Session 2008/2009

Sixth Report

PUBLIC ACCOUNTS COMMITTEE

Report on Shared
Services for Efficiency –
A Progress Report

Together with the Minutes of Proceedings of the committee
relating to the report and the minutes of evidence

Ordered by The Public Accounts Committee to be printed 11 December 2008

Report: 21/08/09R (The Public Accounts Committee)

EMBARGOED UNTIL 00:01 AM on Thursday, 15 January 2009

This document is available in a range of alternative formats. For more information please contact the Northern Ireland Assembly, Printed Paper Office, Parliament Buildings, Stormont, Belfast, BT4 3XX Tel: 028 9052 1078

Public Accounts Committee

Membership and Powers

The Public Accounts Committee is a Standing Committee established in accordance with Standing Orders under Section 60(3) of the Northern Ireland Act 1998. It is the statutory function of the Public Accounts Committee to consider the accounts and reports of the Comptroller and Auditor General laid before the Assembly.

The Public Accounts Committee is appointed under Assembly Standing Order No. 51 of the Standing Orders for the Northern Ireland Assembly. It has the power to send for persons, papers and records and to report from time to time. Neither the Chairperson nor Deputy Chairperson of the Committee shall be a member of the same political party as the Minister of Finance and Personnel or of any junior minister appointed to the Department of Finance and Personnel.

The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.

The membership of the Committee since 9 May 2007 has been as follows:

Mr Paul Maskey*** (Chairperson)
Mr Roy Beggs (Deputy Chairperson)

Mr Thomas Burns** Mr Trevor Lunn
Mr Jonathan Craig Mr Mitchel McLaughlin
Mr John Dallat Ms Dawn Purvis
Mr George Robinson**** Mr Jim Wells*
Mr Jim Shannon*****

* Mr Mickey Brady replaced Mr Willie Clarke on 1 October 2007

* Mr Ian McCrea replaced Mr Mickey Brady on 21 January 2008

* Mr Jim Wells replaced Mr Ian McCrea on 26 May 2008

** Mr Thomas Burns replaced Mr Patsy McGlone on 4 March 2008

*** Mr Paul Maskey replaced Mr John O’Dowd on 20 May 2008

**** Mr George Robinson replaced Mr Simon Hamilton on 15 September 2008

***** Mr Jim Shannon replaced Mr David Hilditch on 15 September 2008

Table of Contents

List of abbreviations used in the Report

Report

Executive Summary

Summary of Recommendations

Introduction

Identifying the Need for and the Scope of the Projects and the Procurement Options Chosen

The Importance of Identifying Anticipated Benefits to be Derived from Projects and Managing Risks to Delivery

The Delivery of the Reform Programme and Learning Lessons for Future Projects

Appendix 1:

Minutes of Proceedings

Appendix 2:

Minutes of Evidence

Appendix 3:

Chairperson’s letter of 17 November 2008 to Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel

Correspondence of 1 December 2008 from Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel

Chairperson’s letter of 8 December 2008 to Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel

Correspondence of 10 December 2008 from Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel

Appendix 4:

List of Witnesses

List of Abbreviations used in the Report

NICS Northern Ireland Civil Service

The Department/DFP Department of Finance and Personnel

CAL Centre for Applied Learning

ICT Information and Communications Technology

C&AG Comptroller and Auditor General

SIB Strategic Investment Board

SRO Senior Responsible Officer

DETI Department of Enterprise, Trade and Investment

C2K Classroom 2000

BFO Best and Final Offer

CPD Central Procurement Directorate

ISNI Investment Strategy for Northern Ireland

Executive Summary

Introduction

1. The Northern Ireland Civil Service (NICS) is currently undertaking a major programme of reform, known as the Reform Agenda, which is being taken forward by the Department of Finance and Personnel (DFP). This an ambitious programme of projects that seeks to improve NICS capacity and capability through improving processes and infrastructure and developing skills and people, so that they can better service the public. Central to the programme are seven key projects (the projects) with an estimated value of £3 billion. These projects provide for a service-wide consolidation and redesign of business processes into stand alone centres or ‘shared services’ centres.

2. The seven projects which are, in some cases, already beginning to change the way the NICS operates are:

HR Connect – provides personnel services from a shared service centre;

Workplace 2010 – aims to introduce a modern working environment in the NICS;

Records NI – an IT based common storage facility for all of the NICS records;

Account NI – provides centralised transaction processing services from a shared service centre;

Network NI – the delivery of voice, video and data communication in a high speed network service connecting all NICS locations;

Centre for Applied Learning (CAL) – provides quality training services mainly to NICS departments and agencies, including the Senior Civil Service; and

IT Assist – a new information and communications technology (ICT) shared service centre.

3. The projects are currently a work in progress: CAL was established in 2006; Records NI has effectively been rolled out to all departments, although there is a great deal of ongoing post implementation monitoring and evaluation of the project; the agreements for HR Connect, Account NI, IT Assist and Network NI are being implemented and should be fully operational during 2009. In October 2008, DFP decided to suspend the procurement of the Workplace 2010 project and will review the position in January 2009, when it can take stock and see where and how the procurement should be advanced.

4. As this is a progress report the Committee is not in a position to make a definitive statement on the projects’ value for money. Nevertheless, the Committee is interested in the value for money issues that have been identified to date and the lessons that the Civil Service should have learned. The C&AG’s report has provided the Committee with a valuable first run over this important group of projects that are critical to the future effectiveness of Northern Ireland’s public services. While the Committee is reassured by some of the evidence of progress, it is clear that some key projects are already experiencing significant delays and, in the case of Workplace 2010, suspension. There remains an enormous management challenge for DFP to complete the implementation phases and to move to successful operation of these projects. In the Committee’s view, the Department’s capacity to do this is still unproven.

Identifying the Need for and the Scope of the Projects and the Procurement Options Chosen

5. In three of the projects (Account NI, HR Connect and Network NI), there were significant changes between the approval of the Outline Business Cases for each project and the signing of the deals. The Committee acknowledges that, during the course of any procurement, the eventual service to be delivered may, on occasions, change from what was envisaged in the Outline Business Case. While this can lead to delays, these can be minimised if projects are properly thought through or requirements fully specified at the outset. However, it is clear that, in a number of these critical projects, this had not been done. Departments must fully consider all options and potential risks to the procurement process before going to the market. Failure to do so will make it more difficult to demonstrate that value for money has been secured.

The Importance of Identifying Anticipated Benefits to be Derived from Projects and Managing Risks to Delivery

6. DFP explained to the Committee that it had instigated the suspension of the Workplace 2010 in October 2008 as there had been significant media speculation that the two remaining bidders were in discussions about a possible merger and the current unprecedented turbulence in financial markets.

7. The potential merger of the two bidders is a major concern. In the Committee’s view, competitive tension in the procurement process has been eroded since April 2008. Furthermore, the turbulence in the property market has been prevalent for some time. Given the significance of both these factors the Committee acknowledges that the Department had no choice but to suspend the procurement. However, the Committee is concerned by DFP’s admission that, despite the slump in the property market, it has not revalued or sought to revalue the 65 properties that are due to be transferred to a private sector partner as part of the procurement. This is vital if the Department is to make informed judgements on the reasonableness of any bids received and on the overall value for money and affordability of the Workplace 2010 procurement.

8. The Workplace 2010 procurement was also the subject of a legal challenge from an unsuccessful bidder. While DFP was convinced that it could win this case, despite acknowledged shortcomings in its evaluation methodology and in debriefing bidders, it settled the case, on advice from counsel, at a cost to the taxpayer of £225,000. The full cost to the Department was £1.243 million. The Committee considers that concluding a settlement, where departments are convinced of resisting legal challenge, sends absolutely the wrong signal to other unsuccessful bidders about the government’s determination to stand over their tender processes when there is a robust case to do so.

9. The Committee is encouraged that DFP has taken some steps to develop the skills and capacity of its staff. However, it is evident that the NICS was ill prepared to face the significant challenge presented by these projects. The Committee notes that research commissioned by DFP/Strategic Investment Board (SIB) in 2006, raised concerns over the skills base and capacity of the NI Public Sector to deliver all the elements of the Investment Strategy for Northern Ireland and the Reform Agenda.

10. The Committee considers that departments should always undertake a review of their capability to carry through major public sector projects. DFP has a responsibility to nurture, develop and harness essential skills and ensure that they are deployed appropriately in future projects. The Centre for Applied Learning (CAL) has clearly being identified by DFP as key to ensuring that it establishes learning and development opportunities to allow public sector staff to meet those competencies. It is important that that Centre is adequately resourced to deliver a quality training programme.

11. The Committee is amazed that one individual was given Senior Responsible Officer (SRO) responsibility for four of these major projects. To prepare for future large scale procurements, departments should identify the pool of NICS staff with the skills, experience and availability to be an SRO and, if necessary, develop and train additional staff for this demanding role.

12. The Committee regards the requirement for DFP Supply approval as an absolutely key safeguard which provides assurance to the Assembly that decisions to commit resources have been subjected to independent scrutiny. The Committee considers that there is a need for DFP to draw up clear guidelines regarding the circumstances when DFP Supply approval is required for projects of this nature for which DFP itself is responsible.

13. The Committee acknowledges the work currently being completed to identify the full range of benefits that can be realised from these projects as they are rolled out over the next decade and beyond. The Committee is encouraged that this work is being developed further in DFP, by taking the model of benefit realisation for each project and applying it in practice in various parts of the Department. However, the absence of baseline data makes it much more difficult for the Department to demonstrate, and for the Committee to assess, whether value for money has been maximised. The Committee is also concerned that, without any clear specification of the benefits that would accrue, there could still be systems that are not fit for purpose.

The Delivery of the Reform Programme and Learning Lessons for Future Projects

14. To date, the Gateway process has been largely adopted but with some exceptions. The Department explained that the reason for not applying Gateway to CAL was because it was a small project that did not justify Gateway reviews. By definition, all the reform projects are central to the future organisation and delivery of public services and accordingly, in the Committee’s view, projects should be subjected to Gateway reviews at the prescribed stages of their procurement, implementation or service operation. This is a general lesson for all departments.

15. Furthermore, as the Reform Programme represents a major commitment of resource, it is important that the Committee and the taxpayer are assured that this investment is achieving the benefits envisaged and that transparent evidence of the costs incurred in achieving those benefits is provided.

16. Records NI aims to provide a common storage facility for all of the NICS known as an Electronic Document and Record Management System. This will form the basis for Northern Ireland’s Public Record. As such it is important that those using the system are properly trained and that the system is used correctly to ensure that a complete and accurate public record is maintained. It is also essential that the C&AG has the necessary access rights and privileges to Records NI to allow him to carry out his statutory functions.

Summary of Recommendations

Identifying the Need for and Scope of Projects and the Procurement Options Chosen

1. The Committee recommends that, when considering procurement programmes or projects, departments must fully consider all options and potential risks to the procurement process before going to the market. Failure to do so will make it more difficult to demonstrate that value for money has been secured (see paragraph 12).

Targeting the Importance of Identifying Anticipated Benefits to be Derived from Projects and Managing Risks to Delivery

2. The Committee recommends that the Department undertakes a revaluation of the public sector land and property included in the Workplace 2010 procurement. This is vital if the Department is to make informed judgements on the reasonableness of any bids received and on the overall value for money and affordability of the Workplace 2010 procurement (see paragraph 17).

3. The Committee recommends that all programmes and projects should have challenging yet realistic timetables for procurement and implementation. These should take account of the time that may be necessary to get the right deal supported by a robust tender process. This is important, particularly in the context of delivering major reforms such as the Reform Agenda and the Investment Strategy both of which raise expectations. Subsequent failure to deliver can impact negatively on public and market confidence. Delay inevitably has a cost implication and may adversely affect the value for money assessment (see paragraph 20).

4. The Committee is of the view that concluding a settlement, where departments are convinced of resisting legal challenge, sends completely the wrong signal to other unsuccessful bidders about the government’s determination to stand over their tender processes when there is a robust case to do so. Government should not be, nor be seen to be, a soft touch in relation to threats of litigation arising from bidders (see paragraph 22).

5. The Committee considers that DFP has a responsibility to nurture, develop and harness essential skills and ensure that they are deployed appropriately in future projects. This should include putting in place career structures that create and retain a cadre of public sector procurement professionals, with experience of complex procurements. This should also be supported with a mechanism for ensuring that those staff can be deployed to appropriate projects (see paragraph 26).

6. The Committee recommends that departments should always undertake a review of their capability to carry through major public sector projects. Those plans should consider and address the skills and resources available, both internally and across the wider public sector, to manage the projects and properly identify the need for consultants to fill any skills or resource gaps (see paragraph 27).

7. The Committee recommends that where individuals are designated as a Senior Responsible Officer (SRO) for a major project, they should not simultaneously be given lead responsibility for a range of other projects. To prepare for future large scale procurements, departments should identify the pool of NICS staff with the skills, experience and availability to be an SRO and, if necessary, develop and train additional staff for this demanding role (see paragraph 30).

8. The Committee requires an assurance from DFP that there is absolutely clear guidance regarding the circumstances when DFP Supply approval is required for projects of this nature for which DFP itself is responsible (see paragraph 34).

9. The Committee recommends that all NICS departments follow the lead provided by DFP and adopt a register of benefits expected from the reform projects. For future projects departments must ensure that benefits realisation plans are developed at the outset and clearly show what will happen, where and when the benefits will occur and who will be responsible for their delivery. In addition, through a tracking system, there should be evidence of realisation of actual benefits (see paragraph 38).

10. The Committee wishes to emphasise that the groundwork for ensuring effective performance of the Reform programme should be put in place without undue delay. The Committee recommends that DFP ensures that all NICS departments have access to sufficient staff with appropriate skills to manage the new arrangements and the operational aspects of the associated contractual agreements (see paragraph 40).

The Delivery of the Reform Programme and Learning Lessons for Future Projects

11. By definition, all of these reform projects are central to the future organisation and delivery of public services. The Committee recommends that all such projects, including Centre for Applied Learning, undertake Gateway reviews at the prescribed stages in their procurement, implementation and service operation. This includes Gate 5 reviews (Benefits Realisation) for each project when it reaches that particular stage. (see paragraph 43).

12. The Committee recommends that, as part of the post project evaluation of these major projects and in the interest of transparency, information is made available on the full costs of these major projects. In addition, the key findings of any lessons learned reports should be circulated to departments and made available to other government organisations negotiating similar contracts. The Committee looks to DFP and the C&AG to ensure that at an appropriate point, the costs are fully assessed and made available to the Committee (see paragraph 45).

The Committee emphasises that the new processes and practices introduced by Records NI must not compromise the maintenance of Northern Ireland’s public record and the ability of the C&AG to carry out his statutory functions in providing the necessary assurance to the Committee on departments’ use of resources. The Committee would like an assurance from DFP that it is satisfied that the integrity of the public record will not be diminished and that the C&AG’s access rights have been circulated to, and understood by, all departments (see paragraph 48).

Introduction

1. The Public Accounts Committee met on 13 November 2008 to consider the Comptroller and Auditor General’s (C&AG’s) report “Shared Services for Efficiency – A Progress Report”. The witnesses were:

• Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel (DFP)
• Mr David Orr, Director of Central Personnel Group, DFP;
• Mr Derek Baker, Director of Corporate Services, DFP;
• Mr David Thomson, Treasury Officer of Accounts, DFP; and
• Mr John Dowdall CB, Comptroller and Auditor General.

2. The Northern Ireland Civil Service (NICS) is currently undertaking a major programme of reform, known as the Reform Agenda, which is being taken forward by the Department of Finance and Personnel (DFP). This an ambitious programme of projects that seeks to improve NICS capacity and capability through improving processes and infrastructure and developing skills and people, so that they can better service the public. Central to the programme are seven key projects (the projects) with an estimated value of £3 billion. These projects provide for a service wide consolidation and redesign of business processes into stand alone centres or ‘shared services’ centres.

