Beaumont Hospital charged more than €66,000 over HR/payroll system penalty

A letter to the Dáil's Public Accounts Committee said that 'Beaumont Hospital failed to meet its full obligations to the Revenue Commission in early 2024 which, when following discovery and disclosure by the hospital, led to an interest and penalty demand of €66,061'. File Picture: PA

Implementation issues with a HR and payroll system at Beaumont Hospital led to an interest and penalty demand of more than €66,000, the Dáil's Public Accounts Committee (PAC) has been told.

The new HR and payroll system installed at the Dublin hospital eventually cost €4.8m, against an initial budget forecast of just €1.9m, the PAC heard in October, with correspondence being requested on additional issues. 

In the correspondence sent to the PAC, and seen by the Irish Examiner, the hospital said it had identified "serious deficiencies in its HR and payroll systems in the period leading up to 2022, because of the lack of integration between its systems, necessitating consideration of its replacement with an alternative integrated system".

Adding controversy to the overspend, the recently appointed director of finance at the hospital, Francis Hanlon, told the committee the spend had initially been labelled as compliant with public procurement rules, despite the fact that no public tender competition had been held for it.

The correspondence says that an internal review by the hospital management team in 2025 determining non-compliance with procurement requirements was down to an interpretation in 2021, which "specific circumstances during covid were deemed to warrant a derogation from procurement standards".

The contract for the implementation of a replacement HR/payroll integrated system was signed in March 2022, with the project starting in July 2022, and the human resource module went live in October 2023. 

However, due to "implementation complexities, as well as recurring national industrial relations issues, the payroll module did not go live until January 2024".

The projected cost of the project at the outset was €1,964,925, which assumed "break-even licence costs", but the letter to the PAC says that the amount paid to the implementation and support vendor to the end of December 2024 was €3,818,935. 

Underestimation of complexities

In addition, Beaumont Hospital has paid €823,180 in total system licence fees over the years 2022 to 2024. The equivalent licence costs for the legacy payroll system provider for the years 2022 to 2024 would have been €570,862 had the legacy system been retained.

The letter says Beaumont Hospital has also incurred a cost for the legacy payroll system of €133,068 to "allow access to historical payroll and human resource data", adding that the overspend has occurred "due to an underestimation of the project's complexities and the initial estimated cost of implementation, compounded by staff turnover in key specialist positions and national industrial relations impediments, with ongoing support required from the vendor".

It adds that "as a result of specific implementation issues, Beaumont Hospital failed to meet its full obligations to the Revenue Commission in early 2024 which, when following discovery and disclosure by the hospital, led to an interest and penalty demand of €66,061".

As a result of post-project costs, as well as the implementation issues, the hospital has engaged an independent external review of the payroll system module implementation. The cost of the external review was €115,251 and began in August.