UtiliCorp United and Andersen Consulting are engaged in a legalbattle over fees for work Andersen did for UtiliCorp that theclient says spiraled to more than twice the amount agreed upon.Most recently, UtiliCorp filed a $10 million suit in a Missouricourt charging Andersen with negligence and failure to live up toterms of a 1996 contract for administrative software and systems.The suit is a response to a complaint filed in March by Andersenseeking payment of fees UtiliCorp had withheld.

UtiliCorp claims Andersen failed to properly design and managethe project, resulting in significant cost overruns and financialdamages to UtiliCorp exceeding $10 million. According toUtiliCorp’s complaint, the company was told in January 1997 theproject would cost $9.3 million, which UtiliCorp agreed to. “Fornine months, the Andersen managers of the Enterprise Supportproject did not advise responsible UtiliCorp executives that thebudget Andersen provided to UtiliCorp was grossly erroneous or thatthe true cost of the project would be more than double Andersen’sbudget. In addition, the Enterprise Support project was scheduledfor completion in January 1998. The work progressed more slowly andAnderson failed to timely disclose to responsible UtiliCorpexecutives the significant amount of work remaining to be done.”

According to UtiliCorp, by Andersen estimates the project’s costgrew to $11.5 million, then $12.1 million. “In or around December1997, Andersen told UtiliCorp that the cost of the project would be$16.2 million. In January 1998, Andersen revealed to UtiliCorp thatthe actual cost would be even higher – $17.6 million.” Further,UtiliCorp claims, Andersen knew or should have known but failed totell UtiliCorp its computer hardware would require an upgrade touse the software. UtiliCorp said it spent $1.5 million on computerupgrades.

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