Housing NZ defends $72m systems overhaul

Housing New Zealand's controversial major systems overhaul will cost up to $80 million – almost twice what was originally estimated.

Labour MP Moana Mackey has warned the five year project is a waste of money that could be better spent on housing.

The Enterprise Transformation Programme was previously estimated at $43.6m, but the department says its total cost will be $72m, including staff costs, with an extra $8m allowed for overruns.

The bill includes $58m for new systems, processes and technology, and will be covered using the department's current revenues.

Chief operating officer Stephen McArthur says it is confident it will recoup the project's cost in four years and expects to save as much as $70m a year once the new software is in place.

The original cost estimate of $43.6m was made prior to the completion of the detailed business case – on which it spent $9.6m.

The department would have had to spend $18m over five years on its existing systems for lesser efficiency gains if it had not gone ahead with the project, he says. It will use Oracle software to manage its commercial operations and $14.5 billion state housing network, and British firm Northgate's software to manage information about its 200,000 customers and tenants.

The investment will enable the department to reduce the amount of time homes are vacant for – which will increase rental income – and set rents more accurately, Mr McArthur says.

Tenancy managers inspecting properties will be able to use tablet computers out in the field to file reports, rather than using paper forms and keying details into computers back at the office.

"The pressures on social housing are severe and set to increase ... we need to redistribute, reconfigure or upgrade about 27,000 houses to meet demand. This is a huge job. We need our staff to be more mobile ... and we need better information to base our investment decisions on."

Housing New Zealand's decision to overhaul its systems has drawn flak.

Former department managers and whistleblowers have claimed the costly overhaul is unnecessary and challenged the department to explain its predicted savings. One existing supplier, TechnologyOne, has also queried aspects of the purchase.

Ms Mackey says the department needs to focus on building and maintaining its properties and should not be "wasting money on a computer project".

"Housing New Zealand has not done anything to allay the concerns about the actual need for this project." Costs are "going to be in the area of $100m ... [that] would build an awful lot of houses and maintain an awful lot of houses."

The department says its method for determining the project's benefits and costs were reviewed by Independent Quality Assurance New Zealand and KPMG, and the business case was developed under processes set out by the State Services Commission.

- © Fairfax NZ News