3. The seven projects which are, in some cases, already beginning to change the way the NICS operates are:

HR Connect – provides personnel services from a shared service centre;

Workplace 2010 – aims to introduce a modern working environment in the NICS;

Records NI – an IT based common storage facility for all of the NICS records;

Account NI – provides centralised transaction processing services from a shared service centre;

Network NI – the delivery of voice, video and data communication in a high speed network service connecting all NICS locations;

Centre for Applied Learning (CAL) – provides quality training services mainly to NICS departments and agencies, including the Senior Civil Service; and IT Assist – a new information and communications technology (ICT) shared service centre.

4. The projects are currently a work in progress: CAL was established in 2006; Records NI has effectively been rolled out to all departments, although there is a great deal of ongoing post-implementation monitoring and evaluation of the project; the agreements for HR Connect, Account NI, IT Assist and Network NI are being implemented and should be fully operational during 2009. In October 2008, DFP decided to suspend the procurement of the Workplace 2010 project and will review the position in January 2009, when it can take stock and see where and how the procurement should be advanced.

5. As this is a progress report the Committee is not in a position to make a definitive statement on the projects’ value for money. Nevertheless, the Committee is interested in the value for money issues that have been identified to date and the lessons that the Civil Service should have learned. The C&AG’s report has provided the Committee with a valuable first run over this important group of projects that are critical to the future effectiveness of Northern Ireland’s public services. While the Committee is reassured by some of the evidence of progress, it is clear that some key projects are already experiencing significant delays and, in the case of Workplace 2010, suspension. There remains an enormous management challenge for DFP to complete the implementation phases and to move to successful operation of these projects. In the Committee’s view, the Department’s capacity to do this is still unproven.

6. In taking evidence on the C&AG’s report, the Committee focused on three main issues. These were:

• identifying the need for and the scope of the projects and the procurement options chosen;
• the importance of identifying anticipated benefits to be derived from projects and managing the risks to delivery; and
• the delivery of the reform programme and learning lessons for future projects.

Identifying the Need for and the Scope of the Projects and the Procurement Options Chosen

7. In three of the projects (Account NI, HR Connect and Network NI), there were significant changes between the approval of the Outline Business Cases for each project and the signing of the deals. In the Account NI project the contract length and service requirement were expanded; in HR Connect, in addition to the length of the contract and service requirement being extended, the procurement solution was revised; and in Network NI the scope of the project was reduced significantly.

8. In relation to Account NI, DFP pointed out that, shortly after the procurement process started, the supplier of the original software told it that it would no longer support the software for the existing NICS financial systems. Rather than take the risk of running for another three or four years on the old, unsupported software and wait for new software coming in, DFP decided that it would update the old software. It then entered negotiations with the preferred bidder to take responsibility for the old systems, so that, as the new systems were rolled out, it would be dealing with one supplier and not two. This was a major change and was one of the reasons for the long delay in this project.

9. On HR Connect, the project team engaged in an intensive period of investigation, research and consultation with potential bidders, including site visits and workshops. This was done in order to gather ideas about the kind of services that might be provided and how best to apply new technology opportunities in the Civil Service. While the eventual solution resulted in a much greater degree of outsourcing than originally envisaged, the Committee notes that the various bidders had to spend significant time, effort and energy on understanding how the human resources function in the Civil Service operated and the associated risks. The Department acknowledged that this resulted in additional time being taken to procure the new system. It also considered that the cost increase from £328 million to £465 million was acceptable, when set against the increase in the contract period from 10 years to 15 years, higher level of upfront capital payments and a lower level of service charges payable to the contractor over the term of the contract. The Department is hopeful that the decision will stand the test of time.

10. The original concept of the Network NI project, referred to at that time as the Broadband Aggregation Project, was that it would embrace not just the Civil Service and its core departments, but the wider public sector in Northern Ireland, including the Health Service and local government. The Outline Business Case was approved in March 2005 on this basis and expressions of interest from prospective suppliers sought in January 2006. This resulted in valid initial responses from 11 suppliers of whom 7 were asked for more detailed proposals. The Committee was surprised to learn that, by September 2006, the project’s scope had been significantly reduced. The Committee was told that the Department of Enterprise, Trade and Investment (DETI) had advised DFP that there was a risk that contracting one supplier for the entire public sector in Northern Ireland would have produced a very dominant supplier and that would have had an adverse impact on the marketplace and on competitiveness in that sector. The decision was then made to limit the Network NI contract to core Civil Service departments, their agencies and the Classroom 2000 (C2K) project in schools.

11. The Committee acknowledges that, during the course of any procurement, the eventual service to be delivered may, on occasions, change from what was envisaged in the Outline Business Case. This can lead to delays in implementing programmes or projects. However, it is clear to the Committee, based on the C&AG’s report and evidence provided by the Department, that a number of these critical projects had not been fully and properly thought through before going to the market place. For example, in Network NI, the Committee questions why the advice on aggregation from DETI had not been forthcoming as far back as 2003, when the Feasibility Study into Aggregation of Public Sector Demand for Broadband was carried out. Furthermore, it is possible, given the level of market interest in this project that the public sector could have secured, through aggregation, a better value for money solution. The Committee would like the C&AG to review the outcome of other public sector broadband tenders that might have been part of this project.

Recommendation 1

12. The Committee recommends that, when considering procurement programmes or projects, departments must fully consider all options and potential risks to the procurement process before going to the market. Failure to do so will make it more difficult to demonstrate that value for money has been secured.

The Importance of Identifying Anticipated Benefits to be Derived from Projects and Managing Risks to Delivery

13. The Workplace 2010 procurement was suspended in October 2008, when the project was at Best and Final Offer (BAFO) stage. DFP explained to the Committee that it had instigated the suspension for two key reasons. First, there had been significant media speculation that the two remaining bidders were in discussions about a possible merger. It had been monitoring the situation since April 2008, when Land Securities announced that it intended to sell its Trillium business. By October 2008, it judged that developments were at a stage where it was right to suspend the procurement until the sale process could be finalised. The second reason was to do with the current unprecedented turbulence in financial markets which has prevented bidders from meaningfully engaging with their financiers. DFP will review the position in January 2009, when it can again take stock and see where and how Workplace 2010 should be advanced.

14. The Department assured the Committee that the Civil Service and the Government is still committed fully to the concept of the Workplace 2010, which is about creating a modern, open working environment for public servants that matches the technological requirements of their jobs and that will enable them to work much more efficiently and cost-effectively. DFP also assured the Committee that there were rigorous legal agreements with both bidders that prevent them from disclosing their bids to each other during their sale process, and that it is content that they are not discussing their Workplace 2010 bids.

15. The potential merger of the two bidders is a major concern. In the Committee’s view, competitive tension in the procurement process has been eroded since April 2008. Furthermore, the turbulence in the property market has been prevalent for some time. Given the significance of both these factors the Committee acknowledges that the Department had no choice but to suspend the procurement.

16. In 2007 the Committee reported on the Transfer of Surplus Land in the PFI Education Pathfinder Projects[1], which recommended that when considering the disposal of property, public bodies should ensure that valuations are updated on a regular basis. The Committee is concerned by DFP’s admission that despite the slump in the property market, it has not revalued or sought to revalue the 65 properties that are due to be transferred to a private sector partner as part of the procurement. In the Committee’s view this is basic and essential information without which the Department is in no position to make a judgement on the value for money of any bids it may subsequently receive.

Recommendation 2

17. The Committee recommends that the Department undertakes a revaluation of the public sector land and property included in the Workplace 2010 procurement. This is vital if the Department is to make informed judgements on the reasonableness of any bids received and on the overall value for money and affordability of the Workplace 2010 procurement.

18. The approved Outline Business Cases for most of the projects included timescales for both contract signature and subsequent implementation period. On many of the projects, procurement times took longer and contract signature dates were significantly later than initially planned. The Committee is concerned that, where procurements do not deliver a signed deal on a date that is close to the original deadline, market confidence may be dented as a result and future projects affected.

19. DFP told the Committee that the projects concerned involved large amounts of money, and they were highly complex. It considered that the changes to circumstances that occur during large scale procurement exercises mean that it is much better to delay and negotiate those changes before signing the contract rather than to try to recover the situation afterwards. The Committee welcomes the Department’s assurances that it has learned from previous procurement exercises that it is better to ensure that the process is carried out correctly rather than to rush through it simply to meet a deadline. However, many of the delays could have been avoided if the procurements had been properly thought through or requirements fully specified at the outset. In addition, it is evident that in some cases the public sector set unrealistic and over ambitious timetables.

Recommendation 3

20. The Committee recommends that all programmes and projects should have challenging yet realistic timetables for procurement and implementation. These should take account of the time that may be necessary to get the right deal supported by a robust tender process. This is important, particularly in the context of delivering major reforms such as the Reform Agenda and the Investment Strategy both of which raise expectations. Subsequent failure to deliver can impact negatively on public and market confidence. Delay inevitably has a cost implication and may adversely affect the value for money assessment.

21. The Workplace 2010 procurement was subject to a legal challenge from an unsuccessful bidder. The Department acknowledged that there were shortcomings in its evaluation methodology and in debriefing bidders, but were adamant that those were not material to, and would not have altered the outcome of the competition. Although the Department was convinced it could win this case, advice from their counsel, on balance of advantage, felt that it was better to conclude a settlement with the unsuccessful bidder in order to prevent further expenditure of public money on litigation. The settlement cost the taxpayer £225,000 and the full cost to the Department was £1.243 million.

Recommendation 4

22. The Committee is of the view that concluding a settlement, where departments are convinced of resisting legal challenge, sends absolutely the wrong signal to other unsuccessful bidders about the government’s determination to stand over their tender processes when there is a robust case to do so. Government should not be, nor be seen to be, a soft touch in relation to threats of litigation arising from bidders.

23. In its report on Use of Consultants[2] the Committee stressed the need for DFP to work with departments and produce a formal strategy to reduce their dependency on external consulting. In the Shared Services projects DFP told the Committee that its approach is to use consultants for specific areas where the skill will not be required in the long term. The Committee notes from the evidence contained in the Account NI Lessons Learned Report, DFP considered that it would have been beneficial, during the consultants selection process, to ensure that NICS had a proper understanding of the project, the resources needed and the role of the consultants. The Report considered that, had the NICS been fully aware of the complexity and level of resources needed, it would at least have been in a better position to recognise the full extent of the resource requirement and level of consultancy input which, in the event, more than doubled to around £2.5 million during the procurement phase. The report also notes that the NICS team did not have the full capacity to undertake the Full Business Case and were therefore unduly dependant on the consultants. The Committee is surprised by this admission as the ability to undertake a Full Business Case is a fundamental skill that will continue to be required within the NICS.

24. The Department assured the Committee that it makes a conscious effort to ensure that there is a skills transfer to in-house staff. The Committee is also encouraged that DFP has taken some steps to develop the skills and capacity of its staff, for example the Centre for Applied Learning (CAL), which has developed additional training courses in programme and project management. The Committee also notes that departments have established programme delivery support units and that a dedicated unit has been established in the Central Procurement Directorate (CPD) for managing the Investment Strategy for Northern Ireland (ISNI) contracts; and a centre of excellence in CPD for training in the Gateway Review process.

25. There is no doubt that these projects challenged the skills and capacity of the NICS. However, it is evident that the NICS was ill prepared to face the challenge. The Committee notes the findings of research commissioned by DFP/SIB in 2006 into the skills base and capacity of the NI Public Sector to deliver all the elements of the Investment Strategy for Northern Ireland and the Reform Agenda. At that stage all of these projects were in the process of procurement or implementation. The Committee is deeply disturbed that only 5% of project managers in ICT projects considered that they had the full range of skills and expertise to deliver on ISNI; and that 73% of Senior Responsible Officers felt that they did not have the full range of skills and experience required to deliver on projects. The Committee has previously expressed concerns over this same issue in its report Transfer of Surplus Land in the PFI Education Pathfinder Projects, Recommendation 9.

Recommendation 5

26. The Committee considers that DFP has a responsibility to nurture, develop and harness essential skills and ensure that they are deployed appropriately in future projects. This should include putting in place career structures that create and retain a cadre of public sector procurement professionals, with experience of complex procurements. This should also be supported with a mechanism for ensuring that those staff can be deployed to appropriate projects.

Recommendation 6

27. The Committee recommends that departments should always undertake a review of their capability to carry through major public sector projects. Those plans should consider and address the skills and resources available, both internally and across the wider public sector, to manage the projects and properly identify the need for consultants to fill any skills or resource gaps.

28. The HR Connect Lessons Learned report stressed that the presence of a Senior Responsible Owner (SRO), who is prepared to drive the business agenda and interact on a regular basis with all key stakeholders, is fundamental to the success of a major Reform project. The Account NI Lessons Learned Report also concluded that key staff needed to resource major projects should be selected with the appropriate skills needed for the project. Those senior staff involved (including the SRO) should also be given the time necessary to manage the project.

29. Given the importance and magnitude of these projects, the Committee is astonished that one individual SRO was given responsibility for four projects. The explanation given was that three of the projects were closely related. The Committee does not accept this rationale. The issue is that any of these projects, particularly a project of the magnitude of Workplace 2010, would be a major burden for one individual without adding more. The Department’s response suggests a lack of understanding within DFP about what exercising effective leadership and responsibility for projects of this nature must inherently involve.

Recommendation 7

30. The Committee recommends that where individuals are designated as a Senior Responsible Officer (SRO) for a major project, they should not simultaneously be given lead responsibility for a range of other projects. To prepare for future large scale procurements, departments should identify the pool of NICS staff with the skills, experience and availability to be an SRO and, if necessary, develop and train additional staff for this demanding role.

31. The Data Centre project was publicly advertised in November 2006 and a preferred bidder appointed in April 2007. The Committee was told that the decision was taken to commence the procurement process, pending the formal approval of DFP Supply. This was on the clear understanding that the procurement process could be stood down at no cost to the Department should DFP Supply consider that the proposed route was not appropriate. However, DFP Supply approval of the Outline Business Case was not obtained until May 2007, six months after the project went to the market and after the appointment of the preferred bidder. The Committee was also told that it was agreed with DFP Supply that a Full Business Case was not required, provided that some updated financial information was supplied, as it was essentially a reorganisation of existing in-house resources.

32. The Committee regards the requirement for DFP Supply approval as an absolutely key safeguard which provides assurance to the Assembly that decisions to commit resources have been subjected to independent scrutiny. The failure to obtain DFP Supply approval to the Outline Business Case before going to the market and appointment of a preferred bidder and waiving the need for a Full Business Case raises serious concerns that there may be inadequate challenge within DFP on projects for which DFP has responsibility.

33. The Committee has also noted with concern the breach of another key control of expenditure. The Account NI Lessons Learned report notes that, during the discussions with the financial consultant for the Account NI project, it became apparent that, although it was implicit that DFP/CPD had agreed that the contract should be awarded, the original contract (value £971,000) had not been formally approved by DFP Supply or the Minister. The position was subsequently regularised and the revised contract with the consultant for the implementation phase has since been agreed in accordance with current DFP consultancy guidance and CPD procedures.

Recommendation 8

34. The Committee requires an assurance from DFP that there is absolutely clear guidance regarding the circumstances when DFP Supply approval is required for projects of this nature for which DFP itself is responsible.

35. The Committee is concerned that there was an absence of measurable data to enable departments to identify baseline costs for the development of these projects. One of the main lessons stemming from HR Connect was that appropriate measures, including key performance indicators, should be developed at an early stage of any similar project. This facilitates the development of a baseline position against which to measure any future improvement and provide a framework for ongoing monitoring and comparison. The Committee notes that the Lessons Learned Report also found that delays in reaching definitive service levels, capable of being reflected in contractual language, was an obstacle to maintaining the momentum of the procurement and added to the procurement timetable. This arose because of a lack of in-depth HR experience in service measurement evidenced by the fact that the development of key performance indicators and ultimately the specification of service levels, required significant consultancy input.

