A delay in implementing an in-house electronic system for computing employee payroll could cost Pittsburgh as much as $2.6 million, officials said.

The city was scheduled to go live with the system in January 2013, but has pushed the date back three times. Meanwhile, it is paying a Minnesota company about $800,000 annually for payroll services and has run up $988,644 in cost overruns on the new system, according to the Peduto administration and controllers for Pittsburgh and Allegheny County.

Officials are pointing fingers over who is to blame, and the city is risking the ire of state financial overseers, who have made system implementation a condition of budget approval.

“It's due to hesitation on the part of the prior administration and hesitation on the part of the current administration,” said Pittsburgh Controller Michael Lamb. “My only concern is this hesitation is costing us too much money. We've got to get this up and running.”

Mayor Bill Peduto said he ordered a halt because of the overruns and delays.

“It's been mismanaged and poorly implemented,” he said. “We're going to hire a professional organization that does this for cities and other organizations to implement a financial management system that works.”

Nick Varischetti, who chairs the Intergovernmental Cooperation Authority, said he expected the city to have the system in place this month.

“The lack of a financial system has been as much a factor of the financial status of the city as anything else,” he said. “This is a tool that's needed.”

Pittsburgh and Allegheny County have a joint operating agreement to share financial management services from offices in the City-County Building known as the Shared Services Center.

Pittsburgh, using center support in 2010, implemented a general ledger system for paying bills and performing basic accounting functions within six months at a cost of about $4 million.

The Ravenstahl administration chose Denovo Ventures LLC, a technology consulting firm based in California and Colorado, to help implement the more complicated system for computing payroll for about 3,300 employees and pension checks for retirees. The original contract ballooned from $263,940 to $1.2 million.

Denovo did not return phone calls or an email.

Allegheny County Controller Chelsa Wagner blamed overruns on city ignorance of its own payroll system, city timekeepers not showing up for training sessions, reluctance by the Ravenstahl administration to move forward and a request by Peduto in July to wait until he took office.

Chuck Half, who managed the payroll project under Ravenstahl, said delays mainly came in early 2013 when tests revealed inconsistencies between the new and old systems.

It took months to reconcile them, Half said.

Hiring a new consultant could push system implementation back to 2015, according to Wagner and Lamb. The delay could cost the city $800,000 more for payroll services in 2014 and is unnecessary because the Shared Services Center can implement the new system, they said.

“The computer system is completely configured,” said Amy Griser, the deputy county controller, who oversees the center. “The configuration of everything is complete.”

©2014 The Pittsburgh Tribune-Review (Greensburg, Pa.)