THE Queensland Health payroll bungle must take place "in the front rank of failures in public administration in this country", a Commission of Inquiry has found.

"It may be the worst," Commissioner Richard Chesterman said.

There are no recommendations to prosecute public servants or politicians in his report tabled in Queensland Parliament on Tuesday morning but Mr Chesterman said the decision to settle with IBM over the Queensland Health payroll bungle was taken without proper analysis or risk examination.

He labelled the project a "serious failure" marred with poor decisions manifested from a lack of diligence.

Mr Chesterman slammed the government's decision to settle with IBM and release them from further legal action.

He said advice, repeated several times, to seek opinions on the value of the state's rights against IBM was never acted upon.

Mr Chesterman said those rights were potentially worth tens of millions of dollars.

"The settlement was driven by assumption that without IBM's presence there was a substantial risk that the payroll system would fail utterly and that if the state insisted insisted upon its contractual right to terminate, IBM would ...refuse to assist with the remediation and/or improvement of the system," he said.

Mr Chesterman said the first assumption was wrong and the second appeared unlikely.

He said the state's response to the malfunctioning payroll system was "timid" and attempts to recover any recompense for the failure were "ineffectual".

Mr Chesterman said the settlement rectified only outstanding defects and released IBM from all claims for recompense without knowing the value of what it released.

Queensland paid IBM $25.7m for the QH replacement payroll system.

The original price was $6.195m.

The system went live on March 14, 2010, after 10 aborted attempts.

"It was a catastrophic failure as all Queenslanders know," Mr Chesterman said.

"The system did not perform adequately with terrible consequences for the employees of QH and equally serious financial consequences for the state."

QH employees were overpaid, underpaid or not paid on time for months.

After many months of hardship and uncertainty, a functioning payroll was developed requiring 1010 payroll employees to process fortnightly pays as at May 31, 2012.

They performed more than 200,000 manual processes on an average of 92,000 forms processed each fortnight.

The system required significant modification, 2500 customisations and more than 130 manual workarounds.
Since May, 2013, the payroll staff has reduced to 841.

The cost of operating the system has been estimated at $416.6m for the three years to June 30, 2012, and a further $836.9m estimated for the five years ending June 30, 2017.

That totals $1.253.5b.

Mr Chesterman has recommended forward planning and risk assessments for all legacy systems to ensure decisions are "not made in haste".

He suggested the Queensland Government give special attention to lessons learned from this failed project in all future projects.

Mr Chesterman also recommended planning for the replacement of the QH payroll system begin immediately.

Premier Campbell Newman said the report showed disconnected leadership and a blundering political party.

He said the report proved there was a "cover-up".

Health Minister Lawrence Springborg said the report detailed "corrupt behaviour".

He said a cast of thousands played a part on a path to "oblivion" and no one intervened.

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