The Canadian government‘s Phoenix payroll system, launched in April 2016 at a cost of CA $310 million, has been plagued by significant problems since its inception. This ministry’s attempt to reform government was pretty shocking and delightful in itself. This will be their second try at replacing the payroll system, after an unsuccessful effort in 1995. Even by 2023-2024 almost one in three workers had experienced some kind of payroll mistake. This scenario is a significant indictment of the federal government’s IT project management capability and IT project success.
Like the Phoenix project, the goal was customization of PeopleSoft’s standard payroll package. To do so, it had to achieve compliance with a mind-boggling 80,000 pay rules across 105 collective agreements with federal public-service unions. The system has had a hard time living up to these goals and providing reliable payroll services. In fact, bad management choices are the largest single factor driving continued unrest today. They rarely account for or redefine well-documented reasons for past failures.
Historical Context
In 1995, the Canadian government launched its first serious effort to replace the payroll system. Unfortunately, that effort ended up failing and established a lousy precedent for the Phoenix project. When Phoenix went live in 2016, stakeholders across the country hoped that lessons learned from the past would lead to a smoother Phoenix implementation. Unfortunately, that was not the case. The project included combining all 34 government-human-resource-system interfaces across 101 agencies and departments, which multiplied the complexity by orders of magnitude.
Shortly after the launch, the systemic issues bubbled up all at once. A tidal wave of bugs and salary snafus began crashing down on workers. As of the end of March 2025, more than 349,000 errors were still overdue. Even worse, more than half of these problems hadn’t been addressed for more than a year. This unprecedented backlog has caused immeasurable financial stress and anxiety for thousands of employees and their families during this pandemic.
“Anyone can make a mistake, but only an idiot persists in his error.” – Cicero
Current Impact on Employees
The devastation wreaked by the disastrous implementation of the Phoenix payroll system has been far reaching. About 70 percent of the 430,000 active and retired Canadian federal government employees on the Phoenix pay system have experienced paycheck problems. This has been a recurring issue for the last nine years. In addition to these fiscal failures, HR missteps have resulted in heightened anxiety and uncertainty for employees.
In the 2023-2024 school year, almost a third of staff members said they had suffered paycheck mistakes, highlighting the faults in the current system. This state of affairs is in glaring opposition to the government’s commitments. They promised to eliminate the backlog of mistakes by June 2026, but have defaulted on prior deadlines including an original goal of March 2025.
Even though government officials in both administrations have repeatedly assured employees that they are addressing these issues, the employees just don’t believe them anymore. We’re hearing alarm bells all over the place from advocates and stakeholders about this backlog. We’re hearing from many of you who are concerned that big changes aren’t made fast enough.
Lessons on IT Project Management
The Phoenix project has become like the cautionary tale about the risks of big IT projects. Its failure rate is comparable to that of other costly, high-risk IT initiatives. This conceptual similarity just serves to further highlight the hurdles organizations face during such challenging technological transitions. Observers are very concerned the lessons learned from Phoenix will be overlooked in other projects. They worry that efforts to replace the system might lead to an equally disastrous outcome.
Henry Petroski once stated, “To Engineer Is Human: The Role of Failure in Successful Design,” which captures the essence of how failures can serve as learning opportunities. Assuredly, if one considers the case of Phoenix, the lessons have not been effectively folded into practice yet.
It’s a moment when the Canadian government is faced with a profound crisis of its own. Stakeholders are asking if it can truly turn the tide on this deeply troubled project or if history will just repeat itself.
