NZ Report / Proposal Template - State Services Commission

information at the project level that was emerging from August 2005). Decisions were
often taken with discussion, but before the provision of supporting information. The
Steering Group comprised a majority of busy Departmental functional line managers, with
heavy reliance on contractors for advice regarding large construction project decisions.
These managers did address some knowledge gaps through the appointment of an
independent member with construction, project and procurement methodology experience
in 2004, and the conduct of internal and external audits to assess aspects of process.
1.19 Prior to 2005, there was a lack of clarity amongst some, including Steering Group
members, of the role of the Steering Group as to its role as an advisory group
representing the different areas of Department endeavour, or a governance group. This
may have affected the strength of the Steering Group to challenge the issues with
reporting and information for key decisions.
1.20 Due to the pressing nature of the growth in the projected prison population, the
completion of the projects to the proposed schedule became a paramount factor in
decision-making.
1.21 Overall, these arrangements made it very challenging for the Steering Group to
assess governance risks and to communicate these beyond the Steering Group. The
Steering Group seemed surprised to learn of the actual size of the cost escalations in late
2005.
1.22 The nature and level of reporting to Ministers was also an issue. In our view, the
information provided to Ministers as part of Budget 05 did not sufficiently or clearly signal
the uncertainty around the estimates and the risk of cost increase. Further, the fiscal risks
should have been on the radar for the pre-election fiscal update in mid-August 2005, at
least in a qualitative sense.
Lessons Learned
1.23 Growth in the prison population drives the need for additional capacity. Given the
long lead times involved with building new prisons, a longer term view of future capacity
requirements is needed (than is provided by the Ministry of Justice five year forecasts) in
order to enable the Department to appropriately plan, resource and schedule the delivery
of additional greenfield capacity.
1.24 The choice of CWA methodology has assisted the Department to deliver the
required increase in capacity. However, CWA will not be suited to all projects. There is a
need to identify the conditions under which CWA is likely to be preferred ahead of other
forms of procurement. The methodology chosen should be justified on a project by
project basis.
1.25 The CWA methodology adopted by the Department requires careful and
experienced management to protect the Crown’s interests. A blend of competencies and
experience (commercial, construction and public sector management) is required for
effective management. For future projects of this size and complexity, sponsoring
agencies need to be confident that they have the appropriate mix of competencies and
these are represented within the CWA Principal’s Group.
1.26 The development of the TOC is a central part of the CWA methodology adopted by
the Department. It needs to be finalised sooner than has been the case with respect to
Spring Hill and Otago. Specifically, the TOC should ideally be completed at, or about, the
time construction commences. However, appropriate time and resources need to be
planned for to enable this. Until the draft TOC is well developed, estimates of construction
Executive Summary 4