
1998.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        William G. Nelson, Michael D. Marvin, Alan L. Stanzler and Stephen B.
Sayre served on the Compensation Committee during fiscal 1998. Neither such
Compensation Committee members, nor any executive officer of the Company, has
any relationship requiring disclosure by the Company pursuant to item 402(j) of
Regulation S-K promulgated by the SEC.


DIRECTORS' COMPENSATION

        Members of the Board of Directors who are not employees of the Company
or one of the Company's subsidiaries ("Outside Directors") receive fees of
$2,500 per quarter plus $500 for each meeting of the Board of Directors or
Committee of the Board which they attend, and are reimbursed for out-of-pocket
expenses incurred in the performance of their duties as directors of the
Company. Directors who are employees of the Company are not paid any separate
fees for serving as directors.

        Pursuant to the Company's 1994 Stock Option Plan (the "Option Plan"),
each Outside Director, upon first joining the Board, is automatically granted an
option to purchase 12,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock (determined in accordance with the
terms of the Option Plan) on the date of grant, vesting in three equal annual
installments beginning on the first anniversary of the date of grant. In
addition, each Outside Director who continues to serve as a director following
any annual meeting of stockholders of the Company or special meeting in lieu
thereof is automatically granted, immediately following such meeting of
stockholders, an option to purchase 4,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock (determined in
accordance with the terms of the Option Plan) on the date of grant, vesting in
full on the last day of December in the year in which the option is granted.

        ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        PRINCIPAL STOCKHOLDERS

        The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of December 15, 1998 by
(i) each person known by the Company to own beneficially more than five percent
of the Common Stock as of such date, (ii) each director of the Company, (iii)
each named executive officer and (iv) all executive officers and directors of
the Company as a group:




<PAGE>   10


<TABLE>
<CAPTION>
                                                           
                                                           
                                                           Shares Beneficially  
                                                                 Owned(1)       
                                                          ----------------------
      Name                                                Number         Percent
      ----                                                ------         -------
<S>                                                       <C>             <C>

Robert L. Daniels(2)(3)                               
  100 Crosby Drive
  Bedford, MA 01730.................................      2,823,760        28.2%

Susan H. Daniels(2)(3)..............................        849,129         8.5%

Kopp Investment Advisors, Inc.(4)                          
  6600 France Avenue South
  Edina, MN 55435...................................        924,829         9.2%
                                                            
Paul D. Birch(5)....................................         74,233           *

Norman E. Drapeau, Jr.(6)...........................         44,749           *

William G. Nelson(7)................................         27,000           *

David M. Sample.....................................              0           *

John W. Young(8)....................................         21,999           *

Stephen B. Sayre....................................              0           *

Alan L. Stanzler(9).................................        143,000         1.4%

All directors and executive officers as a group                      
  (8 persons) (2)(3)(5)(6)(7)(8)(9).... ............      3,134,741        31.3%


</TABLE>


----------

* Less than one percent.




<PAGE>   11


(1)  The persons named in this table have sole voting and investment power with
     respect to the shares listed, except as otherwise indicated. The inclusion
     herein of shares listed as beneficially owned does not constitute an
     admission of beneficial ownership.

(2)  Excludes 120,000 shares held in three trusts for the benefit of Mr.
     Daniels' three children. Each of Robert L. Daniels and Susan H. Daniels
     disclaims beneficial ownership of these shares.

(3)  Includes shares held by Robert L. Daniels as Trustee of the 1996 Daniels
     Voting Trust (the "Voting Trust"). Of the 1,636,758 shares subject to the
     Voting Trust, 822,629 are owned beneficially by Mr. Daniels and 814,129 are
     owned beneficially by Susan H. Daniels. Mr. Daniels, as Trustee, has sole
     voting power with respect to the shares subject to the Voting Trust. Mr.
     Daniels also owns 1,187,002 shares free of the Voting Trust, and Susan
     Daniels also owns 35,000 shares free of the Voting Trust. Each of Mr.
     Daniels and Susan Daniels disclaims beneficial ownership of the shares
     beneficially owned by the other. Robert and Susan Daniels are divorced. 
     Excludes 30,000 shares held by Anya Daniels, Mr. Daniels' wife. Mr. 
     Daniels disclaims beneficial ownership of these shares.

(4)  This information is as of September 30, 1997, and is based upon a report on
     Schedule 13F filed by Kopp Investment Advisors, Inc. with the SEC, pursuant
     to Section 13(f) of the Securities Exchange Act indicating it had
     investment discretion with respect to such shares as of such date.

(5)  Includes 72,500 shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(6)  Represents shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(7)  Includes 12,000 shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(8)  Represents shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(9) Includes 120,000 shares held in three trusts for the benefit of Mr.
     Daniels' children. Mr. Stanzler has sole voting power with respect to the
     shares held by these trusts. Also includes 9,000 shares issuable pursuant
     to outstanding stock options exercisable within 60 days of the date of this
     table. Also includes 14,000 shares underlying Stock Appreciation Rights
     granted to Mr. Stanzler by Mr. Daniels, exercisable for five years from
     December 8, 1997.


         ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Mr. Daniels is a 1.69% limited partner in the Charles Square Limited
Partnership, a real estate partnership which operates the hotel, retail and
office complex in Cambridge, Massachusetts in which the Company occupied its
corporate headquarters pursuant to a 13 year lease which expired on December 31,
1997. The Company incurred base rent, real estate taxes, operating expenses and
parking of approximately $300,000 to the partnership in fiscal 1998. Although
the total expenses paid under this lease during fiscal 1998 were in excess of
market rates, the Company believes that the total expenses payable under this
lease represented a market rate at the time the lease was entered into.



<PAGE>   12

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: January 27 , 1999

                                   PROJECT SOFTWARE & DEVELOPMENT, INC.


                                   By: /s/  Norman E. Drapeau, Jr.
                                       -----------------------------------------
                                       Norman E. Drapeau, Jr.
                                       President and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



                             
/s/ Norman E. Drapeau, Jr.                January 27, 1999
---------------------------------                                 
Norman E. Drapeau, Jr.                                  
President and Chief Executive
Officer  and Director (Principal
Executive Officer)

                                                                                
/s/ Paul D. Birch                         January 27, 1999
---------------------------------                                      
Paul D. Birch                                               
Executive Vice President, Chief
Financial Officer and Treasurer
and Director (Principal
Financial and Accounting Officer)



---------------------------------
Alan L. Stanzler
Director                           


/s/ Robert L. Daniels                     January 27, 1999 
---------------------------------
Robert L. Daniels      
Director                                  


---------------------------------
Stephen B. Sayre      
Director