NZ Report / Proposal Template - State Services Commission

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procurement. These considerations need to applied on a project-by-project basis and decisions documented. • The CWA methodology requires careful management and sound contracting experience. The Department entered the RPDP without recent major construction project experience. It is building that capability. This needs to continue if further new prisons are proposed. At a wider level, consideration may need to be given as to whether the public sector generally needs to build its contracting expertise for major projects (although this would depend on there being a sufficiently large scope of future projects). • CWA, along with any form of procurement, needs to be based on sound facility designs. In turn, this requires agreed standards and adequate design capacity. • As part of the CWA member selection process, it may be possible in some circumstances to seek indicative target costs. This would help to provide a degree of market testing of costs. However, to do this requires that the following conditions be met which, in the situation of Spring Hill and Otago, was not the case: – there be sufficient contractors prepared to engage in this process; – designs be developed to a stage sufficient to support estimation of costs – the Department have the resources to support the process; and – sufficient time be available for the process to work through. • The development of the TOC is a fundamental part of the CWA methodology and needs to be completed sooner than has been the case in the Spring Hill and Otago projects. This emphasises further the need for timely completion of designs and appropriate levels of project management resource. • Until the TOC is underway, cost estimates are indicative only. This needs to be made clear to decision makers. Once TOC estimates begin to emerge, they should be reported regularly so as to provide maximum opportunity to modify requirements if budgets are under pressure. Methodology and Processes: Design, Costing, Procurement and Scheduling 44
6 Governance and Project Management Key Findings: Achievements • New Zealand will have four regional prison projects completed in time to meet the growth in the prison population. • The Steering Group comprised senior management in the Department and this group recognised gaps in knowledge and expertise that needed to be filled, namely: experienced Project Director, Audit and Independent Review processes, acquisition of external large scale project management expertise, and Treasury representation. • Changes to project governance and management structures from late-2005 have greatly increased the quality of review, reporting and decision-making on the projects. This includes the establishment of a Programme Management Office (PMO) in February 2006 to assist with the project and risk management dimensions at governance and project management levels. • Formation of the Construction Sub-committee comprising appropriate expertise and with responsibility for decision-making advice to the wider group on complex technical matters. • These arrangements and changes have made significant improvements to the quality of reporting, decision-making and potential for risk management. We note that the PMO has potential to significantly assist the programme governance, but that this is still early days for this role. • Mid-2005, a senior Department manager was appointed to each of the CWA Principals Groups at Otago and Spring Hill sites. This has provided opportunity for the Department to be represented on the Principals Group by one of its senior managers and to more directly support the role of the Project Director. This arrangement has also provided for a more direct link between the senior management team and the Principals Group. • At site project management level, the departmental interest has been represented by appointment of permanent departmental staff as CWA Manager at Otago and Auckland Women’s. • While it is outside of the scope of this review to assess the specific project management methodologies at respective sites, we observe that the project management approaches of the main CWA partners do employ expected tools for project management of planning, project risks, costing, progress monitoring, resource management. We also note that RPDP played a role in developing planning and reporting tools for the programme. Challenges • The Steering Group composition did not include personnel with strong large scale project management experience (mainly line managers) until January 2004 with the appointment of the independent project consultant to the Group. • Prior to review in 2005, the role of the Steering Group was not consistently clear to all members in terms of the Group’s advisory and/or governance responsibilities. • Prior to review in 2005, there was insufficient formal reporting to the Steering Group to support key decisions and to signal project risks adequately. Formal reporting tended to Governance and Project Management 45
Page 1: Report of the State Services Commis
Page 5 and 6: Disclaimer In preparing this report
Page 7 and 8: 1 Executive Summary 1.1 Constructio
Page 9 and 10: the development of the TOC until mu
Page 11 and 12: cost should be seen as indicative o
Page 13 and 14: 2.8 As indicated above, the scope o
Page 15 and 16: 3 Background 3.1 Before discussing
Page 17 and 18: 3.12 While the merits of the new de
Page 19 and 20: 4 Key Drivers and Causes of Cost Es
Page 21 and 22: Otago Cost Contributors ($ million)
Page 23 and 24: • The types of building included
Page 25 and 26: • sub-contractors’ margins have
Page 27 and 28: • the impact of the projects on l
Page 29 and 30: Lessons Learned: • Notwithstandin
Page 31 and 32: Costing CWA methodology provided a
Page 33 and 34: • Auckland Women’s was a full C
Page 35 and 36: 5.20 Several points should be noted
Page 37 and 38: • The CWA methodology has been pu
Page 39 and 40: • • Department engaged CMS in r
Page 41 and 42: • Outsourcing arrangements - thes
Page 43 and 44: the hyb rid CWA subject to the cond
Page 45 and 46: • • where complexity gives rise
Page 47 and 48: 5.65 A probity audit of the selecti
Page 49: determination of TOC/QRA and the in
Page 53 and 54: Public Sector Project Governance an
Page 55 and 56: 6.12 It is noted that these arrange
Page 57 and 58: Previous Arrangements 6.20 While th
Page 59 and 60: Department ‘Client’ Representat
Page 61 and 62: • While it is outside of the scop
Page 63 and 64: 7 Reporting to Ministers Key Findin
Page 65 and 66: • it is a core expectation that p
Page 67 and 68: • The report prepared by the Depa
Page 69 and 70: elationships and, as part of this,
Page 71 and 72: • the gain and pain is linked to
Page 73 and 74: Decision-making Effective decision-
Page 75: The decision-making for each projec

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