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TechnologyOne hits back at Brisbane City Council as stoush heats up

30 Jan 17

TechnologyOne has hit back at Brisbane City Council saying it is confident of its legal and commercial position – and that it has had ‘challenging’ projects with the council in the past.

The enterprise software company’s comments follow allegations from Brisbane City Council that a $122 million project to deliver a new regulatory system, which upgrades 13 IT systems, was facing a big delay – and a potential $60 million blowout.

Brisbane City Council said it was giving TechnologyOne six months to deliver on the project – or lose the deal.

Today the disagreement stepped up a notch, with TechnologyOne putting the blame back on Brisbane City Council, saying delays in the project have been fully documented ‘and are due to BCC’ and a well-documented change in project strategy which the council requested, along with a significant increase in the scope of TechnologyOne’s contracted work, which included more than 500 additional business processes.

Adrian Di Marco, TechnologyOne executive chairman, says the company was effectively blindsided by BCC’s going public with the story last week.

Di Marco has come out swinging, outlining a number of ‘clarifications’ to BCC’s allegations.

He says Brisbane City Council has not initiated any of the contractual mechanism built into contracts to assist with dispute resolution and mediation, or issued a breach notice.

“TechnologyOne was not aware of a contract dispute until the detrimental media statement made by BCC,” Di Marco says.

TechnologyOne executives were briefed by members of the BCC review committee on the morning of Brisbane Council’s announcement of the issues, with TechnologyOne alleging the statements made by the committee were ‘inconsistent’ with the later public announcement.

He’s also said the $122 million figure over 10 years for the project is not the contract value to TechnologyOne, which only stands to gain $50 million.

“The $50 million to be paid to TechnologyOne covers the cost of the development, configuration, implementation, interfaces and data migration from BCC’s legacy system, as well as operating and supporting the production system for BCC in the TechnologyOne cloud and providing ongoing support and enhancements.

“The additional $72 million… is not part of the contract to TechnologyOne and are costs associated with BCC staff and contractors.”

Di Marco says the $60 million overrun figure is ‘not costs being charged by TechnologyOne, and are not part of the TechnologyOne contract, and are once again costs associated with BCC staff and contractors’.

The two companies are continuing to work together on the project, with TechnologyOne saying it has notified council ‘that it cannot continue to frustrate our ability to complete the project’.

TechnologyOne says the impact of a continuing dispute with Brisbane City Council on this year’s earning target ‘is not material’ with perpetual licenses already paid, only a small number of consulting staff working on the project – and able to be redeployed – and the annual cloud fee and annual support fee ‘not material’ given the size and scale of TechnologyOne’s cloud and support business.

The company says it also believes the stoush won’t impact its sales pipeline, which remains strong.

“The company has an unblemished track record over 30 years and over 1000 successful implementations and a strong reputation in the market,” TechnologyOne says.

“This event is being seen by the market as unique to BCC because it has been made public by BCC without ever initiating the normal contracted remediation processes,” Di Marco says.

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