S-10700-00015522 Payroll X-formation IQMS RFQ Ex 5-Charter.pdf

Statewide Payroll Transformation

Last Saved: 11/25/2025 Level 1 - Published Page 1 of 10

Project Charter Ve rsion 1 .0

N ovembe r 2 5 , 202 5

Table of Contents Charter Purpose

Directive

Overview

Objectives

Scope

Schedule

Budget

Resources

Key Stakeholders

Guiding Principles

Assumptions, Constraints, and Risks

Assumptions

Constraints

Risks

Approvals

Version History

Version Date Author Description

0.9 11/13/2025 Martin Kraal, Project Manager Version submitted to EIS-P3.

1.0 11/25/2025 Martin Kraal, Project Manager Aligned project cost estimates with business case and IT investment form.

Oregon Department of Administrative Services

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Charter Purpose The Statewide Payroll Transformation Project charter formally authorizes the project and provides the information necessary for the Sponsors to approve resource commitments. It informs stakeholders of the project’s intent and strategic direction.

The charter defines the background, justification, and high-level scope, timeline, and resource requirements. Upon approval, the Sponsors authorize the Project Manager to lead and deliver on the defined objectives.

The charter serves as an ongoing point of reference to support alignment, coordination, and informed decision-making throughout the project. Active participation from stakeholder groups is expected to support successful execution.

Directive Since Workday Payroll launched in December 2022, the state has worked diligently expending significant staff time and internal and external resources to identify and correct errors caused by the transition, as well as to better understand what is causing those errors. Unlike most other employers, State of Oregon employees are paid a monthly salary, including overtime eligible, non-exempt employees. This forces the system to pay overtime-eligible employees both a salary and on an hourly basis. This is a highly unusual pay structure for overtime-eligible employees which causes significant problems for modern payroll systems like Workday Payroll. Efforts to configure Workday Payroll to align with our long-standing and unique pay practices have been problematic.

That process has shown there are aspects of the State’s historic pay practices causing significant ongoing challenges to Workday’s effectiveness for processing the state of Oregon’s payroll.

In response to a class action lawsuit filed in January 2023, the Oregon Department of Administrative Services (DAS) has committed through a formal settlement agreement to transform its pay practices to improve the transparency, predictability, and accuracy of employee pay.

To meet this commitment, DAS has identified a set of recommended changes that reflect modern payroll practices. These include eliminating the use of forecasted hours, transitioning to a biweekly pay frequency, and changing how overtime-eligible salaried employees are paid by moving to an hourly rate.

These changes are intended to be implemented no later than July 1, 2027, in alignment with DAS’ obligations under the settlement and labor agreements.

Overview DAS will modernize outdated pay practices, improve payroll-related business processes, and enhance services delivered through the Workday Payroll system. These updates include:

• Transitioning from pay based on forecasted hours to pay based on actual hours worked (i.e., in arrears) by implementing a standard lag period to process payroll, eliminating forecasted hours

• Paying overtime eligible employees on an hourly basis rather than a monthly salary

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• Moving from monthly to biweekly pay periods

Changes will have impacts on the payroll lifecycle, from employee time entry and manager approvals to agency payroll oversight and central processing and reporting. The transformation applies to all agencies using the Workday Payroll system and will result in a fully tested, accurately calculated, and consistency communicated payroll process. Expected overall benefits from the structural changes include improved pay accuracy, transparency, and predictability, alignment with industry standard payroll practices and core Workday Payroll functionality, and reduced workarounds and manual processes.

Objectives The Statewide Payroll Transformation Project is chartered to achieve the overarching goal of accurate, transparent, and predictable employee pay.

To achieve this goal, the project must:

• Implement structural pay practice changes by July 1, 2027

• Ensure continuity of core business operations by identifying all functional areas impacted by the changes and implementing necessary adjustments to workflows, processes and user interaction

• Maintain data integrity and system interoperability through a comprehensive review and update of all the affected integrations and data exchanges with internal and external systems

• Ensure accuracy and reliability in reporting and analytics by assessing impacts to data, reporting, and validating outputs against business requirements

• Protect data and maintain appropriate system access by reviewing security roles, permissions, and access controls to reflect new business processes and data sensitivity

• Validate system performance and usability through structured testing and quality assurance activities, including unit, integration, user acceptance, end-to-end, and parallel testing

• Ensure compliance with the State’s collective bargaining agreements and required state and federal regulations

• Implement quality assurance and control processes to ensure accurate pay

• Align system configuration with evolving operational needs by updating documentation and processes

