A review of the project for the rollout of the 'Phoenix Payroll System'
The Federal Government of Canada rolled out a new Pay System during the later half of February, 2016. The system was supposed save somewhere in the range of $70 million per year, as per government's announcements at the time of its launch. However, soon after the system's rollout it got hit by number of issues. And when there are issues with regards to people's pay, you bet none of those issues will be ones you'd be able to ignore. And Govt. of Canada learned it the hard way. More than a year and a half later, government employees are urging the government to replace the system, and the government is talking about investing $50 million over four years to get the system back to track.
Conservative Government launches plans to update the pay system:Under minister Rona Ambrose, Public Works launches a two-part plan to transform public service pay: consolidate all work in Miramichi, and replace the 40-year-old payment system. The business case is approved and Public Works starts the procurement process. Costs are pegged at $310M, of which $187M will be pay system.
Aug 19 - Conservative Prime Minister Stephen Harper promises 550 jobs in Miramichi: As part of this switch, employees will do the work of 2,700 compensation advisors scattered across the country
Vendor selected: IBM Canada receives a contract to implement a new PeopleSoft-based system. It is awarded a total of $141M between 2011 and spring of 2016
May - Original rollout delayed: At IBM's recommendation, the original rollout schedule of October and December 2015 is delayed because of outstanding "critical" defects in the system.
June - Miramichi workload high, even before Phoenix: Compensation workers can't keep up with complaints for the first, smaller groups of accounts transferred to Miramichi
Feb 24 - IBM's Phoenix system goes live: The government rolls out the new payment system in 34 government departments. Those 120,000 see their first payday under the new system on March 9. Internally, those overseeing the project congratulate themselves on a successful launch.
Apr - Pay problems hit the news: CBC and other outlets start reporting stories of people who are being underpaid, overpaid or not at all.
Apr 21 - Phoenix rollout number 2: Despite urgings from public service unions to delay the second half of the rollout, Public Services and Procurement Canada transfers the remaining 67 departments, representing 170,000 employees. On May 4 pay day, all 290,000 employees are paid through Phoenix. The old system is decommissioned. At this point about two-thirds of public servants are serviced through the pay centre and the other third still deal with their department's compensation advisors.
Total Budget: $300 million
Baseilne: 4 years, 4 months (or 52 months)
Actual: 4 years, 8 months (or 56 months)
Variance: 4 months ( or 7.6%)
Primary Vendor: IBM Canada
Base Product (Off-the-shelf): PeopleSoft
The fallout of this project is still under way. So, I don't think we are at a point to draw a final conclusion on it. However the project, in essence, is over and we can definitely draw some interesting observations.
This project is a very interesting case study. And that is not because of the way it blew up, but because when you look at the project from a few selected perspectives, it in fact appears to be a relatively successful project. But from other angles, it definitely looks like a car that has been hit by a tractor trailer.
What do I mean by that?
Look at it from the perspective of project deadline (or schedule or time-management in project management speak) and project budget (project cost management in PM speak), the two key concerns of any project manager, and on both of these fronts, the project looks relatively successful. It was delivered with a 4 month delay and within 5% variance of original budget (based on publicly available information). If that is correct, any average project manager would consider it a success (maybe not a spot-less one, but still one nevertheless). However, the issue with this project was that it did not meet one of its key requirements - delivering paychecks to government employees. That is an issue in meeting project scope, and at a level of quality that is satisfactory to the client and the end users.
I'd like to add one more point on this one - There was also a mis-management of project risks. Payroll is a matter of livelihood. It may also be a matter of life (in certain circumstances). It is a topic that cannot be taken lightly. The repercussions of any mishap could be huge. But, based on the way the project's transition was handled, it does not seem that this factor was taken into account - at least as serously as it should have been. Risk assessment and management should have been a higher priority than any other average project.
Finally, we know for a fact that when a product or service that is riddled with issues is released to operations (through a rollout), the number of instances of impact could exponentially grow. And sometimes, it could grow outside the boundary of "managibility". In these circumstances, the cost of fixing these issues could also grow expenontially. The Phoenix Payroll project is a very good example of this phenomenon. The only good thing was that the operating organization for this project was the Government of Canada. When the operating organization is not as financially sound an organization (with almost limitless funds) as the Government of Canada, these disasters have the potential to bring the entire organizaiton to the ground.
Feb 28, 2016 (Ottawa Citizen) - Federal government rolls out new pay system
Apr 11, 2016 (psacunion.ca) - PSAC presses government to fix Phoenix pay system
Apr 18, 2016 (Ottawa Citizen) - Despite complaints, government intent on second rollout of new pay system
Jul 19, 2016 (CBC.ca) - Phoenix pay system also breached federal workers' privacy
Jul 22, 2016 (CBC.ca) - How the Phoenix pay system rose and fell
Jul 25, 2016 (CBC.ca) - Liberals agree to emergency meeting Thursday over Phoenix payroll mess
Jul 26, 2016 (CBC.ca) - Public servant who wasn't getting paid quits in disgust
Jul 27, 2016 (GlobalNews.ca) - Phoenix Pay system: Pay day is here, but many public servants still waiting for their money
Aug 8, 2016 (ITWorldCanada.com) - Federal government encountered 'unanticipated complexity' in rolling out payroll system
Aug 18, 2016 (CBC.ca) - Phoenix managers' performance pay tied to timely payroll system roll-out, other targets
Aug 19, 2017 (CBC.ca) - Cost to fix federal government's Phoenix pay system jumps to $25M
Sep 7, 2016 (CBC.ca) - Payroll fix could cost $50M this year, government says
Oct 31, 2016 (GlobalNews.ca) - Government misses deadline on Phoenix pay system backlog
Nov 17, 2016 (NYTimes) - A New Payroll System Misfires, and Canadians Ask: Where’s My Pay?
May 24, 2017 (CBC.ca) - Price tag for fixing Phoenix pay system now tops original cost
Jun 2, 2017 (CTVNews.ca) - Phoenix pay problems spike again amid retroactive labour deals, summer hiring
Sep 21, 2017 (CBC.ca) - IBM contract cost for failure-plagued Phoenix payroll system jumped to total $185M
Oct 5, 2017 (CBC.ca) - Phoenix payroll system doomed from the start: report
Nov 26, 2017 (Global News) - Government won’t scrap Phoenix pay system because ‘there is no fallback’: MacKinnon