36. The Committee considers that the absence of baseline data placed DFP at a disadvantage in contract negotiations. The Committee is also concerned that some projects reached contract signature without benefit realisation strategies being finalised. This makes it much more difficult for the Department to demonstrate, and for the Committee to assess, whether value for money has been maximised.

37. The Committee acknowledges the work currently being completed to identify the full range of benefits that can be realised from the projects as they are rolled out over the next decade and beyond. The Committee is also encouraged that this work is being developed further in DFP, by taking the model of benefit realisation for each project and applying it in practice in various parts of the Department. However, the Committee is concerned that, without any clear specification of the benefits that would accrue, there could still be systems that are not fit for purpose. This is because judgements were made about what was needed only after the contract has been awarded and the services are being provided.

Recommendation 9

38. The Committee recommends that all NICS departments follow the lead provided by DFP and adopt a register of benefits expected from the reform projects. For future projects departments must ensure that benefits realisation plans are developed at the outset and clearly show what will happen, where and when the benefits will occur and who will be responsible for their delivery. In addition, through a tracking system, there should be evidence of realisation of actual benefits.

39. With implementation expected to complete on most projects in 2009, much of the work on the Reform Agenda is moving towards operational phase. The Committee commends the steps that DFP is taking in response to manage the operational challenges of the new service environment including; the reorganisation of DFP internally to ensure that there is a focused responsibility for the management of shared-service organisations; strong stakeholder arrangements involving monitoring groups chaired by one or more permanent secretaries; and ensuring that, at a senior level in the Civil Service, there is a continuing focus on ensuring that the entire reform programme continues to deliver what it was intended to deliver and to deliver it in a way that meets expectations of quality, timeliness and cost across the system.

Recommendation 10

40. The Committee wishes to emphasise that the groundwork for ensuring effective performance of the Reform programme should be put in place without undue delay. The Committee recommends that DFP ensures that all NICS departments have access to sufficient staff with appropriate skills to manage the new arrangements and the operational aspects of the associated contractual agreements.

The Delivery of the Reform Programme and Learning Lessons for Future Projects

41. The HR Connect Lessons Learned Report recognised the benefit of Gateway Reviews. That report explained the benefits of the process in reassuring decision makers that the project was on track and at key decision points, it served as a confidence building measure at Programme Board level in terms of delivering an expansive and highly innovative agenda. The lessons learned report also considered that the use of additional interim health checks, especially during a long period between Gate 2 and Gate 3, provided additional reassurance at key stages and may be an appropriate approach on future major projects.

42. To date, the Gateway process has been largely adopted but with some exceptions. The Department explained that the reason for not applying Gateway to CAL was because it was a small project that did not justify Gateway reviews. However, whilst small in monetary terms, DFP told the Committee that CAL was key to ensuring that it establishes learning and development opportunities to allow public sector staff to develop key competencies, including those required to deliver a major reform programme. The Committee also questions why the Department did not feel that a Gateway 0 Strategic Assessment review was appropriate for large projects such as Workplace 2010 or Network NI. In June 2007, the IT Assist project, at Gate 0 attracted a “Red” rating which generically, is advice for the project team to take immediate action in specific areas, in this case the availability of funding and staff resources. While the Committee is concerned that the Gateway Review process has not been applied to this project since, the Committee is encouraged that the Department did address the main issues raised in the Gate 0 review.

Recommendation 11

43. By definition, all of these reform projects are central to the future organisation and delivery of public services. The Committee recommends that all such projects, including the Centre for Applied Learning, undertake Gateway reviews at the prescribed stages in their procurement, implementation and service operation. This includes Gate 5 reviews (Benefits Realisation) for each project when it reaches that particular stage.

44. The Committee acknowledges the evidence provided by the Department of the post project, and other internal evaluation work undertaken. The HR Connect agreement contains many examples of best practice that may benefit other government organisations negotiating similar agreements. However at a strategic level, this is a huge programme of complex projects with very significant expenditure and associated costs. It is important that the Committee and the taxpayer are assured, not just in relation to the benefits achieved by each project for each department or participating body, but also in terms of the provision of transparent evidence of the costs incurred in achieving those benefits.

Recommendation 12

45. The Committee recommends that, as part of the post project evaluation of these major projects and in the interest of transparency, information is made available on the full costs of these major projects. In addition, the key findings of any lessons learned reports should be circulated to departments and made available to other government organisations negotiating similar contracts. The Committee looks to DFP and the C&AG to ensure that at an appropriate point, the costs are fully assessed and made available to the Committee.

46. Records NI aims to provide a common storage facility for all of the NICS known as an Electronic Document and Record Management System. This will form the basis for Northern Ireland’s Public Record. As such it is important that those using the system are properly trained and that the system is used correctly to ensure that a complete and accurate public record is maintained. It is also essential that the C&AG has the necessary access rights and privileges to Records NI to allow him to carry out his statutory functions.

47. The Committee was assured that all staff who use the system have gone through a comprehensive training programme. However it is unclear to the Committee whether sufficient and appropriate guidance has been issued by each department to its respective staff on the use of the system. Furthermore, the Committee is concerned that DFP could not give a categorical assurance regarding the C&AG’s rights of access.

Recommendation 13

48. The Committee emphasises that the new processes and practices introduced by Records NI must not compromise the maintenance of Northern Ireland’s public record and the ability of the C&AG to carry out his statutory functions in providing the necessary assurance to the Committee on departments’ use of resources. The Committee would like an assurance from DFP that it is satisfied that the integrity of the public record will not be diminished and that the C&AG’s access rights have been circulated to, and understood by, all departments.

[1] Transfer of Surplus Land in the PFI Education Pathfinder Projects, 11/07/08R, November 2007

[2] Use of Consultants, 16/07/08R, January 2008.

Minutes of Proceedings of the Committee relating to the Report

Thursday, 13 November 2008
Senate Chamber,
Parliament Buildings, Belfast

Present: Mr Paul Maskey (Chairperson)
Mr John Dallat
Mr Trevor Lunn
Mr Mitchel McLaughlin
Mr George Robinson
Mr Jim Shannon
Mr Jim Wells

In Attendance: Ms Alison Ross (Assembly Clerk)
Mr Jim Beatty (Assembly Clerk)
Mr John Lunny (Clerical Supervisor)
Mr Darren Weir (Clerical Officer)

Apologies: Mr Roy Beggs (Deputy Chairperson)
Mr Thomas Burns
Mr Jonathan Craig
Ms Dawn Purvis

The meeting opened at 2.00pm in public session.

The Chairperson welcomed Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel (DFP), Mr David Orr, Director of Corporate Services, DFP, Mr Derek Baker, Director of Central Personnel Group, DFP and Mr David Thomson, Treasury Officer of Accounts (TOA).

1. Apologies.

Apologies were received from Mr Roy Beggs (Deputy Chairperson); Mr Thomas Burns; Mr Jonathan Craig and Ms Dawn Purvis.

2. Evidence on the NIAO Report ‘Shared Services for Efficiency – A Progress Report,

The Committee took oral evidence on the NIAO report ‘Shared Services for Efficiency – A Progress Report’ from Mr Leo O’Reilly, Accounting Officer, DFP, Mr David Orr, Director of Corporate Services, DFP, Mr Derek Baker, Director of Central Personnel Group, DFP and Mr David Thomson, TOA.

The witnesses answered a number of questions put by the Committee.

2.13pm Mr Wells joined the meeting.

Members requested that the witnesses and Deputy TOA should provide additional information to the Clerk on some issues raised as a result of the evidence session.

3.52pm The evidence session finished and the witnesses left the meeting.

[EXTRACT]

Thursday, 11 December 2008
Northern Ireland Audit Office,
University Road, Belfast

Present: Mr Paul Maskey (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr John Dallat
Mr Mitchel McLaughlin
Ms Dawn Purvis
Mr Jim Shannon

In Attendance: Mr Damien Martin (Clerk Assistant)
Ms Alison Ross (Assembly Clerk)
Mrs Gillian Lewis (Assistant Assembly Clerk)
Mr John Lunny (Clerical Supervisor)
Mr Darren Weir (Clerical Officer)

Apologies: Mr Jonathan Craig
Mr Thomas Burns
Mr Trevor Lunn
Mr George Robinson

The meeting opened at 2.00pm in closed session.

The Chairperson thanked the Northern Ireland Audit Office for the use of their conference room for the Committee’s meeting.

4. Consideration of the Committee’s Draft Report on Shared Services for Efficiency – A Progress Report.

Members considered the draft report paragraph by paragraph.

The Committee considered the main body of the report.

Paragraphs 1 – 7 read and agreed.

Paragraph 8 read, amended and agreed.

Paragraph 9 read and agreed.

Paragraph 10 read, amended and agreed.

Paragraphs 11 – 13 read and agreed.

Paragraph 14 read, amended and agreed.

Paragraph 15 read and agreed.

Paragraph 16 read, amended and agreed.

Paragraphs 17 – 19 read and agreed.

Paragraphs 20 and 21 read, amended and agreed.

Paragraph 22 read and agreed.

Paragraph 23 read, amended and agreed.

2.20pm Mr Dallat joined the meeting.

Paragraph 24 read and agreed.

Paragraph 25 read, amended and agreed.

Paragraphs 26 – 28 read and agreed.

Paragraphs 29 and 30 read, amended and agreed.

Paragraph 31 read and agreed.

Paragraph 32 read, amended and agreed.

Paragraph 33 read and agreed.

Paragraphs 34 and 35 read, amended and agreed.

Paragraphs 36 – 38 read and agreed.

Paragraph 39 read, amended and agreed.

Paragraphs 40 and 41 read and agreed.

Paragraph 42 read, amended and agreed.

Paragraphs 43 – 48 read and agreed.

The Committee considered the Executive Summary.

Paragraphs 1 – 6 read and agreed.

Paragraphs 7 and 8 read, amended and agreed.

Paragraphs 9 and 10 read and agreed.

Paragraph 11 read, amended and agreed.

Paragraphs 12 – 16 read and agreed.

Agreed: Members ordered the report to be printed.

Agreed: Members agreed that the Chairperson’s letters requesting further information to the Accounting Officer, Department of Finance and Personnel, and the initial letter from the Accounting Officer, Department of Finance and Personnel would be included in the Committee’s report.

Agreed: Members agreed that when clarification is received from the Accounting Officer regarding the commercial sensitivity of some of the documents forwarded to the Committee, the Chairperson would decide which papers would be included in the Committee’s report.

Agreed: Members agreed that the report would be embargoed until 00.01am on Thursday, 15 January 2009, when the report would be published.

Agreed: Members agreed that they would not hold a press conference to launch the report.

[EXTRACT]

Appendix 2

Minutes of Evidence

13 November 2008

Members present for all or part of the proceedings:
Mr Paul Maskey (Chairperson)
Mr John Dallat
Mr Trevor Lunn
Mr Mitchel McLaughlin
Mr George Robinson
Mr Jim Shannon
Mr Jim Wells

Witnesses:

Mr Derek Baker Mr Leo O’Reilly Mr David Orr

Department of Finance and Personnel

Also in Attendance:

Mr John Dowdall CB		Comptroller and Auditor General
Mr David Thomson		Treasury Officer of Accounts

1. The Chairperson (Mr P Maskey): I welcome Mr Leo O’Reilly, accounting officer of the Department of Finance and Personnel (DFP), Mr David Orr, the director of corporate services in DFP, Mr Derek Baker, director of the central personnel group in DFP, and Mr David Thomson, the Treasury Officer of Accounts.

2. We will discuss the Comptroller and Auditor General’s report ‘Shared Services for Efficiency — A Progress Report’, which focuses on developments, up to 31 December 2007, in a major programme of Civil Service reform and examines seven key projects. The Committee’s two main concerns are first, the length of time that has been taken for the projects to reach procurement and implementation secondly, the management of risk.

3. It is important to note that, as this is a progress report, the Committee is not in a position to make a definitive statement on the projects’ value for money. Nevertheless, we are interested in the value-for-money issues that have been identified to date and the lessons that the Civil Service should have learned. Given that some of you will have been here before, you know the procedure that we follow. I will ask the initial questions, after which members can ask questions.

4. Figure 3 of the report details the position of the shared-services projects at the end of December 2007. Will you please provide a brief update of the implementation phase of each project? I ask you to keep your answers short but detailed.

5. Mr Leo O’Reilly (Department of Finance and Personnel): I introduce Derek Baker, who is the senior responsible officer for HR Connect, and David Orr, who is the senior responsible officer for Workplace 2010 and has oversight responsibility for Records NI, IT Assist and Network NI. For the Committee’s information, the Treasury Officer of Accounts, David Thomson, is the senior responsible officer for the Account NI project.

6. As you mentioned, we have been undertaking a comprehensive programme of reform of the Northern Ireland Civil Service. The reform cuts across a range of core activities, which are primarily shared-service issues that affect the entire Civil Service. The programme has been under way for a number of years and has posed several significant challenges. We have gone through a significant period of learning and development, and, the Committee will undoubtedly want to address some of the issues that were identified in the report.

7. I will bring the Committee up to date on the projects’ progress since the report was completed for December 2007. I will give a rundown of each of the projects, as illustrated in figure 3. The Centre for Applied Learning (CAL) came into operation in September 2006. It provides a full range of training services, including front-line services, to all Departments, and it uses its combined purchasing power and combined skill base to provide what we believe is better value for money and better quality training in the Civil Service.

8. The HR Connect project, for which Derek is responsible, aims to modernise the delivery of human-resource services in the Civil Service. That project is still being implemented, and several early phases have been introduced. We are moving towards the implementation of the non-industrial payroll, which is a major part of the HR Connect programme. That project is still under way, but our objective is to conclude it in early 2009.

9. The Account NI project is in a similar position; it is under way and being implemented. To date, six of the 11 Departments have been brought on to the Account NI project, the latest being in November 2008. Five Departments will be phased on to the project in April 2009 and July 2009.

10. Records NI aims to provide a standardised records database for Government and the Civil Service in Northern Ireland. That project is in a similar position to CAL; it has, effectively, been rolled out to all Departments and has been running — largely effectively — for approximately the past 12 months. However, there is a great deal of ongoing post-implementation monitoring and evaluation in that project.

11. IT Assist aims to provide a common support system to the entire Civil Service. It replaces the old IT sections that existed in each of the Departments. The project is at an advanced implementation stage and is delivering to 15,500 people in nine of the 11 Departments, with two to be brought on. That is still being rolled out, but its implementation is well advanced.

12. Network NI is a technical enabling project that is involved in providing the Civil Service and its agencies with the broadband database that is required to allow it to operate more effectively in its use of IT systems. Again, that project is still being rolled out, and to date, it has been rolled out successfully. Some 130 sites from a total of 275 are connected to the network, and work in that area is under way.

13. Finally, the Workplace 2010 project is still in procurement stage. As the Committee will be aware, a couple of weeks ago, the Department announced that the procurement of that project was being suspended for the various reasons that the Department specified at that time.

14. The Chairperson: Thank you, Mr O’Reilly; we will perhaps stay with you. I think that we all appreciate that this is clearly a major programme of reform. However, figures 7 and 12 of the report demonstrate that it has taken longer than planned to procure, and indeed implement, the projects. Has the Civil Service attempted to bite off more than it can chew?

15. Mr O’Reilly: Figure 7 illustrates the variations between regional timetables and subsequent implementation phases for each of the projects. In general, as we will find out later, these were quite complex projects that have, in some cases, proven more difficult than anticipated to roll out and implement. Therefore, in some cases there have been delays to regional timetables, and, with the benefit of hindsight, the original target dates were perhaps too ambitious.

