Replacing the troubled Phoenix pay system is estimated to cost at least $4.2-billion, according to a new report from Auditor-General Karen Hogan that finds federal efforts to eliminate the backlog of longstanding pay complaints ahead of the transition are falling short.

The problems with the Phoenix pay system over the past decade have emerged as a prime example of what can go wrong with large IT projects.

A flood of complaints quickly surfaced after launch in 2016 and thousands of public servants continue to face frustration with inaccurate payments. In some cases, the backlog of complaints includes files that are as much as seven years old.

The government has announced that it will gradually transition away from Phoenix in favour of a new pay system – called Dayforce – starting next year with three departments.