Twenty months into an overhaul and integration of its more than 300 key IT systems, applications and data sources, the city of Portland, Ore., has changed IT consultants as the price tag for the project has soared.

Originally targeted to cost about US$31 million in late 2006 for consulting fees, hardware, software and other expenses, the project is now estimated at $49.45 million, according to the city. The work, which was supposed to be completed this past December, now won't be finished until sometime next year, raising the costs of the project considerably, said Laurel Butman, a principal management analyst for the city's Office of Management and Finance.

"What happened was we were supposed to go live in December of last year ... and it became increasingly clear that we weren't ready," Butman said.

Now the city is negotiating a termination deal with Ariston Technologies and Consulting Inc., the San Diego-based IT consultant that was hired to oversee the project. Both the city and the consulting company say that problems with the other led to the cost overruns and delays in getting the work finished.

As the target completion date passed last December, the city brought in consultants from SAP AG for advice, since the city is now moving to SAP's enterprise resource planning (ERP) software systems, including financial and human resources capabilities.

Butman said SAP found that the previously set project schedule and budget were too tight, and that more time and money would be needed to complete the work. The city was told "that the approach that Ariston suggested wasn't getting us to [the December 2007 completion] goal. It wasn't the software, but the process of approaching the implementation."

Now that SAP will provide consulting services to complete the project, the timeline, and the costs, have been expanded. The new schedule calls for the city's financial software to be ready by November, with the human resources software ready by next May, Butman said. "SAP said that that was going to be a better situation for us," she said. "We are off and running."

Robert Stoll, a Portland attorney representing Ariston in the termination negotiations with the city, said the company did the best it could do with the information it was given by the city.

"The city, rightly or wrongly, I think it's safe to say, lost confidence in Ariston," Stoll said. "We think wrongly. Ariston's not fighting them about that. They wanted out of the thing and we said 'fine.'"

From Ariston's point-of-view, he said, city officials who prepared the project requirements and put it out for bid weren't familiar enough with their overall IT systems and needs, making the goal for the work an impossible target to hit. "It's sort of garbage in, garbage out, if you know what I mean," Stoll said. "I certainly don't think that Ariston made any mistakes."

Both sides say that the termination deal with Ariston, which the company and city are calling a "transition agreement," is continuing as both sides work to settle disagreements about payments for change orders that were made during the work.

"We're trying to get things resolved," Stoll said. "We hope that we're not going to have to take legal action. I'm very hopeful that the parties will be able to work things out."

Mark Greinke, who became the city's CTO in February, said the IT overhaul project has been in the planning stages since 2001 as the city looked to bring together diverse systems, applications and data sources to increase efficiency and save money. The city has about 220 IT workers who oversee a diverse system that includes a 15-year-old IBM mainframe, IBM pSeries servers running AIX, an Oracle database backbone and a host of legacy applications.

The financial and payroll systems are included in a homegrown application that was custom-built for the city, Greinke said. Because it was hard to add new components to that application, "shadow systems" were created by various city departments to add needed features that weren't tied directly into the main legacy application. What that created, he said, was a diverse IT system made up of single Microsoft Access database files, single Microsoft Excel spreadsheet files and more, that weren't connected in a useful way. The new IT infrastructure is being created to tie all of that data together in a unified system, he said.

Once the upgraded IT system is completed, most users will be able to access the SAP applications through Web-based interfaces, rather than through difficult-to-administer, mainframe-based applications, Greinke said.

The city's IT overhaul isn't the only IT controversy making headlines in the city recently. Portland's municipal Wi-Fi system, which debuted in December 2006 with enthusiasm, remains stalled since last September due to a lack of money to complete it.