16. On your point about having bitten off more than we can chew, it is important to highlight the various roots of these projects. At a simple level, a couple of the projects were concerned with replacing out-of-date IT systems. For example, the origins of the Account NI project lay in the fact that each Department had old accounting computer systems that were simply ceasing to provide the quality or sophistication of service that would be required in the future. That was particularly true in relation to the introduction of new systems of accounting in Northern Ireland in the early years of this decade.

17. Therefore, there was a basic need to replace a system, and, in large measure, that applied to the origins of HR Connect. That project was created around the need for completely new payroll systems in the Northern Ireland Civil Service. The Audit Office published a report on the effort to do that in the 1990s; some nine years were spent on that project, but it did not succeed in implementing a new IT-based payroll system in the Civil Service. A summary of that report can be found in Appendix 9 to the report that we are discussing today.

18. The lesson that was learned from that was that we had to go about the process much more rigorously and comprehensively. In the two cases that I mentioned, there was a basic need to replace systems; however, it was also recognised that the environment in which those new IT systems would operate was very different from anything that was envisaged previously. The capacity for every civil servant to have direct and personal access to IT systems created an entirely new context and environment.

19. Similarly, records systems, and the working environments within which civil servants could operate in the future, had to be improved and changed due to the demands of new IT systems, communications systems, and new ways of working. The Workplace 2010 programme originated from that idea.

20. Setting those four core projects aside, the other three are largely enabling projects that will allow that core programme of work to continue. Network NI was about building the IT and communications infrastructure that was necessary to support a system that is much more demanding of communications capacity than anything that we have had in the past. IT Assist was about providing a new support mechanism to allow all Departments to take full advantage of those new IT systems.

21. As I said, the Centre for Applied Learning was about ensuring that we had the skills in place and that staff were trained and knowledgeable about the new systems.

22. The seven projects add up to a demanding programme of work. Realistically, we could not have gone about it in any other way, because if any one of the building blocks is taken out, the entire tower of blocks begins to fall, as each of them are to some extent interrelated. The Civil Service had no option but to take the whole suite of projects forward in the way that it is doing at the moment.

23. The Chairperson: The reason that I asked whether the Civil Service had bitten off more than it could chew was because when we examine the outline business cases, in some instances, there was no timetable, and in others, there was no need for an outline business case. Was that well thought out, or would you do it differently now?

24. Mr O’Reilly: Each of the projects had an outline business case — indeed, a full business case was produced where it was deemed necessary. The outline and final business cases for the larger, more complex, projects were quite detailed documents that were considered before the programmes were initiated. In going into those projects, we were aware — and still are — that they posed challenges. My colleagues can provide the Committee with more detailed information on the specific challenges that we have faced in the detail of some of those projects. However, the report highlights the fact that a clear business need was identified for each of the projects that are part of the programme and that different procurement options were identified on the basis of our analysis of those business needs.

25. The Chairperson: I will now throw the meeting open to members to ask questions, for which they will have approximately 10 minutes. I would appreciate it if the answers could be brief. However, some questions may require further probing.

26. Mr Lunn: My questions are all for Mr O’Reilly, and they all relate to HR Connect. You have referred already to the failure of the previous attempt to implement a new payroll system. Appendix 9 sets out the key findings of the 2001 report on the cancellation of that system, which appears to have cost £9·5 million for no return whatever, except, perhaps, for the experience that was gained in how not to do it. Given that the HR Connect contract includes the replacement of a payroll system, can you assure the Committee that lessons have been learned and that the same problems have not been encountered in the procurement and implementation of HR Connect?

27. Mr O’Reilly: As Appendix 9 identifies, £3·3 million was spent in the 1990s on the development of that project, and planned savings of £6·1 million were not achieved. Significant lessons have been learned from the experience of the project in the 1990s and from the report that the Audit Office prepared at that time on the outcome of that project.

28. Some of the key lessons that were learned were, first, there was an understanding that such a project was a complex and significant undertaking. The Civil Service payroll system is a complex system, and perhaps some of those complexities were not appreciated fully when we set out on the journey in the 1990s. Secondly, a lesson was learned about the need for robust project-management arrangements. Clearly, there had been some deficiencies in the project in the 1990s. The third key lesson that was learned concerned the need for skills and the need to ensure that the right skills were in the right place at the right time to ensure that the project could be advanced successfully.

29. With the Chairperson’s agreement, I will ask my colleague Derek Baker, who is responsible for the contract, to elaborate on the points that I made.

30. Mr Derek Baker (Department of Finance and Personnel): I will add a couple of points to what Mr O’Reilly said about the lessons that were learned. You are absolutely right; payroll is a very important element of HR Connect. It is also a complicated and challenging element of the project.

31. I shall add two points about applying the lessons that were learned. Following the previous failed attempt to implement a new payroll system, we learned the lesson that the contract had not been specific enough in pinning down exactly what the contractor was expected to provide. As the Chairperson said, the procurement phase for HR Connect took longer than anticipated, and one reason for that was because its contract pinned down precisely what the contractor was expected to provide and the service levels that were associated. In addition, the contract specifies clearly the remedies that would be due to the authority — that is, the Department — in the event of the contractor’s non-performance. To date, the authority has not shirked from exercising those remedies in the event of contractor’s delays.

32. Mr Lunn: Is the HR Connect payroll project on course to be implemented fully this month, in accordance with the stated timescale?

33. Mr Baker: The overall timetable predicted the project’s full implementation by November 2008; however, this time last year, contractual targets for releasing the various HR Connect services were agreed as part of an amendment to the original contract. Therefore, according to those contractual deadlines, the project is late.

34. Six sets of services will be implemented under HR Connect. Two have been implemented fully, and four — one of which is the payroll system — have yet to be implemented. It is the payroll system that is demanding our attention. November 2008 was the target date for full implementation, and we are still working towards that date for three of the remaining releases.

35. In fact, I came here hotfoot from a meeting of the HR Connect programme board in which it was decided that payroll-system testing is sufficiently advanced to allow us to proceed to the next key decision point, which is whether to implement the system for November. That decision will be made this day week, in light of final testing and of whether the contractor can meet the success criteria that we laid down. Although I will not pre-empt next week’s decision, which will reflect how well the contractor performs and the programme board’s opinion, a plan to deliver the service is in place, as are plans to deliver two of the other services at the end of this month or the start of December.

36. The fourth service is industrial payroll, which is much smaller and covers 1,200 to 1,400 Civil Service staff. In my opinion, that service will be implemented no earlier than March 2009, which is late and means that it slips beyond the target time that was highlighted in the Audit Office report.

37. Mr Lunn: Paragraph 2.8 in the report notes that, in June 2003, the HR Connect project board concluded that a full PPP solution represented too much of a change and that the risk could not be transferred fully to the contractor. However, by April 2004, the same board had changed its mind. What factors led to that about-turn? The Committee has investigated other situations involving various Departments in which PFI and PPP projects turned out to be very much in favour of contractors and bidders, rather than the public purse. Therefore, I want you to reassure me that, in this case, a solution was arrived at that suited the bidders rather than the public sector.

38. Mr Baker: At the outline business case stage, the programme team was given a mandate to pursue what we call a service-negotiated route. That means that it was to explore the best procurement options that were available for that particular service. Consequently, the team engaged in an intensive period of investigation, research and, indeed, consultation with potential bidders, with whom it held dozens of meetings and workshops in order to gather ideas about the kind of services that might be provided and about how best to apply new technology opportunities in the Civil Service. In addition, the team visited local authorities in Great Britain, private-sector companies and, further afield, a facility in Copenhagen.

39. On the basis of all that investigation, the programme team concluded that there was a better method of procurement and that there was a way to exploit the opportunities that new technology offered. It opted for the solution that was eventually approved in the full business case.

40. You asked whether that transferred risk to the authority or to the contractor. It must be remembered that the programme is much more than the contract: it is concerned with the total transformation of the human-resources function in the Civil Service. The contract element of that is much smaller. The report notes that the overall full economic costs of the programme increased, but that was because the lifetime of the transformation was increased from 10 years to 15 years. If the costs of the 10-year outline business case were extrapolated to cover 15 years, they would be more expensive than the solution on which the programme board decided.

41. During that period, new decisions were made on the rebalancing of upfront capital payments to a contractor and on service charges over a certain period. The programme team decided to opt for a higher level of upfront capital payments and a lower level of service charges over a certain period in order to reduce the risk that might be posed by affordability problems later in the programme.

42. In essence, those are the reasons that the programme team changed the solution from that in the outline business case to that in the full business case.

43. Mr Lunn: Are you happy that that decision was made in favour of the public purse?

44. Mr Baker: The full business case was a rigorous assessment the affordability and value for money of the project. All the approval procedures were carried out, and it went through the programme board, DFP Supply and the Minister of Finance and Personnel. Hopefully, that decision will stand the test of time.

45. Mr Lunn: On page 22 of the report, figure 8 illustrates a case study that shows that the procurement period was lengthened from 12 months to 30 months. Having looked down the list of reasons for that, the common denominator appears to be risk. Will you outline the bidders’ concerns about risk, and how did you assess the value that was placed on those risks in their bids?

46. Mr Baker: The programme team opted eventually for a solution that involved a much greater degree of outsourcing than was proposed originally in the outline business case. It envisaged that the new shared service centre, which was to be located in the private sector, would take on a greatly enhanced range of functions than had been envisaged originally. Therefore, the various bidders had to spend much time, effort and energy on understanding how the human-resources function in the Civil Service operates.

47. In answering the previous question, I mentioned that the Department organised dozens of detailed workshops for the bidders. We had a data room, in which we made available all our documentation, policies, procedure, and data. Those workshops allowed the bidders to investigate certain issues in detail with those who are responsible for various aspects of the Civil Service, including payroll, grievance cases and equal opportunities.

48. The bidders went through every element in detail in order to understand what they would have to do to deliver the service from a shared service centre, because they would be taking on a risk that was completely new to them. They would have to deliver to service levels that the Department wanted to specify clearly in the contract. Without that process, there was a risk that the contractor might not understand those issues. That was part of the due diligence on which the contractors insisted during the bidding process. That was not the only factor in the delay in the procurement phase, but inevitably it contributed to the delay.

49. Mr Lunn: Are you satisfied that the risks rest with the parties that are best able to manage them in the circumstances and that the public sector is not paying over the odds and accepting an inappropriate proportion of the risk?

50. Mr Baker: The optimal balance of risk will always be a value judgement, but, as I mentioned before, the full business case went through a rigorous testing procedure. The contract that we signed was the subject of a great deal of attention and time and effort. I make no bones about the fact that to date, the implementation process has been difficult. It is a challenging project, and there have been tensions between the Department and the contractor. However, the contract has stood us in good stead. It has afforded an excellent measure of protection to the authority throughout.

51. Mr Lunn: You have managed to win one battle already with the contractor over recovering money for failure to perform. You referred to that earlier. Are you satisfied that it is a good, tight contract and that, if the Committee were to come back to the issue in five years and found that things have gone wrong, the contractor, and not the Department, would have to pay?

52. Mr Baker: I would not like to characterise the situation as a battle with the contractor; we are in a partnership with the contractor. The amendment agreement, which we negotiated this time last year, was a negotiated settlement. That, of itself, says something about the relationship between the Department and the contractor. Notwithstanding the tensions, we see the relationship very much as a partnership.

53. I will probably not be sitting here if we were to come back in five years. However, I hope that the contract will continue to stand us in good stead, because it has done so to date. I cannot gaze into a crystal ball. As an authority, we have managed to the contract very robustly, and we will continue to do so.

54. Mr Lunn: I think that this is the first time since I joined the Public Accounts Committee that I have seen a situation in which the public purse came out ahead on a negotiated settlement — or battle. I hope that you can maintain that standard.

55. Mr Shannon: Or a race. That is a kinder word, you know.

56. Mr Lunn: Or a race.

57. Mr G Robinson: I have some questions for Mr O’Reilly on the Workplace 2010 procurement. Turning to page 2.14 and figure 7 of the report, last Friday your Department announced the suspension of the Workplace 2010 procurement. Can you tell us the reason behind that decision? When is the contract likely to be signed, and what is is the revised timetable for its implementation? Can you explain the reason that there was no outline business case?

58. Mr O’Reilly: With the Chairman’s agreement, I will outline briefly the key reasons behind the decision to suspend the procurement, as announced by the Department on Friday week ago. I will then ask my colleague David Orr, who is the senior responsible officer for that programme, to go into more detail on some of the points that you have raised.

59. As the notice that the Department issued two weeks ago said, there were two key reasons that the Department, with the agreement of the two bidders, decided to suspend the procurement. First, there had been significant media speculation that the two best-and-final-offer (BAFO) bidders — as they are referred to — were in discussions about a possible merger. As I said, that was media speculation, but it was apparent that such a merger was at least possible. We and the bidders recognised that if that were to happen, it would have significant implications for the procurement. If it happened, the Department — as the authority — would have to review the procurement exercise fundamentally. That uncertainty about the position of the two bidders was the first reason that the Department decided to suspend the procurement.

60. The second reason was simply to do with the current enormous and unprecedented turbulence in financial markets. All such bids require bidders to be able to conduct discussions with their financial backers, including banks, and in the present circumstances — not only for this project, but for a raft of similar projects across Government and internationally — bidders have not been able to engage meaningfully with their financiers.

61. For those two reasons, the Department decided to suspend the procurement and to review the position in January 2009 when we can again take stock and see where and how Workplace 2010 should be advanced. However, I stress the point, which the Department and the Minister emphasised, that the Civil Service and the Government are still committed fully to the concept of the Workplace 2010 model, which is about creating a modern, open working environment for public servants that matches the technological requirements of their jobs and that will enable them to work much more efficiently and cost-effectively. The commitment to that principle still stands; the issue that is in question is the procurement method that will be used to deliver that outcome.

62. Mr Orr will respond to your query on the status of the business case, and he may make more general points on the issue.

63. Mr David Orr (Department of Finance and Personnel): The outline business case was approved in October 2005, as set out in appendix 4 of the Comptroller and Auditor General’s report. I will be happy to answer questions on that, on the suspension of the project, or on the circumstances that led to it.

64. Mr G Robinson: Are we correct to assume that Workplace 2010 was suspended at the initiative of the bidders? Does that not suggest that the tail was wagging the dog?

65. Mr Orr: Workplace 2010 was suspended at the instigation of the Department. We had been monitoring the situation since April of this year, when Land Securities announced that it intended to sell its Trillium business. We kept in close touch with that situation. By the middle of October, we judged that developments were at a stage where it was right to suspend the procurement until the sale process could be finalised.

66. Mr G Robinson: Were you not worried that Land Securities wanted time to complete its merger, remove the competitive attention from the contract and present you with a monopoly bidder?

67. Mr Orr: We were finding that it would be difficult for the two bidders to remain in a competitive bidding situation when they were discussing a possible merger. That is the reason that we felt that it was better to suspend the procurement until the merger situation was sorted out one way or the other.

68. We have rigorous legal agreements with both bidders that prevent them from disclosing their bids to each other during their sale process, and I am content that they are not discussing their Workplace 2010 bids. I do not think that it would have been possible for them to continue bidding for Workplace 2010 when there were reports that they were seeking to merge.

69. Mr G Robinson: Given the dramatic downturn in property prices, are you concerned about the value for money of past and planned deals that involve public-sector property?

70. Mr Orr: That is in our minds. We are concerned not only about the value of the Government office estate, but about the cost of borrowing. October 2008 represented unparalleled financial turmoil, which presented another of the advantages of suspending the project until January, thus allowing us to take a hard look at the situation.

71. Mr G Robinson: Can you inform the Committee of the latest values of the properties?

72. Mr Orr: We have not revalued the properties — or sought a revaluation — since the financial turmoil of October, and we do not have any bids from the bidders with which we can advise you of valuations.

73. Mr G Robinson: Appendix 4, paragraph 4 of the NIAO’s report refers to the settlement of a legal challenge from one of the unsuccessful bidders. What gave rise to that challenge?

