Canada’s Phoenix Payroll Catastrophe

What is the Phoenix Pay System?

The Phoenix system is one of Canada’s most amazing blunders. It’s a multi-billion dollar failed project.

In 2009, the federal government of Canada hatched an idea to update all payroll systems for federal public employees. It was decided they would build a brand-new system from scratch and then decommission all the old systems. (One system to rule them all!) Bureaucrats got behind the plan to make government “smaller and more efficient” by centralizing the payroll operations into a single office and a single IT system.

If you listen closely, you might hear the faint echoes: “A flick of a switch”, they said. “We’ll save millions”, they said. “We’ll launch the new system with just the push of a button”. And some fool decided to name the new system Phoenix – it would “rise from the ashes” they said.

March 9, 2016, was Phoenix’s first payday. How did it go? Thousands of employees didn’t get paid the correct amounts. Some were paid too much, others too little. Income taxes were calculated incorrectly. Many didn’t get paid at all. Within weeks, employees were dipping into their retirement savings, credit cards, and defaulting on their mortgages to make ends meet. An incredible disaster.

To get a sense of the chaos, here is a screenshot of the government’s FAQ for their employees:

By June of 2016, the government was throwing people and money at the problem. And by August 2017, the most recent publicly-available report, only 49 per cent of payday transactions were being handled accurately by the system.

I believe the Phoenix catastrophe is not an anomoly. It is merely the most recent and visible illustration of the absolute failure of the Waterfall. The cost of failed and challenged Waterfall projects worldwide is estimated, annually, in the trillions.

I will watch this story unfold.

Update: I wrote a book, published in 2023, to chronicle the entire Phoenix story.