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                                                                    Exhibit 10.2




               PROJECT SOFTWARE & DEVELOPMENT, INC. & SUBSIDIARIES

                          YEAR ENDED SEPTEMBER 30, 1998

                              EXECUTIVE BONUS PLAN



                                 September 1997
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               PROJECT SOFTWARE & DEVELOPMENT, INC. & SUBSIDIARIES
                          YEAR ENDED SEPTEMBER 30, 1998
                              EXECUTIVE BONUS PLAN


1.    PURPOSE

      The purpose of the FY98 Executive Bonus Plan ("Plan") is to provide key
      management employees of Project Software & Development, Inc. and its
      subsidiaries ("Company"), with an incentive to make significant and
      extraordinary contributions to the long-term performance and growth of the
      Company, to join the common interest of the Company and key executives,
      and to attract and retain executives of exceptional ability.

2.    ADMINISTRATION

      2.1   The Plan shall be administered by the Compensation Committee of the
            Board of Directors of the Company (the "Committee"). The Committee
            will base all decisions and awards on quarterly and annual financial
            statements filed with the Securities and Exchange Commission.

      2.2   By adoption of this Plan the Board has deemed eligible those
            individuals named in Appendix I. The Board shall have full and
            complete authority and discretion to make binding decisions on the
            administration of the Plan and shall adopt such rules and
            regulations and make all other determinations deemed by it necessary
            or desirable for the administration of the Plan.

      2.3   The Compensation Committee and Board of Directors of the Company
            shall have the authority to amend or terminate the Plan, provided,
            however, that if the Plan is amended or terminated, the Company
            shall be required to complete payment to each Participant of the
            amount which that Participant otherwise would have received based on
            the provisions set forth in paragraph 7.2.

3.    DEFINITIONS

      3.1   PLAN YEAR means the fiscal year ended September 30, 1998.

      3.2   PLAN QUARTER means each of the three-month periods ended December
            31, 1997, March 31, 1998, June 30, 1998, and September 30, 1998.

      3.3   PARTICIPANT means any executive of the Company who is designated in
            Appendix I.
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      3.4   PERMANENT DISABILITY, means a Participant's inability, as a result
            of illness, incapacity, disease or calamity to perform a substantial
            part of his primary job responsibilities as set forth in his
            employment contract or job description for any concurrent six month
            period.

      3.5   PLAN means this FY98 Executive Bonus Plan.

      3.6   Except as otherwise indicated by the context, any masculine term
            used herein also shall include the feminine; the plural shall
            include the singular and the singular shall include the plural.

      3.7   COMPANY means Project Software & Development, Inc. and its
            subsidiaries included in the consolidated financial statements.

      3.8   PLAN NET INCOME means net income as disclosed in the consolidated
            quarterly financial statements of the Company, before deductions and
            additions of:

            (i)   Taxes calculated by net income.
            
            (ii)  Extraordinary items as defined under US generally accepted
                  accounting principles. 

            (iii) One time expense adjustments arising out of any acquisition
                  accounted for as either a pooling or purchase.

4.    ELIGIBILITY AND PARTICIPATION

      Executives eligible for bonuses under the Plan shall be those individuals
      specified in Appendix I.

5.    BONUS FUNDING MECHANISM

      5.1 The on-target bonus Fund will be determined as follows:

            (a)   Each Participant will be eligible to receive an on-target
                  funded earnings bonus if the Company achieves quarterly and
                  annual Plan Net Income as stated in Appendix II.

            (b)   The percentage of the on-target bonus described in Appendix I
                  earned by each Participant on achievement of the amounts
                  stated in Appendix II in respect of cumulative quarterly and
                  year end is:

                  (i)   Q1      0%
                  (ii)  Q2     15%
                  (iii) Q3     25%
                  (iv)  Q4     30%
                  (v) Year end 30%

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            (c)   As a result, the full on-target bonus stated in Appendix I for
                  each Participant can only be achieved if all three quarters
                  and annual Plan Net Income equal or exceed all of the target
                  amounts stated in Appendix II.

      5.2   An incremental funded bonus is available on corporate achievement
            above the on-target earnings specified in Appendix II and will be
            calculated as follows:

            (a)   The aggregate incremental bonus amount to be distributed to
                  all Plan Participants in each Plan Quarter will be 2% of the
                  difference between Plan Net Income and the amounts stated in
                  Appendix II for the quarter.

            (b)   The aggregate incremental bonus amount to be distributed to
                  all Plan Participants in respect of year end will be 3% of the
                  difference between Plan Net Income and the amount stated in
                  Appendix II for the year.

            (c)   The amount of bonus calculated in Section 5.2 (a) and (b)
                  shall be distributed as follows:

                  David Sample               45%
                  Paul Birch                 25%
                  Operations Executive       15%
                  Jack Young                 15%

6.    PAYMENT OF BONUSES

      Funded bonus under the provisions of 5.1 and 5.2 will be payable sixty
      days after the end of the period in which the bonus was earned provided
      that:

      6.1   Each executive's goals for the quarter must be met for funded bonus
            to be paid;

      6.2   The results for the period have been issued to the public.

7.    TERMINATION OF EMPLOYEE

      7.1   If a Participant's employment is terminated prior to the conclusion
            of any Plan Quarter or, following the conclusion of a Plan Year, or
            prior to any payment being made:

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            (a)   By reason of (i) any deliberate material breach by the
                  Participant of his employment obligations with the Company,
                  which, if curable, is not cured within ten (10) days after the
                  Company shall have notified the Participant in writing
                  describing to Participant all material facts concerning such
                  breach,

                  (ii)  any deliberate material breach by the Participant of his
                        employment obligations with the Company, which is not
                        curable according to notice from the Company, or (iii)
                        the conviction of a felony or the commission of a
                        material, fraudulent act by the Participant against the
                        Company;

            (b)   Voluntarily by Participant other than for a "Reason
                  Constituting Good Cause." Reasons Constituting Good Cause are
                  limited to: (i) a significant change in the nature and scope
                  of Participant's duties combined with a change in the
                  Participant's title resulting in a position of materially
                  lesser authority, or (ii) a reduction in the Participant's
                  base compensation.