74. Mr Orr: By April 2007, we had selected two bidders to submit best and final offers. In July 2007, one of the unsuccessful bidders took a court action, and they were granted an injunction preventing any further progress with the procurement, pending a full hearing. The unsuccessful bidder alleged that the evaluation had been conducted improperly and that there were shortcomings in the debriefing that they had received.

75. The Department acknowledged that there were shortcomings in the evaluation methodology. The Committee will appreciate that with such a complex and significant procurement, there is a comprehensive and complex quality and price-evaluation process.

76. There were indeed some shortcomings in that evaluation and in the debriefing. However, the Department was adamant that those were not material to, and would not have altered the outcome of, the competition.

77. The Department was convinced that it could resist the legal challenge, but the question needed to be asked as to what the cost would be. Therefore, having taken advice from counsel, the Department decided to negotiate a settlement with that unsuccessful bidder. The outcome of that was that the bidder accepted that the shortcomings had not been material to the decision.

78. Mr G Robinson: Why did you not defend the public-sector position on that case? What are the wider lessons to be learned for current and future public procurements?

79. Mr Orr: As one would expect, a lessons-learned paper was prepared after the event. The lessons that were learned for wider public procurement involve the need to take extreme care during first, the assessment of quality price bids, and secondly, the debriefing process.

80. You also asked about the reason that we did not continue to defend the action. We were convinced that we would win the case, but at what cost as regards a further delay to the programme and further legal costs. A full hearing had been scheduled, and when we took advice from our counsel, on balance of advantage, we felt that it was better to conclude a settlement with the unsuccessful bidder in order to prevent further expenditure of public money on litigation.

81. Mr G Robinson: Can you assure the Committee that if any litigation results from the mishandling of the latest stage of the project, you will not just cave in again?

82. Mr Orr: I do not think that we did cave in. The amount that was paid to the unsuccessful bidder represented about 30% of its legal costs. The unsuccessful bidder, having initiated a challenge, settled it, but at some cost to itself.

83. Mr Shannon: Mr O’Reilly is back in the hot seat again. The previous time that he was here, that seat was on fire, and I expect that when he leaves today, it will be on fire again. However, I am sure that he will be able to deflect some of the heat.

84. I want to focus on Account NI and on paragraphs 2.15 and 2.16 of the report. It appears that the service requirement was amended 14 times and that the preferred bidder submitted revised prices twice. That reminds me of the rates issue with which the Public Accounts Committee dealt recently. Does the process of change, review and revision not put a question into everyone’s mind — including the Committee and those further afield — of whether the system was specified properly at the outset, whether it was tested properly, whether it worked as intended, and whether it would meet the implementation dates that are set out in appendix 3?

85. Mr O’Reilly: As the report highlights, there was a considerable period of negotiation with the preferred bidder. The process of procurement in this instance, which is referred to as the negotiated procedure, in fact envisages the authority — in this case, the Department — as identifying a preferred bidder and then engaging in final negotiations with that preferred bidder on the final details of the contract. In this instance, you highlighted the fact that those negotiations continued for a considerable time. However, that was simply a reflection of the complexity of the project that was involved, including first, its timescale, which was increased from 10 years to 12 years, and secondly, the total expenditure that was involved. The report highlights that such lengthy negotiations are not an unusual part of a major, complex negotiation such as this. Those negotiations have subsequently served the Department well in that they defined clearly the requirements at various stages, the phased roll-out of the Account NI programme to different Departments, and the phasing of payments to the contractor as each stage of the programme is rolled out successfully.

86. It has meant that, as in the case of HR Connect — to which my colleague referred — where there have been difficulties and delays, payments due to contractors have been withheld until such times as those difficulties have been resolved. You are right to highlight the considerable amount of time that was spent finalising the detail of the contract, but that was time well spent, as we must ensure that we have a robust contract in place for the roll-out of what is a very significant project for the Civil Service.

87. Mr Shannon: Are you aware of any other organisations that felt it necessary to amend their service requirement 14 times? Is it not unusual to have such levels of amendments and revised prices?

88. Mr O’Reilly: I agree that amending the service requirement 14 times seems to be a lot, but it is important to remember that this is a total financial system for the entire Northern Ireland Civil Service. It is for all Departments in Northern Ireland, which have a combined spend of approximately £18 billion a year. Given the scale of the expenditure and the fact that this project cuts across the responsibilities of 11 Departments that have different spending requirements and patterns, I do not think it entirely surprising that that number of changes was required to get us to the position that we wanted to be in so that we could move forward.

89. Mr David Thomson (Treasury Officer of Accounts): I will give the Committee a flavour of the kind of changes that are happening. Shortly after we started the procurement process, Oracle, which is the supplier of the original software, told us that it would no longer support the software. Supporting it means getting software updates — most of us who have a Windows operating system on our computer will get such updates. We had to make a big decision at an early stage as to whether we should take the risk of running for another three or four years on the old, unsupported software and wait for the new software coming in, or whether we should change it there and then. We decided that we would update the old software even though we were in a procurement process. That was a major change, and it was one of the reasons for the long delay as we upgraded the old systems to Oracle 11i.

90. We then entered into negotiation with BT in order that it would take responsibility for the old systems, so that as we rolled out the new systems, we would be dealing with one bidder and not two. Therefore, that was another major change in that BT renegotiated the old contracts and we were then working with it. BT then said that it would bring in new software. In discussion with the supplier, we realised that, as a Government, we could negotiate those software licences at a better price than BT was able to do, so we negotiated the software licences for a much better price to the taxpayer.

91. Those all resulted in major changes to the programme and to the prices. That process went on for about two years. It was not as though we did not inspect matters at the start; we had to respond to a lot that happened as we were going through the process. I just want to give you a flavour of the sort of things that were happening as we went through the programme.

92. Mr Shannon: That was very helpful; thank you. Mr O’Reilly, paragraph 2.2 refers to the original project proposal for Network NI as the aggregation of public-sector demand. That occurred in order that the best commercial deal could be sourced. Everything was set up in March 2005, yet some 18 months later, it seemed to have fallen apart. The health sector had withdrawn. Was the project not properly thought out? Who raised the concerns about risks, and what were those concerns?

93. Mr O’Reilly: My colleague David Orr may wish to add supplementary details to my answer. The original concept of the project, which was referred to at that time as the broadband aggregation project, was that the new Network NI would embrace not just the Civil Service and its core Departments, but the wider public sector in Northern Ireland, including the Health Service and local government. However, as the procurement progressed, the Department of Enterprise, Trade and Investment (DETI) advised that placing such a substantial part of the IT and communications infrastructure in the hands of one successful bidder could have significant long-term anti-competitiveness effects in Northern Ireland. After taking that advice from DETI, which has responsibility for that area of Government, the decision was made to limit the Network NI contract to core Civil Service Departments, their agencies and the Classroom 2000 (C2K) project in schools.

94. Mr Orr: Leo has not left me with much to say, but I will add a few words. There was a risk that contracting one supplier for the entire public sector in Northern Ireland would have produced a very dominant supplier. That would have had an adverse impact on the marketplace and, as Leo said, on anti-competitiveness. After discussion with DETI, we decided to restrict the scope of the contract.

95. However, I am pleased to say that that still resulted in a very effective competition for the Network NI contract; for example, the cost of broadband before Network NI was approximately £2·4 million per annum, and, after Network NI, we reduced that cost to £2·1 million per annum, even with a higher bandwidth and better service response. Previously, the normal service response was eight hours, but faults are now repaired in between one and four hours, depending on how critical the circuit is. I think that it was still a competitive procurement.

96. Mr Shannon: What was the impact of the withdrawal of the health sector at that time, and what are the potential risks of its ending up with a different service provider? Would that not surely complicate matters?

97. Mr Orr: No. The Health Service will, essentially, be buying an interoperable broadband service that can be provided by another broadband supplier.

98. Mr Shannon: Paragraphs 2.11 and 2.13 give some information on what was done to interest prospective suppliers and on the private sector’s participation in the procurement. However, figure 7 in the report shows that procurements took longer than planned. Is there not something wrong when procurements do not deliver a signed deal on a date that is close to the original deadline? I suggest that confidence was dented as a result of that delay and that future projects will be affected. What has been done to address those issues?

99. Mr O’Reilly: The general point is that when an initial procurement plan is outlined, target dates are set. Those have been recorded properly in the report. However, you have probably got a flavour this afternoon of the problems that arise. When we began the process of individual procurements, they were large scale, they involved large amounts of money, and they were highly complex. The points that each of my colleagues have made this afternoon illustrate some of the challenges and unanticipated hurdles that arise when dealing with long-term, complex procurements. David may be able to give some specific examples beyond those that have been given.

100. Mr Orr: I will not really be able to do that, but I will add that the changes to circumstances that occur during large-scale procurement exercises mean that it is much better to delay and negotiate those changes before signing the contract than to try to recover the situation afterwards. In fact, one lesson that has been learned from previous procurement exercises is that it is better to ensure that the process is carried out correctly than to rush through it simply to meet a deadline.

101. Mr Shannon: Is it fair to say that lessons have been learned from the problems that occurred and the methodology that was used? Surely people who apply for contracts must be aware of and have confidence in that process. The Committee seeks assurance that those wrongs have been righted and that the process is now much clearer.

102. Mr O’Reilly: I will ask Derek to comment further on that. Certainly, significant lessons have been learned. We are still developing and building our understanding of how best to manage those procurement exercises. To some extent, lessons were applied successfully during the programme. When problems were identified, action was taken to get back into discussion with potential suppliers as part of the negotiation process; we did not rush ahead to try to agree a contract that, perhaps, would not meet our long-term needs.

103. Similarly, as we have heard already with regard to several cases, implementation of projects was suspended — indeed, in some cases, it is currently suspended — because we encountered issues and challenges with the programme. Rather than rush ahead, we decided to suspend the delivery or implementation of the projects because of the significance of the issues involved and in order to ensure that we got things right. HR Connect’s procurement project is an example of that.

104. Mr Baker: I want to pick up on that briefly. As the table shows, HR Connect’s procurement took much longer than was anticipated originally. I have dealt already with one of the reasons for that. A lengthy lessons-learned report was produced at the end of that procurement exercise to set out what happened, what had gone well and what had not gone well. I will not attempt to go through the report fully because it is lengthy and is a matter of public record. Two lessons have been picked up already in issues that Mr O’Reilly and Mr Orr raised.

105. One lesson that has been learned is that if, during the course of a negotiation, a consortium or the membership of a consortium changed, there could be problems and difficulties. Negotiations must be managed carefully. As Mr Orr explained, that lesson has been applied in the Workplace 2010 procurement exercise.

106. The second lesson that was learned is that very intensive engagement with potential bidders can have beneficial impacts. HR Connect was therefore characterised as a process of constructive dialogue in which we revealed a lot of information about our methods so that bidders would understand them fully. Mr Orr has already picked up on the point that it is better to conduct those matters properly — they should be pinned down in advance before a contract is signed, because it is extremely difficult to try to recover them after a contract has been signed. Those lessons were applied to subsequent contracts.

107. Mr Wells: I am afraid that you are here again, Mr O’Reilly. You have, obviously, committed a terrible sin in a previous life to have ended up sitting here today. We will try to get through the meeting as quickly as possible.

108. Returning to paragraph 3.2 and figure 7 of the NIAO report, I am sure that you are expecting a particular question on it, and I must ask it. There was an assumption that the data centre would be accommodated in Workplace 2010. That did not happen, and an extra £10 million had to be spent on accommodation. What makes that so difficult to understand is that the same senior officer co-ordinated both projects. How on earth did that happen?

109. Mr O’Reilly: The figure that you quoted accurately from the report is £10 million over a 10-year period.

110. Mr Wells: It is enough to build a new bypass: that is the scale of the figure.

111. Mr O’Reilly: The background is that the original Workplace 2010 outline concept envisaged that the data centre would be provided as part of the project. Indeed, it was also envisaged that existing facilities for data-centre provision in the Civil Service, which were, at that time — and, in fact, still are — located at three separate locations, could continue for a period of one to five years and could operate successfully until such times as the Workplace 2010 programme, as it was envisaged, would come into operation.

112. However, in 2006, a significant event occurred. Although it was originally envisaged that the core of the existing Civil Service data centre, which is located in Craigantlet Buildings on the Stormont estate, would be outside the Workplace 2010 framework, by that stage it became apparent that, in fact, Craigantlet Buildings would become a core element of the replacement programme.

113. Put simply, it was envisaged that that building would be demolished in order to make way for a new office building on the Stormont estate. That immediately posed a problem about the overall provision of Network NI, IT Assist and IT systems in the Civil Service for the simple reason that we had to find a new location quickly to replace the facility that was located in Craigantlet Buildings at that time.

114. Another core data centre was located in Clarence Court in the city centre, and that also suffered from power problems. Therefore, it was decided, for a combination of reasons, that the best option would be to move quickly to install a new data centre to replace the existing services at three locations.

115. Mr Orr: It was not the case that the £10 million was an additional cost — that sum was included originally in the Workplace 2010 outline business case. For various reasons, it was decided that it may be better to consider whether that was the best option and, as Mr O’Reilly said, the options appraisal found that it was best to carry out a separate procurement. However, that money would have been required regardless of whether the data centre was accommodated through Workplace 2010 or separately.

116. The deciding factor in favour of a separate procurement was the specialist nature of the data centres and the high levels of security and resilience that they need. Given the current attention that is being paid to data security, we are pleased to have a data centre that is compliant to a much higher level of resilience and security than would otherwise have been the case or was the case previously.

117. Mr Wells: Returning to Mr O’Reilly, I want to focus on footnote 16 on page 24 of the report, which indicates that there were only four senior responsible officers for seven projects and that one poor soul was responsible for four of those projects. Paragraph 3.10 notes that the review of staff skills and resources that DFP and the Strategic Investment Board carried out raised concerns about capacity and capability. Does the data-centre issue not highlight a major problem for the Civil Service regarding the availability of suitably qualified staff to manage high-powered projects? What action are you taking to deal with the findings of that review?

118. Mr O’Reilly: I will deal with the first part of Mr Wells’s question, and my colleague David Orr can deal with the second part.

119. You highlight rightly that one senior responsible officer was responsible for four of the projects. However, it is important to highlight that three of those projects — Network NI, IT Assist and the Centre for Applied Learning — were related closely. Network NI and IT Assist dealt with the development and installation of new IT communication systems. IT Assist also dealt with the provision of the facility to ensure that those systems could be maintained and operated effectively and that customers — that is, the people using the systems — could have quick access to a fault-repair and reporting system. Although the projects were characterised as being separate, they were related quite closely to each other. Therefore, although that was a significant challenge for the individual concerned, I do not think that, organisationally, it was necessarily as remiss as you suggested.

120. As you highlighted, paragraph 3.10 relates to the overall identification of skills. There is a clear acknowledgement that the programme has posed enormous challenges for the Civil Service skills base. It has been a significant learning curve, first, for the people who have overall responsibility for the programmes that the Committee is discussing and for a raft of staff at all levels in the Civil Service, whether they are administrative staff, technical staff, lawyers, economists, and secondly, for others who have been involved in the technical side of the project or in developing the business cases.

121. Earlier, I mentioned the project to develop the Centre for Applied Learning. One of its tasks has been to identify systematically the new skills requirements that those projects have imposed on the Civil Service and to ensure that those skills gaps can be filled by whatever form of appropriate training and support is necessary. I am sure that either of my colleagues could give further illustrations of the skills issues that have arisen and how they have been addressed.

122. Mr Baker: The team that I have working on the HR Connect programme is, in fact, the same team that was put in place at the project’s conception. Mr Wells is absolutely right; those projects place a great burden on people because they are complicated. However, since I joined the programme, I have seen the development of the team’s skills. The people who have been involved with the project from the start have developed tremendous commercial and contractual acumen to add to the programme and project-management skills that they already had. Indeed, those skills are the reason that they were selected for that particular project in the first place.

