<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K/A
                                 AMENDMENT NO. 1

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

(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, 1997, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $116,995,865 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: 9,882,071 shares of common stock, $.01 par value per share, as
of December 15, 1997.

     Total number of pages: 12





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     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:

     ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The directors and executive officers of the Company are as follows. Mr.
Jones is a Class II Director, whose term will expire at the annual meeting of
stockholders of the Company to be held with respect to the fiscal year ended
September 30, 1997 ("fiscal 1997"). Messrs. Drapeau and Nelson are Class III
Directors, whose terms expire in 1999. Messrs. Sample and Daniels are Class I
Directors, whose terms expire in 2000.


Name                        Age                  Position
----                        ---                  --------

David M. Sample             49     President, Chief Executive Officer and 
                                   Chairman of the Board of Directors - Class I

Paul D. Birch               39     Executive Vice President - Finance and
                                   Administration, Chief Financial Officer and
                                   Treasurer

Norman E. Drapeau, Jr.      37     Executive Vice President, Chief Operating 
                                   Officer  and Director - Class III

John W. Young               45     Vice President - Research and Development

Robert L. Daniels           55     Director - Class I

Charles S. Jones            49     Director - Class II

William G. Nelson           63     Director - Class III

     DAVID M. SAMPLE joined the Company as Chairman of the Board of Directors,
President and Chief Executive Officer on February 24, 1997. From 1992 to 1997,
Mr. Sample held various positions with Hyperion Software Corp., most recently as
senior vice president of international operations and North American sales.
During 1995 Mr. Sample was in charge of Hyperion's Pillar Software subsidiary
and, prior to that, served as senior vice president and general manager of
Hyperion's United Kingdom business.

     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.

     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 -
Worldwide Sales and Marketing,



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<PAGE>   4


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.

     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 and was appointed Vice
President - Research and Development of the Company in 1995.

     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.

     CHARLES S. JONES has been a director of the Company since 1994. Since 1991,
Mr. Jones has been Chairman and Chief Executive Officer of First Funding
Corporation, an investment banking advisory company. Mr. Jones is a director of
Farrel Corporation, a global manufacturer of polymer processing equipment for
the rubber and plastic industry. Mr. Jones also serves as a director of a number
of privately-held companies.

     WILLIAM G. NELSON has been a director of the Company since 1994. Since
1996, Mr. Nelson has been Chairman of the Board and Chief Executive Officer of
GEAC Computer Corporation Limited, a producer of computer hardware and software.
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.

     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 1997 and Forms 5 and amendments thereto furnished
to the Company with respect to fiscal 1997, 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 3 and one late Form 4 (concerning one option exercise and sale of the
underlying stock) by Mr. Young; one late Form 4 (concerning a single grant of
options to acquire Common Stock) by each of Messrs. Jones,



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<PAGE>   5


Nelson and Marvin; one late Form 4 by Mr. Daniels in his individual capacity
(relating to three transactions involving the sale of shares); one late Form 3
and one late Form 5 by Mr. Daniels in his capacity as trustee of the 1996
Daniels Voting Trust (relating to the initial contribution of shares to the 1996
Daniels Voting Trust); and one late Form 3 and two late Forms 4 (relating to
five transactions involving the sale of shares) 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
Officer 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 1997.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                     Long-Term
                                  Annual Compensation                               Compensation
                                  -------------------                               ------------
                                                                                       Awards
                                                                                       ------
                                                                                     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>               <C>   

David M. Sample                1997     $167,146       $96,250(3)    $101,778(4)        350,000(5)        $   --
 Chairman of the Board,        1996           --            --             --                --               --
 Chief Executive Officer       1995           --            --             --                --               --
 and President

Paul D. Birch                  1997      166,500        13,655(6)          --            20,000            2,250
 Executive Vice President,     1996      146,500       140,802(6)          --            40,000            2,250
 Chief Financial Officer and   1995      129,000       184,566(6)          --            30,000            2,310
 Treasurer

Norman E. Drapeau, Jr.         1997      152,500        95,885(7)          --            24,999            2,250
 Executive Vice President      1996      120,833       184,517(7)          --            50,000            2,250
 and Chief Operating           1995       93,000       153,627(7)          --            13,500            2,310
 Officer

William J. Sawyer              1997      147,500         8,086(6)          --                --            2,250
 Executive Vice President,     1996      136,250        72,073(6)          --            20,000            2,250
 Operations(8)                 1995      123,750        90,909(6)          --            13,500            1,670

John W. Young                  1997      135,000         7,686(6)          --             9,999            2,250
 Vice President -              1996      115,000        40,000(9)          --            20,000            2,250
 Research and Development      1995       97,500        11,851(9)          --             9,000            1,678

</TABLE>

----------

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



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<PAGE>   6


(2)  The amounts reported represent contributions made by the Company pursuant
     to the Company's 401(k) Plan and Trust for fiscal 1997 and for the fiscal
     years ended September 30, 1996 and 1995 ("fiscal 1996" and "fiscal 1995,"
     respectively).

