Bid to fix billing mess

Controversy surrounding a proposed new billing system is not going away as the city manager plans to appoint an independent risk assurer – costing more money. Alan Cooper reports

ETHEKWINI Municipality should think carefully before scrapping its long-overdue, hopelessly over-budget new billing system as it’s going live.

Nearly half a billion rand has been spent on it to date.

That’s the warning from finance and procurement committee chairwoman Fawzia Peer after city manager S’bu Sithole said on Tuesday the time might have come for the city to “cut its losses” and kill the controversydogged revenue management system (RMS).

He also said he had frozen a R140 million tender for the maintenance of the new system pending the findings of an independent risk assurer, who would be appointed within days.

Welcoming the imminent arrival of an outside expert, Peer warned it might be a mistake to jettison the new system just as it was finally ready and in the process of being implemented.

Several modules of the application have been switched on: revenue receipting, business support, community residential units, bulk electricity and the rates calculation model.

The RMS, approved by the council in 2004 and initially intended to replace the ageing Coins system in 2007, was supposed to have cost R90m, but as the switch-on date was postponed costs soared to R474m.

“Yes, the delays and the cost are unacceptable,” said Peer. “But there were good reasons for them.

“Many factors that could not have been foreseen had to be taken into account, including changes to rating legislation, new refuse and sewerage tariffs and the new debt collection policy.”

She also warned that starting from scratch could mean having to fork out as much, or more, on a new system.

“Cape Town's system cost R350m plus R50m a year to maintain. Joburg spent R800m and look at all the grief they’ve had. If we pull the plug on RMS, we could still be in for another R500m or more to put in a new system.”

She said she had been assured by the officials in charge of implementing the new system that no further council spending would be required, apart from maintenance costs.

“That said, I’m no technocrat. All I can go on is what the officials tell me. That’s why I welcome the city manager’s announcement of an independent expert. He or she will, I hope, be able to give us an informed, dispassionate opinion on how to proceed.”

DA executive committee member Tex Collins said he had no doubt the risk assurer would recommend the city scrap the RMS.

“We’ve been calling for years for it to be thrown out. Instead we’ve continued to throw good money after bad.”

Collins said it was a difficult decision to pull the plug on a project when so much money had already been spent on it, but that they’d had opinions from their own independent experts advising that it be scrapped.

“There have been numerous red flags over the years. For example, one of the big selling points of the RMS was that we could sell it to other municipalities to help offset the costs. Only after we’d sold it to several of them did we dis- cover this was considered disposing of an asset and illegal. Our legal department must have been asleep when they signed off on that deal.

“Then there was the time the RMS team let slip that the new consolidated bills would be eight pages long as opposed to the current one-page bill.

“With 500 000 customers, we’d have to flatten whole forests every time we sent out bills.”

He said the Coins system, while old, was stable and would be able to keep the bills flowing until a new system from an established player like SAP was in place and would have the benefit of costing just R5.5m a year to maintain.

“Compared with RMS, Coins costs peanuts to run. To put it in perspective, we spend more to host a football match than to run our billing system for a year.”

He described RMS as one of former city manager Michael Sutcliffe’s “ego trips” and said his successor, Sithole, was to be congratulated on “finally acting to stop this folly and stemming the cash haemorrhage. If it costs us a million rand to hire this expert, it will be money well spent.”

Collins also hoped the expert would recommend steps to recover money from those responsible for any wasteful or illegal expenditure and that “heads would roll”.

“In business, it is standard to have penalty clauses when suppliers fail to meet deadlines. There are also clawback clauses to recover wasted money. If they weren’t in this contract, our legal department should be held to account.”