123. That kind of skills transfer has taken place over the lifetime of the project and has involved the financial, commercial and legal advisers who were involved in contract negotiation. To return to Mr Lunn’s point, it was that particular team that negotiated the amendment to the contract this time last year. Team members displayed the commercial and contractual acumen that they had developed, and they will be a tremendous resource for the Civil Service. As Mr O’Reilly said, we have to nurture, develop and harness those skills and ensure that they are deployed appropriately in future projects.

124. Mr Orr: There is no doubt that such massive projects challenged the skills and capacity of the NICS — they would have challenged the skills and capacity of any organisation. The Comptroller and Auditor General’s report points out that the Civil Service is trying to make a step change in its quality, efficiency and effectiveness. The report states that the projects were developed on the basis of clear business need, that the risks to delivery have been identified and well managed, and that lessons are being learned. We have very much tried to bridge those gaps as far as possible. Some of the ways in which we have done so are set out in paragraph 3.11 of the report. For example, the Centre for Applied Learning developed additional training courses in programme and project management; programme delivery-support units were created; a dedicated unit was established in the central procurement directorate (CPD) for managing the investment strategy for Northern Ireland (ISNI) contracts; and, in particular, a centre of excellence was created for delivery in CPD that trains people in the Gateway Review process that has been so fundamental to the roll-out of the programmes.

125. Mr Wells: If I was not off your Christmas card list already, I certainly will be now, because I want to raise another difficult issue. Let us look at the IT Assist project, which is dealt with at appendix 7 on page 59 of the report. I will break this issue down by asking three quite searching questions. DFP approved the outline business case during 2006, and the shared-services centre became operational in April 2007. My first question is: was a full business case submitted and approved by DFP Supply?

126. Mr Orr: When the outline business case was approved, the outcome was an in-house solution. It was agreed with DFP Supply that a full business case was not required, provided that some updated financial information was supplied. That information was given to DFP Supply in November 2006.

127. Mr Wells: Even given the complexity of the case, are you saying that DFP officials said that the project could be dealt with in-house? Were they happy with that?

128. Mr Orr: That is correct — it was essentially a reorganisation of existing in-house resources.

129. Mr Wells: Why did you feel the need to conduct a second gateway review 0 strategic assessment review — that is a snappy title — after the centre became operational?

130. Mr Orr: The gateway 0 review is conducted from time to time during a programme rather than at specific points during that programme. The purpose of such a review is to examine a programme, such as IT Assist, that does not require significant external procurement and to undertake that strategic assessment at various points during its lifetime.

131. Mr Wells: Figure 14 of the report indicates that, although that gateway review resulted in a red status, no further reviews were conducted. Why was that?

132. Mr Orr: The gateway review in June 2006 resulted in a red status primarily for two reasons: first, the availability of resources to the IT Assist team; and secondly, funding for the programme. Both issues were addressed, and no further strategic assessment reviews have been undertaken to date.

133. Mr Wells: Finally, according to paragraph 1.4 of the report, one of the fundamental issues of ‘Fit for Purpose: The Reform Agenda in the Northern Ireland Civil Service’ is building capability and enhancing leadership, expertise, professionalism and the general capabilities of the Civil Service. We see that theme repeatedly in all our reports. What are you doing to address that recurring difficulty? What is the timescale for dealing with it?

134. Mr O’Reilly: In response to your previous question, we highlighted the activities that were implemented in the Civil Service to address skills bases. On occasion, we bring in external skills — particularly on a temporary basis — to support the in-house skills team in the development and delivery of those projects, especially during their early implementation phase. Speaking from my own experience, the Workplace 2010 programme is a large project, and in such cases, we rely on external legal advice in particular in commercial contract matters. Although we make strong efforts to develop our in-house capacity, we continue to access outside sources of expertise and advice, particularly when it is required for an initial burst of activity rather than for long-term need.

135. Mr Wells: Does the use of consultants not act as a disincentive to build that capacity in-house?

136. Mr O’Reilly: It could. We aim to tackle that issue in two ways. First, we use consultants for specific areas where the skill will not be required in the long term. Secondly, it is important that we make a conscious effort to ensure that there is a skills transfer to in-house staff of the work that any consultants who are supporting us are doing. As Mr Baker highlighted, we used that concept to our benefit during the HR Connect review of the contract. A largely in-house team negotiated the revision to the contract, whereas much of the original contract work had relied on external consultancy support and legal advice. Therefore, the process of learning and development is ongoing.

137. Mr Baker: In response to Mr Wells’s question, I want to make a generic point about building capability in the Civil Service. In recent years, a great deal of effort has been invested to produce a development framework — snappily entitled professional skills for Government — for all Civil Service staff. It provides a framework of competences whereby civil servants at every level — from senior civil servants right down — can assess the kinds of skills and competences that they need. Furthermore, the framework provides a tool for civil servants to assess how they can meet those competences.

138. The Centre for Applied Learning is using that framework to ensure that it establishes learning and development opportunities to allow all civil servants, regardless of their level, to meet those competences whether they need a professional or a generic skill. Therefore, that is a big issue for us, and we recognise that we must do better with it, and we are therefore investing in it.

139. Mr McLaughlin: Paragraphs 3.4 and 3.6 of the report note that the work on benefits realisation was hindered by the absence of measurable data and that projects reached contract signature before benefit realisation strategies were finalised.

140. That strange approach gives rise to two questions. If you did not have measurable data and did not know what the benefits would be, how could you assess the quality of the bidders’ proposals? Are you now simply attempting to retrofit the strategies in order to justify the procurement decisions that were taken?

141. Mr O’Reilly: The position on the benefits realisation is set out in the report. In response to your first question, the context is that we were dealing with a set of cross-cutting projects in which the benefits to be realised could be measured against the existing arrangements for the provision of those services, whether those are personnel, human resources, accounting or IT services. At the time, those services were being provided in all Departments.

142. The identification of baseline data posed a significant challenge, because identifying fully the costs across all Departments was a complex exercise. For example, each of the 11 Departments to some extent accounted for those costs differently. Each Department organised the delivery of the various individual IT support services differently, and, therefore, the narrowing down and identification of the precise costs that were involved presented a major challenge. In some of the other projects — for example, HR Connect — that challenge was less intense because the nature of the work that was being undertaken in Departments meant that costs were easier to identify.

143. Those outline business cases that were presented for all the projects identified a wide range of potential benefits. However, as you highlighted and as the report identified, not all projects were costed fully in all cases simply because, despite the significant amount of work that was done when the outline business cases were being produced, the task became too large. Nonetheless, the outline business case identified a wide range of potential benefits that could be gained from each project, and approval was granted for work to proceed on that basis.

144. You are right to question what the Department is doing now. A significant amount of work is being done — and, indeed, has been done over the past year — to identify systematically and in great detail the full range of benefits that can be realised from the strategies as they are rolled out over the next decade and beyond. The report acknowledges that it will be some time before we can measure fully the benefits and assure ourselves that they are being realised. However, it is significant that we now identify in detail the potential benefits that should be realised in each Department as a result of the roll-out of the programmes and projects.

145. That work is also being developed further in DFP. We took the model of benefit realisation for each project and applied it in practice in various parts of our Department. The aim is to ensure that those benefits can — and will — be delivered and that they are measurable over the coming years as the programmes and projects are rolled out.

146. The experience has brought home, certainly to me, that in delivering services in Government over a long period, many of the costs get wrapped up in other costs and are extremely difficult to separate and identify precisely. However, when moving into a partnership arrangement with private-sector providers, a contractual arrangement is involved and, therefore, the costs must be specified precisely, because the contractor must know exactly what he is getting paid for, and we must know exactly what we are paying the contractor for. As has been illustrated today, we must know when we are not getting something for which we have contracted, thus allowing us to suspend payment when necessary.

147. It has been a complex and challenging exercise, but in addressing the issue of benefits realisation, it is one to which we have devoted substantial effort over the past 18 months.

148. Mr McLaughlin: Although I appreciate the candour of your answer, it means that the Committee is considering a scenario in which the contractor may not have delivered according to the terms of the contract that was signed. However, without any clear specification of the benefits that would accrue, there could still be systems that are not fit for purpose and whose contracts lack integrity. That is because we make judgements about what is needed only after the contract has been awarded and the services are being provided. We may get what we paid for, but will we get what we expect?

149. Mr O’Reilly: What the contractor is being paid for is an important part of benefits realisation; we want to derive substantial benefit from those payments. However, beyond those cost-based benefits, a substantial number of other types of benefit accrue from those contracts — better communications, more efficient use of resources, and more efficient use of time as staff will have access to financial information, data information, and documentation. We have sought to identify all the benefits that arise from this programme of work.

150. The point that you focused on is whether we might be getting less from a contractor because we were unable to identify the full range of baseline information from which we are working. I do not think that that is the case. The contracts that are in place are extremely detailed and are very specific as to what contractors should deliver in return for specific payments. In the narrow sense of delivering against a contract, I am confident that the arrangements that are in place will deliver.

151. Although the benefits realisation exercise is about delivery, it is also about something much wider. It is about first, seeking to ensure that we understand the full range of benefits that such projects can bring to the Civil Service and public-sector delivery, and secondly, ensuring that we have strong systems in place to deliver them.

152. Mr McLaughlin: I do not wish to explore whether the contractor has met the requirements of the contract. There may be issues with that, but I am not interested in them at present. I simply want to know whether the experience of this approach will demonstrate that we did not commission the type of modernisation project and installation of the necessary IT systems to such an extent that would have included a degree of future-proofing. We may have got what we asked for, but did we ask for less than we should?

153. Mr O’Reilly: I understand your concern. I believe that a significant amount of work was done on the projects before they went to outline business case to identify potential benefits. As a result, a great deal of detailed information is recorded against each outline business case about the anticipated benefits. However, the report highlighted that that information was not able to be costed fully in all cases. Nevertheless, that baseline information exists and was, in fact, added to as the contract negotiations continued. As programmes have been let, we want to ensure that we have a model that encapsulates all the potential benefits that were identified at the various stages and that ensures that we have appropriate measurements to certify that the benefits are being delivered. That model will also ensure that over time, we have strong and robust systems in place to capture the benefits as the projects are delivered.

154. Mr McLaughlin: Moving on, in response to George Robinson’s question, you gave the reasons that Workplace 2010 was suspended. Paragraph 4.4 of the report deals with the post-occupancy evaluations of the Clare House pilot project. Have those evaluations been made public? What action has the Department taken to apply those lessons to the wider Workplace 2010 project, given that you indicated that the Department is still wedded to the principles behind it?

155. Mr O’Reilly: Although the outcome of the evaluation of Clare House may not have been made public formally, it was circulated to all staff, including the staff who work there. The Northern Ireland Statistics and Research Agency (NISRA) carried out that exercise for us, and as the report highlights, it identified not only the benefits of that location, but significant teething problems in some areas such as basic telecommunications facilities. Some people who had not previously worked in an open-plan environment also raised some concerns about levels of noise in such surroundings. Furthermore, the report highlighted some concerns about the adequacy of the car-parking facilities and other issues regarding confidentiality and so forth in situations when people are dealing with more sensitive issues.

156. Significant follow-up action was taken on the Clare House project. From personal experience, I know that the car-parking issue is being addressed. Specific work has also been done to address the acoustics issues that staff mentioned. I know that some Committee members have visited the building already. More importantly, and, as you highlighted, those lessons have been translated across to similar planned projects that involve moving towards a more open working environment.

157. As well as our experience of Clare House being drawn on in other parts of Northern Ireland, the Office of Government Commerce in GB used it to apply parallel lessons to its experiences of developing similar office accommodation. David Orr worked in Clare House when the work was being done.

158. Mr Orr: I worked in Clare House for 18 months, and I know that Mitchel visited it during that time. There were positive elements that were drawn from that experience, and that is still happening. A modern, open-plan working environment was created; such surroundings lead to good teamwork and interaction. However, some issues needed to be addressed.

159. These days, most modern public-sector and private-sector office buildings are open plan, as opposed to being divided into separate office accommodation. That means that the amount of space that is needed for each desk or workstation is reduced by about 30%. Therefore, we need to deal with some challenges, but efficiencies have been achieved.

160. Mr McLaughlin: In that respect, paragraph 4.8 refers to the lessons-learned reports that were produced for HR Connect and Account NI projects. Given that we are under time pressures now, could you provide a copy of each of those reports to this Committee rather than discussing them now? If we had those in writing, they could be discussed subsequently.

161. In paragraph 3.15, figure 13 shows that DFP made an amendment to the strategic partnering agreement for the HR Connect contract because of a delay in implementation. That left the Department with what it rather euphemistically called a “funding gap” of £452,000. Why was DFP unable to make a full recovery of the additional costs and lost benefits on HR Connect? I am interested to find out how that funding gap was closed.

162. Mr Baker: When beginning any kind of commercial or contractual negotiation, one will have a starting point and a bottom line. Our starting point in those negotiations was related to what we regarded as the full economic cost of the delay in implementation, which was £5·7 million. However, the full economic cost is not necessarily a cash cost.

163. Without going into the details of the commercial issues that were involved, I am satisfied fully that the settlement that we reached with the contractor to recover £5·2 million was very satisfactory on the part of the Department — the authority. It covered the losses that the Department felt that it was incurring by way of lost benefits, which were not necessarily cash costs. Additional costs were also incurred by having to keep our staff in place longer and by having to keep existing contracts going for longer than had been anticipated — for example, the old non-industrial and industrial payroll systems.

164. The settlement of £5·2 million that was reached covered adequately the costs that the Department faced. The gap between the Department’s estimate of the full economic cost and what it settled for was absorbed by the programme without any additional resources being required. That was entirely affordable, and it was absorbed because the programme was more efficient in its implementation of the project than had been anticipated at full business case stage. Less money than we had anticipated originally was required to implement the project.

165. Mr McLaughlin: How did you overestimate by £500,000?

166. Mr Baker: The full business case costs are full economic costs — they are not necessarily cash costs. We were able to absorb the full economic cost of the loss without recourse to any additional cash and without bidding for or asking for any additional resources. Therefore, from our point of view, that was a satisfactory outcome to the negotiation.

167. In finalising the amendment, we can be satisfied that the contractor accepted responsibility for the majority of the financial consequences of the delay and covered the costs that we deemed necessary. That was a good outcome for the Department.

168. Mr McLaughlin: I have another question, but perhaps we could come back to that later.

169. Mr Dallat: I have warmed up a bit. I have been sitting here trying to put a figure on the cost of the project. A lot of emphasis has been placed on how court cases were settled. Were the barnacles of the bidders from private enterprises not attached to this rudderless ship from the beginning? Would it not have been better to dry-dock the ship and start over? Instead, a painful process has been gone through that has led to a situation where the former Rate Collection Agency is hopelessly behind with bad debts, Northern Ireland Water does not even know the size of its water pipes, and more importantly, other information that would have been vital was not provided to the Comptroller and Auditor General or to the Health Department, which did not take up the matter. Is the true cost not a lot more than you are telling us it is?

170. Mr O’Reilly: We are giving you the costs of a specific set of reform projects that was identified in the Comptroller and Auditor General’s report. As Derek Baker just said, those can include broader economic costs as well as cash costs.

171. As I said at the beginning of the meeting, even if we had not taken the action that we did, all the projects would still have required development money — we would not have had a zero base and been able to spend nothing. The key issue is to ensure that the money that we spend is well targeted and that the scale and complexity of what is delivered represents value for money.

172. Mr Dallat: Was this not an unfortunate period in the history of the Civil Service? There was a whole purge of the Civil Service and some people, present company excluded, thought that they could contract everything out to the private sector. Those people have learned a very sorry lesson. I have heard it said twice that the contractor needed to know what he was getting paid for — by God, he knew exactly what he was getting paid for. However, do taxpayers know what they paid for?