(3)  Bonus paid pursuant to Mr. Sample's offer letter from the Company dated
     January 30, 1997. See "Employment Contracts".

(4)  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. See " Employment Contracts".

(5)  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.
     See "Employment Contracts".

(6)  Represents bonuses paid under the Company's 1997 Executive Bonus Plan (the
     "1997 Bonus Plan"), 1996 Executive Bonus Plan and 1995 Executive Bonus
     Plan, respectively. The participants in the 1997 Bonus Plan were Messrs.
     Sample, Birch, Sawyer and Young. Under the 1997 Bonus Plan, the
     participants received bonuses if the Company's income before income taxes
     and extraordinary items ("Plan Income") exceeded targets for any of the
     quarters of fiscal 1997 and its Plan Income for the fiscal year exceeded
     $25,250,000. Of the foregoing bonuses, a portion of the amount earned was
     paid on a current basis upon completion of the quarter and a portion was
     paid to the executives following the end of the fiscal year when it was
     determined that the cumulative Plan Income target for fiscal 1997 was met.

(7)  Represents bonus paid under Mr. Drapeau's individual incentive compensation
     plan designed to reward him for achievement of quarterly and annual revenue
     and contribution targets for his geographical territory.

(8)  Mr. Sawyer resigned from his employment by the Company in November 1997.

(9)  Represents bonuses paid under the Company's 1996 Employee Bonus Plan and
     1995 Employee Bonus Plan, respectively.

          Option Grants in Last Fiscal Year. The following table sets forth
certain information regarding stock options granted during fiscal 1997 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>        

David M. Sample..............    100,000(5)          18.2%         $21.125         2/4/07      1,328,500      3,366,500  
                                  50,000(6)           9.1           23.6875       9/23/07        744,625      1,887,625 
                                 200,000(7)          36.5           30.00       cancelled             --             -- 
Paul D. Birch................     20,000(5)           3.7           21.125        8/14/06        265,700        673,300 
                                                                                                                        
Norman E. Drapeau, Jr........     24,999(5)           4.6           21.125        8/14/06        332,112        841,591 
                                                                                                                        
William J. Sawyer(8).........            --            --               --             --             --             -- 
John W. Young................      9,999(5)           1.8           21.125        8/14/06        132,837        336,616 

                                                                   
----------

</TABLE>


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<PAGE>   7


(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 548,098 shares of Common Stock in fiscal 1997 pursuant to the 1994 Stock
     Option Plan. This includes options cancelled in exchange for the grant of
     new options as set forth in note 5 to this table.

(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)  Represents options to acquire shares of Common Stock granted as of July 31,
     1997 conditioned upon the exchange for cancellation of options granted on
     or after August 1, 1996 to acquire a number of shares equal to at least
     twice the number set forth in column 1. All such options retain the
     expiration date of the cancelled options, and are exercisable as to 25% of
     the shares covered as of the date nine years prior to the expiration date
     and become exercisable as to a further 25% annually thereafter.

(6)  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.

(7)  Represents an option granted to Mr. Sample on February 5, 1997 and
     cancelled at Mr. Sample's election. See "Employment Contracts".

(8)  Mr. Sawyer resigned from his employment by the Company in November 1997.


          Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information concerning stock options exercised during fiscal 1997
and stock options held as of September 30, 1997 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 at                    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>     
David M. Sample..........        --              --                 --          150,000               --           $175,000
Paul D. Birch............        --              --             33,112           44,388         $361,629           $354,517
Norman E. Drapeau, Jr....        --              --             18,624           31,125         $140,639           $162,516
William J. Sawyer........        --              --             17,375           27,375         $129,703           $129,703
John W. Young............      3,000        $38,875              7,000           14,999         $ 26,313           $ 86,686

------------------------
</TABLE>

(1)  Value is based on the last sale price of the Common Stock on the exercise
     date, as reported by the Nasdaq National 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.




                                       -7-


<PAGE>   8


(2)  Value is based on the last sale price of the Common Stock on September 30,
     1997, as reported by the Nasdaq National Market ($22.875 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. Sawyer resigned from his employment by the Company in November 1997.


          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 provides, among other things, that Mr. Sample will be
paid a base salary of $22,917 per month, subject to annual review after
September 30, 1997, and will 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 vests in four
equal annual installments. The Offer Letter also provides that the Company will
pay one year's severance pay in the event of the termination of Mr. Sample's
employment under certain circumstances and that the Company will 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 will 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 is still employed by
the Company. The Company forgave $75,000 of such loan during fiscal 1997.


