back to article IBM tries to dodge $1bn sueball for deal won with 'ethical transgressions'

IBM is attempting to fend off a potentially colossal damages claim in the Australian State of Queensland. The dispute started in 2007 when IBM bid AU$6million for a payroll project at the State's Department of Health. The project blew out beyond the billion-dollar mark but didn't deliver: the Department's thousands of staff …

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How do you do this?

I can't even begin to imagine how you can expand an initial $6m bid to over $1bn - and even then not complete the job. Surely at some point - well before it's reached 160-odd times the original price - somebody in charge would say "enough!"?

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Re: How do you do this?

It's called "vague specs" and "gold-plating". Look to the US defense industry as an example. They want an airplane with a rather vague description of capabilities. Add in the various project managers who decide "we want this also". Next thing you know, it's an F-35.

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Re: How do you do this?

South Park produced an excellent documentary about the F35 design process in the episode "An Elephant Makes Love to a Pig" (https://en.wikipedia.org/wiki/An_Elephant_Makes_Love_to_a_Pig)

I'm sure YouTube will have the episode if you need to watch it....

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What kind of settlement would NOT preclude further litigation? What kind of a settlement would that be at all?

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Coat

An unsettling one.

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Well if it was a third world country (and perhaps some first world) it would be a bribe to the right people so it would be unofficial.

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FAIL

For a payroll project?

One billion dollars, even of the Australian variety, for a payroll project?

Just how difficult can it be to pay the right amount of money to the right people at the right time, regularly? Even with a lot of people, gruesome tax laws, and so on?

Spaceprobes have been sent to Mars for less.

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Yeah, but space probes are not subject to the bureaucratic whim of clueless managers.

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(Written by Reg staff)

Re: For a payroll project?

The problem was that the Health Dept employs all manner of specialist folks and pays people differently depending on hours worked. So a certain class of nurse could be paid different rates at different times of day, then again on weekends. Figuring out all that stuff made for massive complexity. And the goalposts kept shifting ...

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Re: For a payroll project?

"The problem was that the Health Dept employs all manner of specialist folks and pays people differently depending on hours worked. So a certain class of nurse could be paid different rates at different times of day, then again on weekends. Figuring out all that stuff made for massive complexity."

Maybe that's why we use computers to work this stuff out.

"And the goalposts kept shifting ..."

And Big Blue just kept quiet and thought of the profits.

I wrote a (rather small - 100ish staff, 300 - 400 tasks) staff costing system in the 1980's. Part was paper based part was computerised. It too had different rates for different jobs etc. etc. Not too much problem there. It's basically a solved puzzle. User stupidity however, nothing can solve that.

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Re: For a payroll project?

This sounds like an Agile cock-up. Start with a vague spec and keep changing it till all the money has gone, then spend more, and then more and more. Of course it is the customer's fault, he should have known exactly what was needed from the out. But then if he had then the spec would not have been vague. There is no alternative to knowing what you need to achieve before you start, all else is a disaster in waiting.

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Anonymous Coward

Utter insanity

$1,000,000,000 of taxpayers money. To handle the pay for 74,000 people. And (of course) it was utterly botched and still doesn't fucking work right. They should take a leaf out of China's book, and just execute the people involved in this.

It would have been cheaper to hire every single one of the 74,000 health workers an intern, who's duties consisted solely of calculating their pay for the month and then paying them it. And that would have actually worked.

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Facepalm

Re: Utter insanity

It's over 20 years ago now, but when I ran a technical business for someone else in Australia we outsourced our payroll. There was a wide range of jobs including scientists, engineers, technicians, sales and clerical support, and management. Many of the staff worked shifts at different rates, and different times. The staff were responsible for filling in their own timesheet (5mins?), the line manager checked it (1 min?) and the timesheet were picked up by an outsourced contractor who charged us $3 per person per week to process them, print the payslips and deliver them, transfer the money to the employees' bank accounts, and do the taxes and superannuation etc.

The average pay for an employee was about $30,000 p.a. so our total costs were <$40,000 for each person. The manager would have been on $45,000 so our manager's cost would be ~$55,000. We were up for a cost of <$40,000/52 x (5/40 x60) or about $1.60 for an average employee per week of their time (Generally as staff knew that they would not get their overtime pay next week if they did not submit their timesheet, they were pretty good at ensuring their timesheet were filled in by Thursday night). The manager's time for each of 20 employees would have cost <$0.50 so - In total ~$5.00 per employee per week.

As this was >20 years ago, allowing for inflation that would be ~$9 today - Most of the calculations would have been done on a 10 user Pick computer, so in real terms the $3 charged by the contractor would probably be less today.

If QLD was able to do what we did; they would be up for, at most, $5 per employee per week for the "computer based" stuff. Anyway 74,000 employees at $5 per week is less than $20 million a year. Using manual data input and obsolete technology, to get to $1 billion we are looking at a project life of 50 years. If we did a discounted cash flow (DCF) analysis and assumed an investment rate of 3% the same $1 billion would generate an additional $3.4 billion over 50 years.

So in conclusion, employ a few more people with spreadsheets.

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Meh

wasn't it a performance oriented government ?

Bit hard to remember, the banana benders change them often these days as each one outdoes the previous one in cock-ups. Still, who was asleep at wheel to allow that price creep to go on so long ?

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Units?

Is there a unit for the number of times overbudget a project is?

You could rank companies based on what they seem to get away with ... then check their ranking against who is on the board ...

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Re: Units?

1 Crapita = 100% over budget.

An open ended logarithmic scale.

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A major part of the problem occurred when they didn't run the existing payroll in parallel with the new one, to make sure the new one worked. An insider told me one of the government bureaucrats refused to renew the licence for the old software (it was due around the time they thought the new system was going to be ready) in order to save $1million (the cost of the licence). So they just shut down the old (working) system and moved to the new (borked) system.

Apparently, those bureaucrats responsible for the $billion debacle were moved onto other government projects as a punishment.

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Moved to a higher pay scale no doubt

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And this is why governments, bureaucrats, managers, and hospitals of all persuasions want to put medical staff (and shop assistants) onto simple flat-rate awards. The "efficiency" dividend has nothing to do with how much you get paid. Everything to do mangement wanting to not care how many hours you work, in what order, on what days, on what shift, continously, so that they don't have to think about it.

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Devil

Ha ha

Classic big blue cock-up. under estimated the requirements (odds on it was deliberate, lock down scope while knowing what is proposed will not work), they would have also thought they could outsource everything to india.

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Another SAP sucker got bit!

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