173. Mr O’Reilly: As I stressed in my responses to Mr McLaughlin, one advantage of our rigorous approach to this set of projects is the enormous detail that we have gone into to identify the precise costs. Therefore, we know what we are paying for, and we are trying to ensure that it represents value for money.

174. The projects have had a variety of delivery models — in some, lead responsibility was placed with an outside provider, as was the case with HR Connect. However, with some of the remaining projects we have had a partnering agreement with an outside supplier, while maintaining in-house staffing arrangements — as with Account NI, for example — or in some cases, as with the Centre for Applied Learning (CAL) or IT Assist, in-house services have been retained. No one set out with a plan to pass all those responsibilities over to private-sector providers. The evidence shows that we have used a variety of delivery models, depending on our assessment of the best way of delivering services in future.

175. Mr Dallat: I will ask a brief question about Records NI. What guidance have Departments issued to staff on the use of the records system? Is that system operating effectively, and can you assure us that the necessary access privileges have been secured in order to enable the Comptroller and Auditor General to carry out his statutory functions? Can you assure the Committee that those resources are being used effectively?

176. Mr Orr: All staff who use the system have gone through a comprehensive training programme. As I understand it, arrangements have been made to provide the Comptroller and Auditor General and the Northern Ireland Audit Office with access to the TRIM documents. May I check on that and report back to the Committee?

177. Mr Dallat: Will the Comptroller and Auditor General answer that question now, please?

178. Mr John Dowdall CB (Comptroller and Auditor General): It is worth saying that any period of significant change such as this that involves a move from one records system to another, causes some anxiety. I emphasise that our ability to access that information must be clear-cut. We are looking to our DFP colleagues to ensure that that message is given clearly to the system, so that my staff do not have to go to the new database each time in Departments and almost begin to have an issue with it. I expect that DFP will do that, but I would like it to assure us that it will put its weight behind that commitment.

179. Mr Dallat: I presume that the Committee will keep its eye on that issue and ensure that that agreement is agreed to in our report.

180. Moving on, why was there no gateway 0 strategic assessment review for Workplace 2010 and Network NI and no gateway 1 business justification review for Records NI? How does your Department decide when a gateway review is appropriate?

181. Mr Orr: There is a difference between a gateway 0 and gateways 1, 2, 3, 4 and 5. Gateways 1 to 5 generally follow a procurement process, and they are introduced at various stages, such as agreement on a business, a decision on a procurement route, readiness for service, or benefits realisation. The gateway 0 is applied to an overall programme, which might be a combination or an accumulation of different projects. We did not feel that a gateway 0 review was appropriate for a project as large as those projects in question.

182. Would you please repeat your second question?

183. Mr Dallat: How does your Department decide when a gateway review is appropriate?

184. Mr O’Reilly: In general, arrangements are in place to identify whether such a project should be subject to the Gateway Review process. That is based largely on a risk assessment of a Government project, and it is a simple test. Most of the projects in this programme have been subject to that process, mainly because of the significance and the cost of the process involved. Figure 14 in the report shows that the Centre for Applied Learning project is the exception to that, partly because it was concerned with the reorganisation of existing in-house Civil Service training provision and also because the new investment that was involved was relatively small compared with other projects. For that reason, it was decided that the CAL project did not need to be subject to a Gateway Review process examination of its development and implementation.

185. Mr Dallat: Are you still of that view?

186. Mr O’Reilly: On reflection, that is our view on the Centre for Applied Learning project. Although that project is relatively small compared with the others, it has been rolled out and implemented successfully.

187. Mr Dallat: Paragraph 4.12 of the report says that in February 2008, the DFP departmental board agreed to develop a register of Civil Service reform benefits across the Department. What progress has been made on that, and has anything similar been adopted by other Civil Service Departments?

188. Mr O’Reilly: My colleague Mr Orr has taken the lead on that. As I outlined in my response to Mr McLaughlin’s questions, the benefits realisation process has been led by DFP. Several substantial presentations have been made to the departmental board on the work that has been done on that area. Coincidentally, the board is due to consider a further report on our work on benefits realisation on Monday 17 November. As I said already, the intention is to ensure that the work that has been piloted in DFP can be rolled out to the other Departments that are implementing those projects. Mr Orr is the author of the paper to which I referred.

189. Mr Orr: We want to create a template in order to spread that work to other Departments, which will be able to realise the work when carrying out each of the reform projects.

190. Mr Dallat: Do you regard the whole matter as water under the bridge and that it will be happy families all round when you next come to the PAC?

191. Mr O’Reilly: We do not regard it as water under the bridge yet because we are still in the midst of implementing several projects, and we are sure that further challenges will emerge. In the case of one of the projects, we will carry out a fundamental review of whether the procurement can go ahead in the way that was originally envisaged. Judging on performance to date, if we can continue rolling out the projects as we have been, a robust framework will be in place for the future delivery of shared services. That will lead to wider public services and a much better system than was in place previously. However, a great deal of work must be done to bring that to fruition.

192. Mr Dallat: I assume that that is a caution, rather than a forecast of more bad news.

193. Mr McLaughlin: My question arises from Jim Wells’s line of questioning. Am I right to assume that the data centre, as envisaged, will mean that all the Civil Service servers, which are grouped currently in three secure locations, will be brought together at a single point?

194. Mr Orr: No. They are grouped together in two separate locations, which is line with best practice in order to lessen the possibility of a disaster at one site.

195. Mr McLaughlin: How is backup of essential data accomplished? Is that part of the contract?

196. Mr Orr: Yes, and the servers speak to each other to duplicate the core data so that they are resilient in the event of a failure of one of the centres.

197. Mr McLaughlin: In the event of such a calamity, would there be no risk to the data because they are backed up to the other location?

198. Mr Orr: The data centres have been configured and designed in that way.

199. The Chairperson: The procurement and implementation phases of those projects have been dealt with. It is also important that, when the contracts move to their operational phase, effective contract monitoring and management processes are in place. What skills and experience do respective contract managers have in managing such contracts? What training, if any, have they received? What steps are you taking to train and develop other staff in important areas of that work?

200. Mr O’Reilly: Again, I will ask my two colleagues whether they want to supplement my answer. I have stressed throughout the meeting that I am conscious that this is a completely new way of delivering core support services across central Government Departments in Northern Ireland. In an effort to look ahead and move towards a steady state with these projects, we have reviewed fundamentally how we will manage them.

201. For the first time, we have an arrangement in which one Department — DFP — is responsible for the operation of core support functions for every Northern Ireland Civil Service Department, particularly in core areas of human-resource management and accounting and finance. That has caused us to review fundamentally how we envisage the arrangements working and progressing.

202. We have identified a three-tier solution to that problem. We intend to reorganise the Department internally to ensure that there is a focused responsibility for the management of that group of shared-service organisations, which will bring in the commercial and contract skills that you identified. We know that it is essential to develop and retain those skills in the Department. However, we must also assure each Department and accounting officer that the facilities that we will provide to support them will meet their requirements, responsibilities and accountabilities — including accountabilities to this Committee. Therefore, strong stakeholder arrangements will be implemented that will involve parallel engagements in the form of monitoring groups that are chaired by one or more permanent secretaries to ensure that they are satisfied with the system that DFP is delivering for them.

203. More generally, we want to ensure that, at a senior level in the Civil Service, there is a continuing focus on ensuring that the entire reform programme continues to deliver what it was intended to deliver and to deliver it in a way that meets expectations of quality, timeliness and cost across the system.

204. The detailed proposals that we are developing are available and can be provided to the Committee. The target date for having those new arrangements in place is August 2009, with process preparation being carried out before then.

205. The Chairperson: Will the contract managers have the specific skills to implement the reforms, and will training be provided?

206. Mr O’Reilly: Yes. As my colleagues stressed, we have built up quite a set of skills — not just in DFP, but across the system — and we intend to concentrate those skills in a particular area in order that there can be oversight of all the projects.

207. You are absolutely right; we want to carry on using the Centre for Applied Learning to continue to focus on areas where we identify that skills are in short supply and to replace them primarily by development and training programmes for individual civil servants. The new shared-service centre organisation in DFP will be a good location for bringing people together for that type of training and development.

208. The Chairperson: Thank you for taking the time to answer our questions. The evidence that was presented today was about the work in progress. The Committee intends to keep the reform programme under review and to monitor its implementation. We will look to the Comptroller and Auditor General to provide further assurance reports as necessary, and we may write to you with further questions. Thank you very much for coming to the Committee.

Appendix 3

Correspondence

Chairperson’s letter of 17 November 2008 to Mr Leo O’Reilly

Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Alison.Ross@niassembly.gov.uk

Date: 17 November 2008

Mr Leo O’Reilly
Accounting Officer
Department of Finance and Personnel
3rd Floor Rathgael House
Balloo Road
Bangor
BT19 7NA

Dear Leo

RE: Public Accounts Committee Evidence Session: 13 November 2008

The Public Accounts Committee, at its evidence session on 13 November, agreed to write out and request further information in relation to the NIAO Report: “Shared Services for Efficiency – A Progress Report”. The Committee has requested responses to the following:

1. In Paragraph 3.2 of the NIAO Report, it states that the Data Centre project was publicly advertised in November 2006 and a preferred bidder appointed in April 2007. This was prior to DFP Supply formally approving the Outline Business Case. Why did you go out to the market before you received formal approval?

2. As a follow on from question 1.above; in the situation described in paragraph 3.2, is it considered acceptable for projects to go out to tender, before DFP Supply has the chance to formally approve the business case? Is the Department content that it is setting a good example for other Departments?

3 During the evidence session a reference was made to paragraph 4.8 of the report which states that “learned lessons” reports have been produced for HR Connect and Account NI projects. Can you provide the Committee with a brief overview of the main findings of these reviews and provide a copy of each report.

I would be grateful if we could have your response by Monday, 1 December 2008.

Yours sincerely

Paul Maskey
Chairperson
Public Accounts Committee

Correspondence of 1 December 2008 from Mr Leo O’Reilly

Chairperson’s letter of 8 December 2008 to Mr Leo O’Reilly

Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Alison.Ross@niassembly.gov.uk

8 December 2008

Mr Leo O’Reilly
Accounting Officer
Department of Finance and Personnel
3rd Floor Rathgael House
Balloo Road
Bangor BT19 7NA

Dear Leo

RE: Public Accounts Committee Evidence Session: 13 November 2008

Thank you for the information provided in request to my letter of 17 November 2008.

In the final paragraph of your letter of 1 December 2008, you have requested that the HRConnect Lessons Learned Report should not to be published as some information contained in it may be commercially sensitive. As you know, the Committee is sympathetic to requests to respect confidentiality. However, I note from page 20 of the evidence session that this report is a matter of public record (Mr Baker); I am also conscious that paragraph 4.8 of the C&AG’s report says that the lessons learned reports have a role to play in informing future projects.

In the light of these observations, it would be helpful if you could indicate to the Committee which sections of the Report you think are commercially sensitive and whether there are issues surrounding disclosure in respect of any other aspect of these reports.

As the Committee intends to consider your request at the meeting of Thursday 11 December, I would be grateful for an urgent response, if possible by Friday 12 December 2008.

Yours sincerely

Paul Maskey
Chairperson
Public Accounts Committee

Correspondence of 10 December 2008 from Mr Leo O’Reilly

From The Permanent Secretary
Leo O’Reilly
Rathgael House
Balloo Road
BANGOR, BT19 7NA

Tel No: 028 91277601
Fax No: 028 9185 8184
E-mail: leo.o’reilly@dfpni.gov.uk

Paul Maskey
Chairperson
Public Accounts Committee
Parliament Buildings
Room 371
Stormont Estate
BELFAST
BT4 3XX 10 December 2008

Dear Paul

Public Accounts Committee Evidence Session: 13 November 2008

Thank you for your letter of 8 December.

Lessons learned reports are generally full and frank documents, compiled in an open and honest manner and acknowledging where there have been issues and problems, for the benefit of other practitioners. If such reports were to be widely circulated beyond the relevant people it is likely that the reports will be more guarded and thus lose much of their value. Therefore, against this background, I would request that the Committee considers publishing only my letter but not the lessons learned reports.

In addition to the lessons learned reports produced by individual projects, the Committee may be interested to note that earlier this year the Reform Oversight Board commissioned a study to identify the strategic management lessons across the reform projects. I attach the output of this work (three documents) which we would be content for the Committee to publish if it wished to.

We also recognise, however, the Committee’s desire to be open and transparent. Therefore, if on balance, the Committee would prefer to proceed to publish the project-specific lessons learned reports we would ask that some sections of the HRConnect report are not published given their commercially sensitive nature.

Yours sincerely

Leo O’Reilly

Annex 1

Northern Ireland Civil Service

Strategic Management Lessons
From our Programmes and Projects

Executive Summary

Assignment Sponsor : Tom Gilgunn (DfPNI)

Produced by: Alan Fellows

Draft Version 2: 14 August 2008

Contents

Page

1: Introduction 54

2: Management Summary 55

3: Executive Summary of Key Management Lessons 56

4: Lessons from Best Practice Information 60

Appendices:

(i) Lessons / comments that emerged from all those interviewed 64

(ii) List of people seen 71

(iii) Documents viewed 72

1 Introduction

This assignment was undertaken over a period from June to August 2008.

The overall purpose was to:

• Summarise the key strategic management lessons from programmes and projects to date
• Produce a top level draft management check list to aid future programmes and projects
• Recommend ways of capturing and disseminating lessons learned in the future.

The main sources of information for this assignment were:

• Short discussions / interviews with a selected group of Senior Managers, SROs, Programme and Project Managers.
• Input from other best practice sources.

This Executive Summary report covers the strategic lessons from programmes and projects. There are two other reports available from this assignment:

• Senior Management Checklist for Programmes and projects – draft checklist framework
• A process for managing lessons - Recommendations

2 Management Summary

Overall, from those interviewed, there was a very positive attitude towards learning lessons and sharing them. In fact a number of projects had already started to collect and analyse lessons at a detailed level.

There was an acceptance that Departments and the whole organisation has been through a major learning curve over the last few years. This has resulted in some good expertise being built and developed in managing programmes and projects. In addition core disciplines have been put in place eg; Gateway / Prince 2. Whilst it is acknowledged that the application of these is varied across the organisation, there is evidence of support for this move to a more rigorous and robust approach.

It is evident too that there is a genuine belief in the importance of leadership and ownership for these projects and that is seen as key to their successful management. Whilst it is true that many of the projects did not start within an overarching vision or strategic framework, this has not stopped a pragmatic and determined approach being taken to their implementation. Effective risk management was also cited as an important element in managing the programmes and projects. Additional emphasis now is also apparent in activities to drive out the benefits from these investments. A number of Oversight Board members felt that the Board, although now working better, still had a role to play in leading discussions on strategic lessons.

Given the many positive indicators touched on above, there are also some key gaps that have been identified and which would benefit from further focus for programmes and projects in the future.

It was felt by the interviewees that the necessary rigour was not always present in the formulation of the required Business Cases. In particular perhaps not enough emphasis and robustness was employed in both articulating the benefits required and in securing the necessary funds for the various phases. That said, people have managed to put these elements in place in the main but it has taken time and effort. This would have been better employed at the front end of the process.

There are also signs of different approaches across the various Departments. Whilst in itself this is not an insurmountable issue, it does not help consistency or a corporate approach to be developed. Taking a cross organisational view of projects and programmes is starting to take place in a number of instances but the lack of this integrated planning in the past did result in some clashes of priority and resource commitments.

Due to a number of the enabling projects being sponsored by DFP there was still some concern expressed about ‘DFP doing things to us’. This indicates the importance of obtaining early involvement and buy-in by key stakeholders in order to ensure ownership rests in the right place.