          On February 11, 1997, the Company entered into a consulting contract
with Mr. Daniels (the "Consulting Contract"). The Consulting Contract provided,
among other things, that Mr. Daniels would be retained as a consultant to the
Company at an annual rate of compensation of $50,000, the amount of such
compensation and the continuation of his engagement as a consultant to be
subject to change at the discretion of the Chief Executive Officer. The
Consulting Contract also provided for the continuation of certain employment
benefits during the period of his retention as a consultant for the Company.
Finally, Mr. Daniels was allowed to retain his executive assistant at the
Company's expense for not more than six months, and to continue to occupy his
office at the Company's headquarters in Cambridge subject to the Chief Executive
Officer's review. The Consulting Contract was terminated on August 14, 1997.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

          William G. Nelson and Michael D. Marvin served on the Compensation
Committee during fiscal 1997. Neither Mr. Nelson nor Mr. Marvin, 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.


                                       -8-


<PAGE>   9


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, 1997 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:

<TABLE>
<CAPTION>
                                                        Shares Beneficially
                                                              Owned(1)
                                                       --------------------- 
      Name                                             Number        Percent
      ----                                             ------        -------
<S>                                                 <C>               <C> 
 
Robert L. Daniels(2)(3)...........................  3,155,760         31.9%
  20 University Road
  Cambridge, MA 02138

Susan H. Daniels(2)(3)............................  1,051,129         10.6%

First Union Corporation(4)........................    615,913          6.2%
  One First Union Center
  Charlotte, NC 28288

Scudder, Stevens & Clarke, Inc.(5)................    723,400          7.3%
  345 Park Avenue
  New York, NY 10154
</TABLE>



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<PAGE>   10


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

<S>                                                                <C>              <C> 
Kopp Investment Advisors, Inc. (6)                                   583,679         5.9%
   7701 France Avenue South 
   Suite 500
   Edina, MN 55435

Paul D. Birch(7)................................................      57,345           0

Norman E. Drapeau, Jr. (8)......................................      27,624           *

Charles S. Jones (9)............................................      20,600           *

William G. Nelson(10)...........................................      41,000           *

David M. Sample(11).............................................      25,000           *

William J. Sawyer(12)...........................................       1,564           *

John W. Young(13)...............................................      12,250           *

All directors and executive officers as a group
(9 persons): (2)(3)(7)(8)(9)(10)(11)(12)(13)(14)................   3,341,143        33.2%

</TABLE>
                                                                          
---------------------------
*Less than one percent.

(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 2,038,758 shares subject to the
     Voting Trust, 1,022,629 are owned beneficially by Mr. Daniels and 1,016,129
     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 1,117,002 shares free of the Voting Trust, and Mrs.
     Daniels also owns 35,000 shares free of the Voting Trust. Each of Mr.
     Daniels and Mrs. Daniels disclaims beneficial ownership of the shares
     beneficially owned by the other. Mr. and Mrs. Daniels are divorced.

(4)  This information is as of January 31, 1997, and is based solely on a report
     on Schedule 13G filed by First Union Corporation with the SEC, pursuant to
     Section 13(g) of the Securities Exchange Act.

(5)  This information is as of September 30, 1997, and is based on a report on
     Schedule 13F filed by Scudder, Stevens and Clarke, Inc. ("Scudder") with
     the SEC, pursuant to Section 13(f) of the Securities Exchange Act with
     respect to the calendar quarter ended September 30, 1997 indicating it had
     investment discretion with respect to 723,400 shares as of such date. In
     addition, Scudder filed a report on Schedule 13G with the SEC dated
     February 10, 1997 pursuant to




                                      -10-


<PAGE>   11


     Section 13(g) of the Securities Exchange Act indicating that Scudder, as of
     such date, had sole voting power with respect to 164,300 shares, shared
     voting power with respect to 306,400 shares and sole investment power with
     respect to 589,500 shares.

(6)  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.

(7)  Includes 55,612 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 20,000 shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(10) Includes 26,000 shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(11) Includes 25,000 shares issuable pursuant to outstanding stock options
     exercisable within 60 days of the date of this table.

(12) In November 1997 Mr. Sawyer resigned from his employment by the Company.

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

(14) Includes 1,564 shares owned by Mr. Sawyer. See note 12.


     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 $2,000,000 to the partnership in fiscal 1997. Although
the total expenses paid under this lease during fiscal 1997 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.




                                      -11-


<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, 1998

                                      PROJECT SOFTWARE & DEVELOPMENT, INC.


                                      By: /s/ David M. Sample
                                          -------------------------------------
                                          David M. Sample
                                          Chairman of the Board, 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/ David M. Sample           Chairman of the Board, President  January 27, 1998
--------------------------    and Chief Executive Officer  
David M. Sample               (Principal Executive Officer)     
                              


/s/ Paul D. Birch             Executive Vice President, Chief   January 27, 1998
--------------------------    Financial Officer and Treasurer      
Paul D. Birch                 (Principal Financial and  
                              Accounting  Officer)                             
                              


/s/ Norman E. Drapeau, Jr.    Director                          January 27, 1998
--------------------------
Norman E. Drapeau, Jr.   



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



/s/ Charles S. Jones          Director                          January 27, 1998
--------------------------    
Charles S. Jones         



/s/ William G. Nelson         Director                          January 27, 1998
--------------------------
William G. Nelson 



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