NZ Report / Proposal Template - State Services Commission

2 Introduction
2.1 The Regional Prisons Development Project (RPDP) is a major construction
programme undertaken by the Department of Corrections (the Department). The project
involves the delivery of new prisons in Northland (referred as Northland Region
Corrections Facility or Northland), Auckland (referred to as Auckland Women’s) North
Waikato (referred to as the Spring Hill Corrections Facility or Spring Hill) and Otago
(referred to as the Otago Region Corrections Facility or Otago).
2.2 The focus of this review is on the Spring Hill and Otago facilities which are located
near Meremere and Milburn respectively. The other two facilities (located at Ngawha and
Manukau) have been considered to the extent that they have assisted understanding of
the arrangements at the Spring Hill and Otago sites.
2.3 Both the Spring Hill and Otago projects are still under construction. Spring Hill is
due for completion by July 2007 and Otago by March 2007. A key driver for the review is
the significant increase in the estimated cost for these projects. As part of Budget 04, the
costs for Spring Hill and Otago were forecast to be $248 million and $161 million
respectively. As part of Budget 05, these estimates were increased to $283 million and
$175 million respectively. These estimates were revised further in light of detailed costing
analysis and reported to Cabinet in December 2005. Spring Hill is expected to cost $380
million and Otago’s cost has been estimated to be $218 million; a combined increase of
approximately 31% over and above the Budget 05 estimates.
2.4 In light of the cost increases, the Cabinet invited the State Services Commissioner,
in consultation with the Treasury, to independently review the processes, system and
contracting practices at the Spring Hill and Otago prisons. PricewaterhouseCoopers has
been engaged by the Commission to undertake the independent review.
Review Objectives
2.5 The primary objective of the review is to learn lessons from the Spring Hill and
Otago projects for the benefit of future capital projects. To this end, the review is to
recommend best future practices that can be applied to future projects in the Department
and, if relevant, to the wider state sector.
2.6 A second objective for the review is to identify the key drivers and causes of the
cost escalation.
Review Scope
2.7 In order to meet the objectives for the review, its terms of reference have required:
• an evaluation of the end-to-end process of designing, costing, procuring,
scheduling and project management of the new facilities;
• an assessment of the adequacy and quality of approach in these areas against
best practices in the public and private sectors;
• an assessment of project governance and management; and
• a review of the quality and timeliness of reporting to Ministers for capital projects of
this size.
Introduction 6