            Then, Participant shall cease to have any rights to any amounts
            unpaid on the date of termination of employment.

      7.2   If a Participant's employment is terminated:

            (a)   By reason of Death, Permanent Disability; or

            (b)   By the Company for a reason other than one described at
                  subparagraph 7.1(a);

            If such a termination occurs prior to the conclusion of any Plan
            Quarter or Year, the Participant shall receive the amount which the
            Participant otherwise would have been entitled to receive had he
            remained in the employ of the Company through the end of the Plan
            Year, but pro-rated based on the number of complete months of
            employment with the Company during such Plan Year. The amount earned
            shall be paid according to the Plan rules.

8.    BENEFICIARY DESIGNATIONS

      8.1   If a Participant's employment with the Company is terminated by his
            death or if he dies after termination of his employment but prior to
            the distribution to him of all amounts payable to him under the
            Plan, any amounts otherwise payable to him hereunder shall be
            distributed to his designated beneficiary or beneficiaries. For the
            purposes of this plan a 

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            Participant's beneficiary will be the beneficiary designated under
            Company provided life insurance coverage. However, a Participant may
            from time to time revoke or change any beneficiary designation on
            file with the Company.

            If there is no effective beneficiary designation on file with the
            Company at the time of a Participant's death, distribution of
            amounts otherwise payable to the deceased Participant under this
            Plan shall be made to the Participant's estate. If a beneficiary
            designated by the Participant to receive his benefits shall survive
            the Participant but die before receiving all distributions
            hereunder, the balance thereof shall be paid to such deceased
            beneficiary's estate, unless the deceased beneficiary designation
            provides otherwise.

      8.2   The Company shall deduct from the distributions to be made to a
            Participant or his designated beneficiary or beneficiaries under
            this Plan any federal, state or local withholding or other taxes or
            charges which the Company is from time to time required to deduct
            under applicable law and all amounts distributable under this Plan
            are stated herein before any such deductions. The Company may rely
            on a written opinion from its legal counsel regarding any questions
            which may arise in connection with any such deductions.

9.    RIGHTS, PRIVILEGES AND DUTIES OF PARTICIPATION

      9.1   No participant or other person shall have any interest in any fund
            or in any specific asset or assets of the Company and its
            Subsidiaries by reason of being a Participant under this Plan nor
            any right to receive any distributions under the Plan except as and
            to the extent expressly provided in the Plan.

      9.2   The Company shall have the right, but shall be under no obligation,
            to segregate cash to fund bonuses payable under the Plan. However,
            any such segregated amounts shall at all times remain Company
            assets, subject to the claims of its creditors.

      9.3   Each Participant shall be entitled to receive a current copy of the
            Plan upon his designation as a Participant if a written request for
            a copy of the Plan is provided to the Chief Financial Officer.
            Thereafter, as long as he remains a Participant, he shall be
            entitled to receive copies of any amendments to the Plan within
            sixty (60) days after their adoption.

      9.4   The designation of any employee as a Participant under this Plan
            shall not be construed as conferring upon such employee any right to
            remain in the employ of the Company and each such Participant shall
            remain an 

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            employee at will. The right of the Company to discipline or
            discharge an employee shall not be affected in any manner by reason
            of such employee's designation as a Participant under this Plan.

      9.5   To the extent permitted by law, the right of any Participant or any
            beneficiary to receive any payment hereunder shall not be subject to
            alienation, transfer, sale, assignment, pledge, attachment,
            garnishment or encumbrance of any kind. Any attempt to alienate,
            transfer, sell, assign, pledge or otherwise encumber any such
            payment whether presently or thereafter payable, shall be void. Any
            payment due hereunder shall not in any manner be subject to any
            debts or liabilities of any Participant or his beneficiary.

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                                   APPENDIX I


                      PROJECT SOFTWARE & DEVELOPMENT, INC.

                              EXECUTIVE BONUS PLAN

                              ELIGIBLE PARTICIPANTS

<TABLE>
<CAPTION>
                                      On-target Bonus
                                         as a % of       On-target
                         Base Salary    Base Salary        Bonus
                         -----------    -----------        -----

      <S>                 <C>               <C>            <C>     
      David Sample        $290,000          100%           $290,000

      Paul Birch           180,000           75%            135,000

      Operations
      Executive            175,000           75%             87,500

      Jack Young           155,000           50%             77,500
</TABLE>

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                                   APPENDIX II


                      PROJECT SOFTWARE & DEVELOPMENT, INC.

                              EXECUTIVE BONUS PLAN

                          ON-TARGET CUMULATIVE EARNINGS


<TABLE>
<CAPTION>
                  <S>                             <C>
                  Q1  FY1998 Year to Date         Not Applicable

                  Q2  FY1998 Year to Date          $12,750,000

                  Q3  FY1998 Year to Date          $19,000,000

                  Q4  FY1998 Year to Date          $28,000,000
                                                   -----------

                  FY1998 Total Year to Date        $28,000,000
                                                   ===========
</TABLE>

                  The on-target earnings established for each plan quarter and
                  the year for any year will not be less than 125% of the actual
                  earnings in the corresponding period of the prior year.