The introduction of new HR and finance systems, which is a joint project between Cheshire East and Cheshire West and Chester councils, has been delayed further resulting in £1.5m of additional costs.*
Members of Cheshire West and Chester Council's Overview and Scrutiny Committee were given an update on the project on Thursday, 14th March. During which they were told that the target date for the new system going live has moved to April 2019, having previously moved to December 2018 from the original date of 1st September 2018. However, they were unable to give a definitive 'go live'.
Aaron Thomas, Senior Programme Manager at Cheshire West and Chester Council, provided an update on the user acceptance testing, which he described as a key part of the program.
He explained "At the moment an insufficient number of tests in that process have been passed, a number of defects have been identified through that process that require resolution, the council has identified a list of corrections in the system as part of the testing."
It was confirmed that they are still on target to make annual savings of £2.3m across both Cheshire West and Chester and Cheshire East as a result of the project but the implementation budget is currently £1.5m above that planned "reflecting the delay in 'go live' of six months on what was a 12 month programme".
A report prepared for Cheshire East Council's Cabinet meeting on 11th July 2017 states that the one-off implementation costs for both councils for this project is £11.8m. The two Councils agreed to share these costs equally, and therefore the CE share is £5.9m.
Whilst the capital cost to Cheshire East Council is £4.890m, to be funded from the Capital Programme allocation of £5.387m.
Over the 7 year primary contract period the total gross cost of the new system (including business change) is estimated at £20.9m. This comprises the pre-implementation costs of £1.4m and total implementation costs of £11.8m and average running costs of £1.1m pa for 7 years.
Aaron Thomas added "The payback on the full cost of the programme is currently estimated at 7 years however if we discount the cost of the council staff working on the programme, who are obviously already employed by the councils, that payback period would fall to just below 6 years."
Cllr Neil Sullivan commented "Clearly April is not going to be met I imagine as we are only two weeks away and half of April is put out with Easter and other tings that will distract us. Are you able to give us an estimate of when you think that is going to be?
Mr Mark Wynn, Director of Corporate Services at Cheshire West and Chester Council, replied "In terms of a definitive go live date I couldn't sit here now and give you a 'go live' date."
He added "We are not far off being able to have definitive go live date but I cannot do so now."
Cllr Nige Jones asked "Is there any scope within the agreement we have with Agilysys to levy financial penalties for the failure to deliver this project on the original time scale?"
Mark Wynn replied "Within the contract there are some clauses to invoke penalties on the contractor if they miss agreed contractual agreements, subject to being able to prove either contractor cause. There are clauses in the contract the other way round if the contractor can prove council cause.
"Clearly on a project like this with many many moving parts proving cause beyond doubt from a legal point of view is quite challenging but there are clauses to impose a daily rate if they miss certain milestones within the contract, of which go live is one of them."
Cllr Nige Jones "Are any levies being considered at this stage? Are we looking at whether we have the option to pursue that."
Mark Wynn replied "We have looked at the contract. We are trying to find an agreed 'go live' date to go forward but we are very aware of what the council's position within the contract is but we are not at the moment doing anything with that contract."
It was agreed that a full and detailed report be provided to the Overview and Scrutiny Committee as soon as possible along with regular progress reports.
*At the time of publication we are awaiting a comment from Cheshire East Council and confirmation of whether the £1.5m is the additional cost to both councils for the delay and if not what the additional costs for CEC are.
We have also asked for confirmation of what the total cost of the project is for CEC and what the annual savings the project are expected to be.
Although 14 companies showed an interest in the opportunity at the outset of the procurement process, and four companies were shortlisted, only one final tender was received (from Agilisys).