Novopay to cost taxpayers over $100m
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The Ministry of Education will end up spending more than $100 million on the troubled Novopay pay system for teachers.
A ministry contract register shows that the contract with Talent 2 for Novopay extends to September 2015 and is worth $80 million.
But in response to questions from Computerworld, the ministry says that the contract register doesn’t take account of the delay to the implementation of Novopay and the resulting contract variations.
“The contract value of $80 million covers the Talent 2 implementation costs and six years of operation from go live,” the ministry says.
According to the ministry the total Novopay costs are:
- Development and implementation - $29.4 million;
- Long-run cost - $12.5 million a year until 2018.
Following a subsequent enquiry by Computerworld, the ministry now confirms the total cost will be $105 million over eight years.
The original contract was signed in September 2008, but the project was delayed for two years while additional testing was done.
Talent 2 has also earned around $500,000 by providing a programme manager, systems administrator, and business analyst, according to the contract register.
Computerworld asked if, given the on-going issues, there were penalty provisions that come into play.
The ministry responded briefly: “The . . . contract with Talent 2 does include penalty clauses.”
This week, the Prime Minister, John Key, said the company was likely to face a financial penalty if errors weren’t resolved.
“The government had paid them a lot of money and they should have got that all right.”
Ministry chief executive Lesley Longstone has since confirmed that the ministry will be seeking penalties from Talent 2.
Assurity Consulting is listed in the contract register as having a contract as test lead for Novopay, valued at $350,000.
The Ministry says Assurity was engaged to do both pre and post go-live testing. A $350,000 payment was made to the consulting company for the first contract. Subsequent contracts have since been signed, and the total invoiced now stands at $842,000.
“Assurity delivered the services required under its contract, and there is no reason for the ministry to enact any penalty provisions.”
Computerworld asked if the ministry had identified the base causes of the on-going pay issues. The ministry responded:
“Most of the issues fall into three broad categories: leave entitlements, staff who use timesheets (such as relief teachers, and staff who are leaving or joining the payroll.
“During the first two pay periods in particular, many schools – frustrated by the problems with Novopay – reverted to using forms instead. This created a backlog of clost to 8000 transactions. This has now been reduced to under 1000.
“The ministry’s focus so far has been on avoiding and resolving errors that impact people’s actual pay. This had reduced the number of underpayments or non-payments from 5600 in the first Novopay period, to 221 in the most recent period.
“Now, particularly through the road shows, schools are giving us feedback on the next layer of issues to address, like making sure entitlements show correctly. While these errors don’t impact pay, they are causing stress and frustration for schools and are our next priority to fix.
“We have releases scheduled each fortnight from now until the end of the year to address the technical problems.”
The ministry says that, as the contracted service provider, Talent 2 is responsible for fixing the errors and providing the payroll service that meets the needs of all schools and staff. It says that Talent 2 has hired additional staff to make sure system performance and service levels improve.
Computerworld asked how many individual teachers’ pay issues had been identified.
“The last pay cycle identified 221 non-payments or underpayments. These are being addressed with the staff and schools,” the ministry replied. It pointed out that a third of New Zealand’s education workforce are support staff, so the answers applied to support staff as well as teachers.
Rebecca Elvy, group manager and Novopay business owner for the ministry, says Talent 2 is being held to account for delivering the service levels and performance the ministry and schools require.
“We are making good progress on getting through the backlog and developing fixes to the technical issues. Our strong focus now is on supporting schools and continuing to make improvements to ensure a successful end-of-year process,” she says.
Posted by Peter at 2:46:48 on November 24, 2012
Then it is just a matter of designing the input screens and security of which users can do what, reporting/inquiry and reconciliations.
The system architecture and communications is pretty much straight forward these days with a lot of options available. The hardware with fail-safe backup should be easy to set up - hopefully not some over-specified monstrosity.
Then a well tested one step conversion process which can be re-run for testing and recociliation checking however many times is required.
So just how hard is this? I could write the whole damn lot in less than a year. Am I over-simplifying something here? What management often fail to get is that just because they are dealing with a system that pays out billions of dollars does not mean it needs cost millions. A payroll system is really straight-forward - where it gets complex is when you throw a lot of money and a therefore lot of people at the problem - they will trip over each other and really make it a mess.
I am not advocating just one person do this but a single designer with 1 or two understudies, a couple of front end screen developers and a few testers would have done it. I guess documentation is useful but any decent system should be intuitive. I wonder how useful any of the current Novopay documentation is of use anyway - as they were running out of time it is unlikely to reflect the final product - which appears to be still evolving anyway.
I do know payroll - I worked on a manual system for the Post Office back in the 70's - that had every permutation and twist and turn in payments and deductions that could be imagined - but basically it could be all simplified into a streamlined application - if the designer was good enough. Else I can imagine that it could be complicated to hell - especially if it could justify charging millions to develop it.
It is just plain stupidity that this system was not put into a cross-section of schools for testing prior to going live - whoever decided that has cost the tax payer a fortune and caused a lot of aggravation to already over-worked teaching staff.
The stupidity of those in IT decision making is unbelievable - it is my opinion it is dominated by people who got into IT for the money but actually hate the technicalities of it (which they never could really understand) so they rise through management to get away from the real work. They have picked up enough of the jargon though to get by and so continue to get IT management roles. The real techies are too busy with their heads down working to be bothered playing the political games required to rise to the top. And so we keep getting these bad decisions. I hope those who made the key decisions with Novopay never get to make dumb decisions again - but no doubt they all have their backsides covered with excuses on why it is not their fault.
Posted by Developer at 12:19:31 on November 19, 2012
Posted by anonymous at 13:24:20 on November 18, 2012
Posted by Anonymous at 9:47:40 on November 17, 2012
I have noticed a trend in many big organisations - new "managers" come in, want to re-invent the wheel - so: out with the old, in with the latest. And, of course, the bigger the latest toy ( sorry, system) is the better - justifies having higher managerial salaries. Also, it looks good on their CVs - "successfully implemented a major system". Yeah right !
Posted by Anonymous at 14:32:27 on November 16, 2012
Posted by SteveC at 16:35:56 on November 18, 2012
The crazy part was it wasn't even seen as an IT project - it was something that could be run out of the Schooling business unit. It was always doomed to fail. Somehow I doubt that the decision makers who created this mess will ever be held to account.
Posted by Anonymous at 11:40:01 on November 17, 2012
Posted by Anonymous at 13:42:16 on November 19, 2012
Btw I know a little about this and the incumbent could actually pick up Talent2/Novopay's slack easily for the 2y of delay. They also seem to have helped over and above the call of duty to support novopay understand the complex system! That is no mean feat and I think that deserves some commendation.
Posted by Anonymous at 15:54:53 on November 16, 2012
The minister tried to point this out last night on Campbell Live -- but that's not a good story.
If I was a teacher the first thing I would do is tell my Union where to go. They have been absolutely and totally useless.
Posted by Anonymous at 14:15:08 on November 16, 2012