New Payroll System’s Cost Rises 85%

City Council members expressed concern Monday that the cost of installing the city’s new computerized payroll system has escalated from $13 million to $24 million as the project has fallen a year behind schedule.

Members of the council’s Budget and Finance Committee called Monday for a shake-up of the team managing the Los Angeles payroll system.

Councilman Mike Feuer expressed particular displeasure with contention between the city controller’s office and the city’s Information Technology Agency over who is to blame for the project’s problems.

“These kinds of cost overruns are intolerable,” Feuer said. “It’s one thing to say it’s hard to estimate what these technology projects will cost. It’s another thing to have cost overruns of 70% to 80%.”

Feuer has asked the council’s chief legislative analyst to devise a new structure for oversight of the project.

Councilwoman Rita Walters also called for a review of the project to determine what went wrong and how it can be better managed in the future.

“It’s costing us nearly twice what they said it would. That’s incredible,” Walters said. “We should find out what has contributed to that doubling of the cost.”

The new payroll system was originally scheduled to begin operating last September, but officials say they now are hoping it will be in operation by Sept. 30.

Councilman Richard Alatorre, the committee’s chairman, said the overruns and management squabbles are outrageous.

Until now, the project has been supervised by a steering committee with representatives from all of the interested city departments, with the city controller’s office ultimately responsible for keeping it on track.

Feuer said the City Council needs to assign one city official to oversee the project, with powers to act against uncooperative departments.

“I’m very dissatisfied with the whole process,” Feuer said. “Until we succeed at changing that we’re going to have more cost overruns.”

Deputy Controller Anthony Miera has served as de facto project manager as problems have developed that the steering committee has not solved, said Tim Lynch, a spokesman for the controller’s office.

The payroll system is designed to replace the 30-year-old payroll system that provides paychecks and handles required deductions for about 32,000 city employees.

Council members were alerted to the problems in a report by Acting City Administrative Officer Paul Cauley, which disclosed the escalating costs as part of a request for an additional $2 million in next year’s budget.

Cauley noted that City Controller Rick Tuttle had estimated in January 1997 that the three-year budget for “implementation and completion of the [payroll project]” would be $13 million.

“In addition to actual expenditures of $17.6 million to date, the proposed expenditures . . . will raise total project costs to an estimated $23.9 million,” Cauley wrote in the report, delivered Friday.

When confronted by council members about why they were not told earlier of the most recent escalation in cost, Miera and Information Technology Agency head John Hwang blamed each other for delays in notifying the council.

Feuer said the finger-pointing is a sign that “there is a deep level of dysfunction on this project.”

If the controller’s office cannot get a better handle on the project, Feuer said, the city might consider bringing in an outside project manager.

Lynch said the latest budget request is largely for increased licensing fees for use of computer software, which he said the Information Technology Agency should have included in the original $13-million budget.