A Mismanaged Australian Payroll System Is One of the Worst IT Projects Ever

I have blogged about some spectacularly mismanaged government IT development projects, such as the UK FiReControl  fiasco, the US Secure Border Initiative debacle, and New York City’s CityTime scandal. But one that continues to fascinate me is the saga of the Queensland Health payroll system, which will likely play out for at least five more years.

According to Australian news stories like these at the Delimiter and the Australian, an audit report (PDF) by the consulting company KPMG into the status of the payroll system indicates that it will cost another A$220.5 million—on top of the A$311 million already spent—to fix nine priority items that prevent the payroll of the 85,000 or so Queensland Health employees from being calculated without massive manual intervention.  Currently, the audit report states, “1,010 payroll staff are [still] required to perform over 200,000 manual processes on an average of 92,000 forms to deliver approximately A$250m (gross) in salaries to QH’s 85,000 staff each fortnight.”

The audit report also makes it clear that the estimated A$220 million does not include any contingency funding in case problems arise with the proposed fixes. It doesn't give an indication on how uncertain its A$220 million estimate is.

KPMG further notes that an additional A$25 million should be set aside for system analysis “in order to determine the requirement for further investment in either a system upgrade or a system reimplementation.” You see, contracted support for the core payroll system software begins to expire at the end of 2014, and it may be wise for Queensland Health’s management to assess what is needed in terms of either a major system upgrade or system reimplementation before then.   

In addition, KPMG states in its report that, “The costs associated with [a] system upgrade or implementation have not been quantified to date and represent additional costs beyond the current ‘minimum’ identified and outlined in the report which relate to a preliminary ‘systems analysis’ only.”

One can only wonder how much a replacement payroll system will cost given the inaccuracy of previously estimated costs. For instance, back in 2008, the original cost of the payroll system development was pegged at A$6.19 million (fixed price), which has steadily grown as problems such as the massive overpayment or underpayment of employee salaries ran rampant. (Issues with these salary mispayments, which still total at least A$91 million, won’t likely be resolved for years.) Even as recently as last July, you may recall, the government emphatically claimed that after spending a total of A$311 million on the payroll system (A$102 million for its initial development and another A$209 million to fix it), it was (then) stabilized and no further money would ever be needed to be thrown at it.   

BTW, KPMG notes that another A$836.9 million will be required to operate the payroll system for the next five years. That is, if nothing else bad happens.

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Willie D. Jones
 
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