Technology One doesn’t expect big profit hit from council dispute

Criticises council over going public

ASX-listed software company Technology One says that a dispute with Brisbane City Council will not have a material impact on its FY 17 profit.

In a statement to the ASX, the Technology One said that its forecast of strong profit growth for FY17 remained.

Brisbane City Council’s lord mayor, Graham Quirk, last week blasted the company over a project to implement its local government platform. Quirk said he was seeking to have the council’s contract with the company renegotiated, and that the rollout could end up 18 months behind schedule and $60 million more expensive than anticipated.

Technology One in response said the problems were on the council’s end. The council’s business processes were poorly defined, leading to a significant increase in the project’s scope. The $60 million figure relates to costs associated with the council and its contractors, not Technology One, the company emphasised in its statement today.

The total value of the contract to the company is $50 million over 10 years, Technology One said.

“This event is being seen by the market as unique to BCC, because it has been made public by BCC without ever initiating the normal contracted remediation processes,” Technology One executive chairperson Adrian Di Marco said.

“In my 30 years in business I have never seen this before.”

“We have had challenging and contentious projects in the past, but because there are dispute resolution and mediation processes built into all contracts that can be initiated by a client if necessary, including the ability to issue a breach notice, this has allowed for the orderly and professional resolution of disputes, without going public, which is normally in both party’s interest,” Di Marco said in a statement.

“To date BCC has not initiated any of these contractual mechanisms so Technology One was not aware of a contract dispute until the detrimental media statement made by BCC.”

The council has said it wants to continue working with the company on the project, the ASX statement said.

Correction: Article initially misstated total value of contract. The value is $50 million over 10 years.

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