• Update any policies, procedures, guides, website language, or other sustaining elements supporting the operations of payroll and impacted areas such as compensation, benefits, and recruiting; this will include partnering with impacted areas that are accountable for these policies, procedures, and other documentation

• Support state employees with system and process training, technical assistance, operational training for payroll and human resources (HR) staff, financial transition education and support, and transparent communication throughout the project

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Scope Items in scope for the Statewide Payroll Transformation Project include:

• Functional configuration changes to the Workday system and impacted functional areas

• Modifications to impacted integrations (e.g., PEBB, PERS, SFMA, Datamart, etc.) and reports

• Comprehensive testing (e.g., unit testing, integration testing, end-to-end testing, user acceptance testing)

• Changes to business processes and statewide policies resulting from changes to pay practices

• Communications, including updates to Workday documentation (e.g., help articles)

• Enterprise readiness activities (e.g., training, calculators, financial processes and reporting, education campaigns, communications) and support for employees through the go-live transition

• Operational readiness activities to support HR and payroll professionals across the enterprise

Items not in scope include:

• Changes to systems owned and maintained by other agencies

• Workday system and operational changes not required to implement the three structural pay practice changes or not required to support a positive customer experience and the successful transition to new pay structures

• Replacement of or modifications to other DAS applications except to the extent needed to implement the scope for changes to the State’s pay practices

Schedule DAS will initiate the Statewide Payroll Transformation Project during the 2025-27 biennium and close out the project in the 2027-29 biennium, tentatively in the first quarter of 2028. Structural pay changes must be implemented on or before July 1, 2027. Figure 1 provides a high-level timeline.

DAS will establish a detailed schedule in collaboration with the implementation vendor.

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Figure 1. Statewide Payroll Transformation Timeline

Budget Total funding requested for the 2025-27 biennium is $13 million, which includes:

• $6 million for personnel and supporting services and supplies

• $7 million for services and supplies including technical vendor support, independent quality management services (IQMS), Workday tenant costs, professional services, additional equipment, payroll consultation services, Department of Justice (DOJ), and procurement costs

Estimated expenses for the 2027-29 biennium include $5 million for personnel services and $7 million for professional services and subscriptions to provide support and stabilization post go live and to close out the project. Overall, it’s estimated the Statewide Payroll Transformation Project will cost approximately $25 million.

The project is funded by Other Funds through assessments to state agencies.

Resources The project will be staffed internally by a dedicated project team and externally with contracted professional services. Staff from DAS’s Workday Program will be key project resources as experts on the State’s current Workday architecture and configuration, to create system and payroll operational documentation, and to help create testing use cases and coordinate system and user testing activities.

The project will employ the services of an IQMS contractor to identify risks, recommend mitigation strategies and monitor project performance.

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Throughout the project, agency subject matter experts from agency business areas will be brought onto the project as expanded team members as needed to assist with requirement validation and system business process design activities, perform acceptance testing of the system functionality, and to create education content for an enterprise-wide train-the-trainer program for various business areas. Further, participants from other agencies will be involved in assisting their agencies with implementation (e.g., changes to integrations), communication, training, and other readiness activities.

The project management plans will outline project roles and responsibilities as well as the supporting governance structure.

Key Stakeholders The Statewide Payroll Transformation Project will have a significant impact on state employees and agencies using Workday Payroll. Key stakeholders include:

• All state employees, including boards and commissions and judicial and legislative branches, who receive pay from the Workday Payroll system

• Governor’s Office

• Oregon State Legislature

• Oregon Judicial Department

• Legislature and the Legislative Fiscal Office (LFO)

• Chief Human Resources Office (CHRO)

• Chief Financial Office (CFO)

• Enterprise Information Services (EIS)

• Agency directors

• Agency Payroll Managers and all agency payroll departments

• Agency Human Resources Managers and all agency HR departments

• Budget directors and all agency budget offices

• Labor unions

• Public Employees Retirement System (PERS)

• Public Employees’ Benefit Board (PEBB)

Guiding Principles The following guiding principles are intended to guide decisions and actions throughout the project to ensure the desired outcomes are achieved.

• User-Centric Approach: Intentionally make decisions with the needs, impacts, and experience of our Workday system users in mind; primarily these are employees, supervisors, and agency HR and Payroll office staff. Actively seek out and incorporate user input from early design phases through development, testing, and implementation. Create a user experience that leads to accurate, transparent, and predictable employee pay.

• Future forward: Challenge current practices and design and build the system with a forward-thinking mindset to drive transformation and innovation.

