This should be a troubling revelation for the Canadian federal government. Almost 10 years after the Phoenix payroll system was rolled out in April 2016, it continues to be plagued by big issues. The original intent of the project was to update the payment system used for the thousands of federal employees. Over the years, it’s become a poster child for government’s inefficiency, haunted by mistakes and outstanding problems.
The ambitious CA $310 million project aims to adapt PeopleSoft’s off-the-shelf payroll package. This needs to be customized to the 80,000 different complex pay rules, found in 105 collective agreements with many different federal public-service unions. Important project management lessons — like those learned from a 1995 failed attempt to replace the payroll system — were somehow dismissed by project managers. The administration is right to take on a complicated and paradoxical issue. They have to clear more than 349,000 outstanding mistakes —53 percent of which have been outstanding for over a year.
Phoenix’s initial charms had everyone aglow, but within weeks it was apparent that the project was a disaster in the making. Project executives initially asserted they could produce the complete endeavor for less than 60 percent of the vendor’s suggested quote. Yet, what seemed like a prudent decision at the time has come into serious doubt as unfortunate complications have developed.
A Troubling History of Payroll System Failures
The Phoenix project was the second attempt by the Canadian government to completely reform its payroll system. The first effort ended in failure back in 1995, raising concerns about the government‘s capacity to effectively manage such large-scale software projects. Despite the well-documented reasons for that earlier failure, including inadequate planning and a lack of stakeholder involvement, Phoenix project managers proceeded without implementing necessary safeguards.
The Phoenix initiative was never doomed by a mismatch of expectations between the team and its management. They were equally committed to creating a memorable experience on a shoestring budget. Unfortunately, we grossly under-projected the project’s difficulties. This often left us with very few resources, and even less aid, to combat all the myriad challenges we encountered.
In hindsight, observers say it’s a dangerous game to overlook hard-earned lessons from the past.
“Anyone can make a mistake, but only an idiot persists in his error.” – Cicero
The Scale of Errors within Phoenix
As of March 2025, the government has more than 349,000 outstanding errors associated with the Phoenix payroll system left to fix. These outstanding roof problems have affected upwards of 70 percent of the 430,000 current and retired employees of the Canadian federal government. Beyond those relying on this antiquated system to receive their pay. Employees have shared stories of unexpected and often devastating paycheck errors that have upended their financial stability and created uncertainty in their lives.
The high level of remaining faults casts a harsh light on the success of the initiative. Even within those rare errors, more than half have been outstanding for a year or more. The backlog has created fears for employees. Policymakers should be concerned too as they scramble to maximize effective government to their constituents.
The federal government is showing that they are seriously committed to addressing these long-standing concerns. They commit to clearing about 500,000 of the remaining Phoenix errors by June 2026. We’re about to find out if this commitment spurs tangible action. Without such a change, bureaucratic inertia will keep dragging down innovation and progress.
Future Prospects and Lessons Learned
The government must continue to push itself. The establishment struck back, with many stakeholders clamoring for a return to top-down, centrally controlled project management. For that reason, experts agree that oversight and transparency have never been more urgently needed. They call for better stakeholder involvement when launching new, large-scale efforts such as Phoenix.
“To Engineer Is Human: The Role of Failure in Successful Design” – Henry Petroski
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