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Water-sewer rate relief on hold The Portland Water Bureau's changeover to a new computer system is running over budget at the expense of customers
Thursday, July 6, 2000
By Scott Learn of The Oregonian staff Glitches in the Portland Water Bureau's new computer billing system, already at least $1.5 million over budget and a year past due, have forced the city to postpone water and sewer rate reforms for a month.
The delay, approved by the City Council on Wednesday, will reduce savings for residential customers, particularly for the low water users that the reforms targeted. It's a black eye for the Water Bureau, which bills 160,000 accounts in Portland.
And it highlights the problems the bureau has had with the new system, purchased from Severn Trent Systems of Houston. A "Fixable" Problem? discuss city computer glitches in the SE PDX forum
Water Bureau workers are having to review each of the 2,000 to 3,000 bills that go out each day for accuracy and are hand-calculating an estimated 100 to 200 bills a week. Long hold times on customer service phone calls are prompting the bureau to open an hour earlier and extend customer service hours until 7 p.m.
Bureau officials originally predicted the system would be in place by December 1998, two years in advance of the year 2000 changeover. Instead, the system didn't "go live" until late February, forcing the city to spend at least $350,000 to reprogram its existing computer system to handle the new millennium.
Meanwhile, the estimated costs of the new system -- for software, training, extra staff and several consultants -- have risen steadily. In 1997, the bureau projected costs as low as $2 million to replace its 15-year-old system. After bids arrived, the budget came in at $6.5 million.
Now bureau consultant Martin C. Wilson pegs the cost at $9.76 million once the new system is operating fully. Bureau officials told Wilson they think they can keep costs down to $8 million, still $1.5 million over budget.
The city is withholding roughly $900,000 in billings on its $3.2 million contract with Severn Trent Systems because of the delays.
Commissioner Erik Sten, who oversees the Water Bureau, defended the computer system, saying it is largely working despite being "the first system of its kind in the country." Large computer changeovers are notorious for unforeseen glitches, he said. And the bureau's computer problems, while "disappointing," are fixable.
Some commissioners alarmed But the problems have clearly alarmed the rest of the council, especially Commissioner Dan Saltzman. Saltzman oversees the Bureau of Environmental Services, the city's sewer agency, which recommended against Severn Trent in 1997 and called its software "vaporware."
Saltzman, whose bureau will have to pick up half the tab for the new system, peppered Water Bureau Director Mike Rosenberger with questions during a Wednesday meeting. Saltzman said Rosenberger assured him months ago that the system would be ready to handle rate reforms, including reduced service charges, by July 1. "I'm very worried that this is a mess that I don't see us getting out of," Saltzman said.
Rosenberger said he's confident the rate reforms can take effect in a month. And he pledged that the bureau will take budget cuts rather than raise water rates to compensate for the cost overruns on the project.
The report from Wilson, the consultant, said the system is the right one for the Water Bureau. The total costs, even at $9.76 million, would still come in less per customer than the average of 17 U.S. utilities that bought new computer systems in the 1990s, the March 16 report says. And the time frame is reasonable compared with the industry.
Utilities' record on implementing new computer systems "has been dismal -- no maybes about it," the report says. Costs have been exorbitant, schedules "seemingly infinite" and the computer-system "vendor world is currently a sea of mediocrity."
Portland's quirks a factor Dan Perrin, Severn Trent's project manager, said in a phone interview that it has been tough to convert Portland from a homegrown system with local quirks to a Windows-based system that largely follows industry standards. But the company considers Portland's system "very successful," he said.
"This is the transition stage," Perrin said. "It's painful. But all of a sudden the clouds clear and things work fine."
The glitch causing the delay stems from Portland's quarterly billing system. The bureau implements new water and sewer rates every fiscal year, beginning July 1.
But many customers' quarterly bills straddle July 1, so the bureau has to figure the bills using old and new rates. At this point, Severn Trent's software can't prorate those bills properly.
Rosenberger said there are other glitches with the system, including some that won't be fixed in a month. Among them are problems with complex sewer bills, trouble billing customers on payment plans and mix-ups with billing addresses.
Service saving predicted In a January memo to Rosenberger, Bureau of Environmental Services Director Dean Marriott noted that the Water Bureau predicted savings in customer service and a 40 percent reduction in manual work as a result of the new system.
"We do not yet see any potential decrease in employees, due to problems in the new system," Marriott wrote.
Rosenberger says the improvements will come; he predicted last July that it would take six to nine months to work the bugs out of the system after it went live.
Rosenberger will report back to the council by July 20 on the fixes to the rate glitch. He said he is negotiating with Severn Trent on damages tied to the delay.
The bureau's contract with the company includes damages of $1,000 a day for a "go-live" date after April 23, 1999. But those potential damages are capped at $250,000.
Sten and Rosenberger said the city has to maintain relations with Severn Trent Systems. Wilson agreed, noting in his consultant's report that "the city will be dependent on STS for a decade -- probably longer -- for maintenance and enhancement support."
-- Martin Thompson (firstname.lastname@example.org), July 06, 2000