A review of the project for the rollout of the 'Phoenix Payroll System'

April 11, 2019 Sid Barthakur

Overview

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.

Timeline

2009:
- 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.
2010:
- 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
2011:
- 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
2015:
- 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
2016:
- 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.

Budget

Total Budget: $300 million

Schedule

Baseilne: 4 years, 4 months (or 52 months)
Actual: 4 years, 8 months (or 56 months)
Variance: 4 months ( or 7.6%)

Procurement

Primary Vendor: IBM Canada
Base Product (Off-the-shelf): PeopleSoft

Conclusion

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.