A delay in the implementation of a new accounting system for the city of Portland could cost up to $3.9m in unanticipated overrun costs.

The city began putting together a project team to implement the new system in 2006, under former mayor Tom Potter. But Mayor Sam Adams' office is now responsible for its being implemented on time.

The news comes as the city of Portland is facing an $8.8m shortfall in its budget, and a 90 percent cut in onetime funding for vital services like homeless shelters.

Half the system went live last November, covering accounting, payments to contractors, and accounts payable, but the the new payroll component of the SAP system was scheduled to go live on April 1.

At a check-in on March 12th a decision was taken with the SAP system's executive steering committee and the project advisory committee to wait until at least mid June to delay implementation of the new payroll system. A committee of outside experts, including former city council candidate Dave Lister, Kumud Srinivasan, General Manager for information technology at Intel, and Cormac Burke, director of SAP for Pacificorp, approved the decision to delay the implementation by three months last Tuesday March 17th.

Oddly, Lister denies being on any such committee in any capacity whatsoever. "I've never been part of any ex-oficio committee whatsoever," he says. "They're just trying to pull me into the manure, I think."

But according to analysis put out on March 6th by the Office of Management and Finance, such a lengthy delay could be very costly:

"However, if the implementation is delayed, it would cost approximately an additional $60,000 per day for every day after the go-live date," reads page 9 of the document.

The Mercury estimates that a 90 day delay in implementation, 90x$60,000=$5.4million.

"It's about a million a month," says Laurel Butman from the city's Office and Management and Finance, who had not seen the $60,000 a day estimate when contacted by the Mercury by phone this morning.

Some of the three months' overrun money will come in part from a contingency fund established for the SAP system—which has about $1.5m in it right now.

"A lot of it's covered in the contingency for the project," says Butman. "I think it's $1.5million that we have, and then we're working on a financing plan. Part of the struggle here is that the bureaus ultimately have to pay a share, but the way the economy is right now, that's really difficult."

But that still leaves up to $3.9million to make up, and Butman thinks the city will "probably" issue bonds to pay for the extra shortfall. Council is scheduled to discuss a $4.2 million multi-year "flexible service contract" for the project this Wednesday.

"You plan for these kinds of overruns, but you still want to do your best to avoid them,"," says the mayor's spokesman, Roy Kaufmann.

Asked what the mayor's office had done to avoid the overrun, Kaufmann declined to take or attribute responsibility for the delay.

"It's our responsibility in the sense that this is a citywide infrastructure of technical solution," says Kaufmann. "I'm not interested in laying the blame or throwing anybody under the bus."

"There were project hiccups and there was some transition between vendors that had to go on, and all of those things will at the end of the day make for a better SAP system," Kaufmann continues.

The decision to delay the implementation is in the best interests of the city, says Ty Kovatch, chief of staff for Randy Leonard, who is understood to support the move.

"The city, through the water bureau in the early 21st century, learned the lesson the hard way," says Kovatch—referring to a debacle in the early implementation of a new water billing system that ultimately cost the city over $20m in lost water revenue, under former city commissioner Erik Sten.

"I don't know anything about how much it costs," says Kovatch, of the overrun. "But I don't think it's appropriate to talk about the costs of potentially not going live without at the same time talking about the potential cost of going live early when you're not ready."

This is the second major problem with the implementation of the SAP system. Last summer, the city realized that the SAP project would be $18m over budget and ten months late, and the city changed contractors for the work.

"For some reason, government has a hell of a time implementing technology projects," says Lister. "But I don't understand where this $60,000 a day figure is coming from."

"The problem is that they have to have all the different nuances for all the different unions that they deal with, worked into the SAP system," says Lister. "The problem is that the unions will sometimes sit down with the bureau managers and say, okay, on the third full moon of the third month of each leap year, I'll get paid time and a half, and then they don't sit down with payroll to figure out how to make it work."