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• Transparency: Provide clear and open communication throughout the project lifecycle.

Share progress, risks and issues, and information in a timely manner to support project governance and alignment on the project’s status and direction.

• Collaboration: Listen to diverse perspectives, share knowledge, and work inclusively with our stakeholders and vendors.

• Maximize Workday functionality: Support Software as a Service (SaaS) ideals by configuring the system as designed, avoiding unnecessary customization and manual workarounds. Leverage Workday and industry standard practices to simplify and optimize business processes.

• Comprehensive documentation: Deliver complete, accurate, and useful operational and system documentation that enables employees to confidently understand and perform their payroll-related duties. Project decisions and configuration changes will be documented during the project and appropriately reflected in operational documentation.

• Accountability: While the project team is collectively accountable for the project outcomes, every team member is responsible for the quality and accuracy of their assigned deliverables.

Assumptions, Constraints, and Risks This section defines high-level assumptions, limitations and restrictions, and risks that will impact the project’s decision making and overall approach.

Assumptions Project planning and execution will be guided by the following assumptions:

• Workday is the state’s HR and payroll system of record. The state will continue to use Workday for payroll processing, human resources management, time and attendance tracking, and absence and leave management among other functionalities, as the system is technically capable of supporting the structural changes to pay practices.

• State agency resources (e.g., subject matter experts, testers) will be available for timely consultation and involvement during the requirements, design, and user acceptance testing phases. Additionally, agencies will perform testing for their specific use cases (e.g., collective bargaining agreements, employee types, work schedules, etc.).

Constraints These constraints – schedule, scope, budget, and resources – impact planning, stakeholder expectations, and decision making throughout the project.

Area Flexibility Explanation Scope Limited flexibility The core scope for the project is the successful implementation of the three structural pay practice changes. While these changes are fixed and represent the minimal success criteria for the project, there is

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Schedule Fixed Structural pay practice changes must be implemented on or before July 1, 2027. Sufficient time must be allocated for testing and go-live readiness.

Budget Limited flexibility (highly constrained)

The project is operating with a limited budget within a broader environment of DAS and enterprise resource constraints. Within the budget there is no flexibility in how the revenue to pay for the project is earned, and limited flexibility in how the resources are used. For instance, there is flexibility in how the work is executed, such as the use of state versus vendor resources, and how vendors’ statements of work are defined to maximize effectiveness and value.

Resources Moderate flexibility DAS has limited employees with the requisite technical knowledge of the Workday system configuration and tools. DAS will need to manage capacity constraints carefully to support both day-to-day operational needs and project needs. Further, DAS must invest in employees during the project to support both implementation and to build the knowledge and expertise needed to continue support and improve operations after going live with transformed payroll practices.

Risks The Statewide Payroll Transformation Project is a high-risk project, impacting people, processes, and technology. Key areas of project risk include:

• Enterprise readiness – Failure to successfully execute statewide change management, communication, and training could result in payroll errors, confusion, employee dissatisfaction, and resistance. Readiness activities must address employees’ trust in the system and processes. Dissatisfaction could be displayed through grievances and new lawsuits.

• Scope definition and management – Insufficiently defined and documented requirements and unmanaged changes to requirements during implementation could lead to noncompliance with collective bargaining agreements and state and federal law, rework, budget overruns, missed deadlines, and/or a solution that does not meet stakeholder expectations.

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• Testing – Insufficient time for comprehensive testing could lead to payroll errors and/or lack of employee confidence in the solution.

• Resources – Limited staff with the required technical knowledge and limited availability of key state agency resources (business and technical) to support implementation (e.g., testing) could lead to configuration errors and delayed or incomplete testing.

• Project versus operational activities – Competitive demand for employee resource (business and technical) time and skill sets to participate simultaneously in project and operational activities could conflict with maintaining the project schedule or impair quality.

• Timeliness in decision making - Delays in reviews, approvals, and decision making could delay or decrease the timeframe for other activities and cause missed deadlines.

The risk and issue registries will be the repository for tracking all project risks and issues according to the processes detailed in the Risk and Issue Management Plan.

Project Charter

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Approvals

Betsy Imholt, Executive Sponsor Date Director, Department of Administrative Services

Rob Hamilton, Sponsor Date State Controller, Department of Administrative Services

Jessica Knieling, Sponsor Date Chief Human Resources Officer, Department of Administrative Services

Renee Royston, Sponsor Date Enterprise Workday System Director, Department of Administrative Services

11/25/2025

11/25/2025

12/2/2025

12/3/2025

Approvals