Allocation of resources is always a thorny subject. There are often ‘day jobs’ to be carried out in addition to the projects – it was felt, however, that brinkmanship with resources may have occurred from time to time and should be addressed in the future, perhaps with more advanced planning of when resources need to be released.

In essence then, and in line with many other organisations, there are strong positive indicators emerging as lessons. Also there are a number of areas where additional judicial effort is required in order to further develop organisational capability for managing successful programmes and projects.

3 Executive Summary of Key Management Lessons

This section summarises the key management lessons that emerged during the assignment and which people saw as important for future programmes and projects. A more detailed list of comments appears in appendix (i).

These have been analysed under four broad areas:

1: Clarity: ‘What are we doing and why ?’

2: Management: ‘How will we / are we managing it ?’

3: People: ‘The skills, knowledge and experience we need’

4: Involvement: ‘Making sure we keep people involved and up to date’

1: Clarity - ‘What are we doing and why?’ to include, eg:

• Objectives / Purpose / Aim
• Investment and anticipated returns
• Business Cases / Affordability
• Benefits sought / realised
• Public Impact assessment
• Ownership and Leadership and Ministerial direction
• Fit to Strategy / other Programmes and Projects
• Measures of Success

2: Management – ‘How will we / are we managing it?’ to include, eg: - Governance

• Risk / Issue / Contingency Management
• Programme / Project / Planning approaches
• Monitoring / Reporting / Controlling (inc QA/Audit/Gateways
• Implementation / Procurement Processes
• Change Management / Contract Management

3: People – ‘The skills, knowledge, experience we need’ to include, eg:

• Key Roles / SRO / Programme & Project Managers / PMO
• Skill development / equality
• Specialist requirements / Legal / Procurement / Contractual / IT etc
• ‘Partners’ and Consultancy support
• Induction / education / awareness
• Intelligent Client roles / Critical friend

4: Involvement – ‘Making sure we keep people involved and up to date’ to include, eg: - Stakeholder Management and engagement

• Communication (internal / External)
• Consultation: TUS / Public / Government Bodies
• Ministerial engagement
• Use of shared services

Pointers for Success

The following are the common key lessons that emerged from the various discussions of programmes and projects in Northern Ireland. They are formulated as recommendations for supporting a successful Programme or Project.

Clarity:

1. Be clear on what you are aiming at:

• The Programme / project objective
• Strategic fit with vision / other initiatives
• Remove any ambiguity in the Business Case

2. Get certainty around funding:

• Phased budgets
• Who is contributing what and when – what are the robust assurances?
• Financial ‘sign off’ and authorisation process

3. Specify the target benefits up front:

• Quantitative / qualitative
• Measures / process
• Baselines

4. Ensure strong visible leadership:

• Champion / SRO and other key roles
• Who needs to have ownership

5. Set a longer term Vision:

• To provide a framework to work within
• To help a corporate approach of associated initiatives

6. Take a broader view:

• Look where integration needs to happen
• Ensure interdependencies are highlighted
• Avoid priority clashes

Management

7. Get the Governance balance right:

• Independent members
• Decision making vs consultation and involvement
• Size to avoid bureaucracy

8. Inject rigour and robustness:

• Use of accepted disciplines, eg: Business Case / Prince 2 / Gateway / Risk Mngt
• Departmental freedoms vs consistency

9. Ensure commercial and contractual acumen:

• More ‘partners’ being used and need to be managed effectively
• Longer term arrangements being put in place

10. Develop early Change Management strategies:

• Put change / behaviour management strategies and plans in place as early as possible.
• Be realistic about the challenges of the required changes, in addition to the benefits.

11. Where possible take an integrated approach to planning:

• Get forward views on, eg: procurement, funding, training, phased delivery
• Get messages across to staff / public / TUs in a co-ordinated way
• Joint / corporate risk management

People

12. Use SROs from across the organisation for cross cutting projects:

• Can also help with independence

13. Be honest about the amount of resource required:

• Mix of full time / part time roles
• Time required for training

14. Always include people from operations / business as usual (BAU):

• They know the business
• To get required ownership

15. Get scarce skills in place for managing the growing number of ‘partner’ relationships:

• Procurement / contractual / legal / negotiating skills more in demand

16. Use your experienced resource to help others:

• Esp Programme / Project Managers / SROs etc. to get consistency of approach

17. Collect lessons throughout the life cycle:

• Don’t let expertise ‘walk’
• Ensure people know where the expertise is, inc: local/organisational/ Departmental/NICS/wider PS contexts

Involvement

18. Get key stakeholders involved early:

• Helps buy-in and gives additional expertise and knowledge
• Can manage expectations better

19. Ensure you take a ‘customer’ perspective:

• Internal and external customers will see things differently
• Allows identification of potential obstacles

20. Prepare Relationship management plans for commercial partners:

• Sets expectations
• Develop contingency strategies in advance

21. Work with the rest of the Organisation:

• Let others know the plans in order to have a more corporate approach helps avoid priority clashes.

4 Lessons from Best Practice Information:

There are many sources of best practice input for managing Programmes and Projects. It is not intended to reproduce these here but to make the point that they exist and can be consulted by those involved in projects and programmes and referenced in your own guidelines.

Ones in regular use across Government are:

• Managing Successful programmes (MSP) – OGC
• OGC Gateway process
• NIAO Reports and guidance
• National Audit / OGC Common causes of Failure
• Prince Guidelines
• Achieving Excellence (AE) in construction
• HMT ‘Orange Book’ (Risk Management)
• OGS – MOR Method

Successful Delivery

The ten lessons cited in OGC Gateway Process ‘ A Manager’s Checklist’ that are key to successful delivery are:

• Clear Senior management ownership and leadership
• Appropriate skills for the programme / project
• Clear roles and responsibilities
• Effective financial control
• Success criteria that clearly links objectives to outcomes and clear links with the organisation’s key strategic priorities
• Effective risk management
• Sound commercial knowledge of the supplier market place linked to the requirement and management of the supplier over the contract term
• Involvement of key stakeholders throughout he programme/project
• Breaking development and implementation into manageable steps
• Effective project team integration between clients, the supplier team and the supply chain

This list compares extremely closely to the lessons analysed from Northern Ireland Programmes and Projects.Analysis of Recent DH Gateways

From an analysis of the recommendations of 62 recent Gateway reviews the following statistics emerged:

84% had recommendations on Roles and Responsibilities

78% had recommendations on Risk

69% had recommendations on Planning

57% had recommendations on Skills and Resources

54% had recommendations on Stakeholder issues

50% had recommendations on Business Case

37% had recommendations on Benefits

Total number of reviews with RED status	33	53%
Total number of reviews with AMBER status	27	44%
Total number of reviews with GREEN status	2	3%
Total number of reviews	62

Issues Raised

This illustrates the top areas for recommendations and hence the top areas where additional focus could be wisely invested.

The summary of key points for each category are as follows:

Roles and Responsibilities

• Form a project or programme board of appropriate size and representation.
• Project and programme boards should be small, focused bodies and made up of only the most senior decision makers.
• Project and programme boards should be constituted as formal decision making authorities.
• Appoint a single senior responsible owner for the project or programme whose role is to ensure that the project or programme meets its objectives and delivers the projected benefits.
• Other stakeholders should be represented in a separate stakeholder forum whose function is to advise and assist the project or programme board.
• The roles, responsibilities and accountabilities of members of the project or programme board should be agreed and clearly stated in a definitive governance protocol which recognises the statutory decision making authority of each partner organisation.
• Use all available assurance options including OGC Gateway Reviews, internal audit reviews, overview and scrutiny etc.

Risk Management

• A systematic risk management process should be put in place for the project or programme.
• The highest rated, current risks should be managed by project or programme boards.
• Risk registers should be costed and prioritised. This should include the financial implications of the risk materialising and of the mitigating actions.
• Risk registers need to be living documents that are regularly updated.
• Contingency and mitigation plans should be developed.

Planning and Scheduling

• Produce detailed plans for short-term activities and high level plans for the whole project or programme.
• Map interdependencies to ensure they are managed effectively.
• Develop a portfolio of projects to deliver programmes and ensure each of these projects is suitably planned and resourced.

Skills and Resources

• Appoint an experienced and skilled project or programme manager to manage the day-to-day delivery of the project or programme and ensure best practice programme and project management processes are put in place.
• Develop a resource plan to assess and put in place the level and type of resource that is required at various stages of the project or programme. This should be detailed for short and medium term activities and high level for later activities.
• Establish a project or programme team capable of delivering the outputs or outcomes and providing the project or programme board with timely and useful management control information.
• Formulate and review regularly succession plans for the key roles in the project or programme.

Stakeholder Engagement, Management and Communications

• Detailed and formal mapping of stakeholders and their potential impact on the project or programme should be undertaken.
• Formal communications and consultation strategies and plans should be agreed, properly resourced to reflect the scale and importance of the project or programme, actively managed and incorporate feedback and response loops.
• Ensure the project or programme plan includes a clear set of deliverables for engagement with all stakeholders.

Business Case and Options Analysis

• Ensure the scope of the programme or project is clearly defined and put in place a formal change management process to ensure control of that scope.
• Develop the key success criteria with key stakeholders at the start of the programme or project, document them and monitor to ensure they are kept clearly in mind.
• Develop and agree the impacts on the whole process(es) concerned before consideration is given to agreeing and short listing options.

Benefits

• Current position should be baselined.
• Benefits management and realisation plans need to be produced.
• Financial benefits as well as non-financial benefits should be identified.
• Benefits should be managed to realisation not produced purely for the business case.
• The benefits realisation process needs to be owned by business manager(s) with defined responsibilities for ensuring delivery.

Appendix (i)

Lessons and comments that emerged from all those interviewed.

Shown under 4 broad categories:

1: Clarity - ‘What are we doing and why?’

including eg:

• Objectives / Purpose / Aim
• Investment and anticipated returns
• Business Cases / Affordability
• Benefits sought / realised
• Public Impact assessment
• Ownership and Leadership and Ministerial direction
• Fit to Strategy / other Programmes and Projects
• Measures of Success
• Get sign-up / funding contributions from the relevant Depts at an early stage in the programme or project.
• Important to align programmes / projects with wider planning and operational environment – make sure the context and bigger picture is understood
• Should always continue to look for maximisation of benefits and associated benefits driven by the investment.
• Many projects did not start as an efficiency drive, therefore ‘retrofitting’ particular targeted benefits has been difficult and time consuming.
• In future phases of programmes and projects we should also look for additional value and benefits of better co-ordination and interplay between projects and not just from the individual programme or project.
• We have sometimes taken too long to focus on benefits realisation. They are not always well articulated upfront.
• We must continue to emphasise the business reasons for these projects. Many do not do this and it is therefore difficult to see how they fit into the wider context.
• We still have a major exercise of rationalising benefits across programmes and projects. We really do need to get this work into the initial Business Cases at the start of the process.
• Getting ownership for the necessary business change management early on in the life cycle is important to driving out potential benefits.
• Sometimes the Business Case approval route can be a lengthy and fraught process. We have to get the right balance between this and the normal project / programme pressures.
• We are devoting more time now to articulating benefits. We must ensure that we keep the process simple and distinguish between the ownership of articulation and the ownership of benefit realisation
• We have to bring more detailed scrutiny to managing our benefits to ensure we obtain the desired return on investment
• It is obvious that ownership at Executive level is strengthening. It is key to ensure credibility of delivery – especially if financial benefits are seen to happen. This means more rigour at the business case development stage and additional scrutiny on delivery.
• With 11 Departments it is always difficult to get full clarity across all of them.
• We must remember that many of the current programmes / projects started separately – not as a coherent set of initiatives. It would still be beneficial to look for ways of making it a ‘tighter strategic picture’ at the top level. This would also help messages to staff and citizens.
• The focus now must be on delivery with a clear emphasis on urgency. We should lead from the top on this to encourage the cultural shift needed.
• We have done the required analysis for benefits realisation – we are still not there yet on delivering them or closing the financial gaps that appear to exist.
• We have done some good work with existing programmes and projects in order for them to be more joined up. We need to ‘paint’ a longer-term picture for the future (5+ years).
• When many of the initial projects were started there was probably not enough attention around benefits planning. Retrofitting benefits is always difficult and we should be careful to avoid overselling additional benefits beyond the original ones envisaged.
• A champion or champions coupled with a strong vision / statement for the future is necessary to lead behaviour change successfully.
• We still do need an overall ‘vision’ supported by, perhaps, 3 to 4 key priorities to help people buy in to a more corporate approach without diluting the importance of individual departments
• We must take a more ‘customer focused’ approach to our projects and look at the aspects of a Programme / Project through their eyes.
• We need to take a cross departmental view on planning, funding, resourcing and owning commitments at an earlier stage in the life of a programme or project. There have been instances of reneging on commitments that have caused issues to arise.
• Leadership and acting as a Champion is still very important to our reforms. This needs to go hand in hand with a longer-term strategic picture.
• It would still be helpful to see a longer term, broader picture, eg: over the next 5 years. This may also help in getting across the vision to ministers.

2: Management – ‘How will we / are we managing it?’ including eg:

• Governance
• Risk / Issue / Contingency Management
• Programme / Project / Planning approaches
• Monitoring / Reporting / Controlling (inc QA/Audit/Gateways)
• Implementation / Procurement Processes
• Change Management / Contract Management
• Keep / get some independence on the programme / project boards to help rigour and challenge and also help to avoid conflicts of interest and potential compromise.
• Whilst accepting that ambitious timeframes help to drive momentum, it is important that they be practical to maintain credibility.
• We are now entering more and larger commercial partnerships. We have to ensure no undue pressure on balancing project delivery vs hitting commercial deadlines imposed by others.
• Good use of risk registers has helped to encourage open debate on key issues.
• Oversight Board has been a start in getting lessons and associated issues shared.
• We have appeared to have taken a piecemeal approach to projects and programmes
• We are fairly good at following ‘prince’.
• Use of the ‘Gateway’ process helped in getting focus on issues and an independent management view for the SRO.
• Spending the right amount of time at the front end to help scope and get the requirements well formulated, paid dividends further into the project.
• Important that we have a good view of interdependences across the programmes and projects. We are getting closer to this but not there yet.
• We haven’t always had the right people on governance boards. Therefore some discussion has been very parochial where it would have benefited from other key players being part of this process. We have to work more co-operatively.
• May be that we have rushed into a few projects and started along the implementation route without thinking through thoroughly what we are trying to achieve from a business perspective, eg: procrastinate about the decisions then rush it to hit budget cycle deadlines.
• Change management in the past has often been left to the later stages whereas we should encompass it much earlier on.
• Developing joint risk registers with contractors has also helped in strengthening relationships and obtain increased visibility on the key issues.
• We have used a Business Implementation Modernisation Committee to help take a top level view on priorities. This process still needs to mature but having a non-operational chair has helped us taken an objective view.
• We seem to do much fire fighting in projects and programmes. Whilst this will always be there we need to shift the balance more to avoidance by good quality assurance.
• Setting the governance at the right levels of membership, including external organisations, helps issues to be raised and discussed in a timely manner.
• We utilised existing communications networks along with workshops, and virtual teams in order to involve people and keep them up to date and encourage ownership.
• For implementation we focused upon three lead implementation teams to test out the new processes and subsequently become a source of advice and guidance for others.
• Spending time looking ahead to the governance needed for operational use needs to be done in an appropriate timeframe so it’s in place for when systems and processes go live.
• Our approach to managing partners and contractors is often different. A more consistent view and approach to these commercial relationships would also bring dividends.
• We have made good use of Gateways and found these very useful. We have had some good experienced OGC input.
• There will always be political tensions of the collective Executive and individual Departments. We have to have processes for managing these and the associated trade-offs.
• We have looked at other examples (eg. Wales) in helping to put together Governance and shadow structures for our programme.
• The Oversight Board now allows for wider discussions on what support is needed across the programmes and projects. We could still do more.
• Identifying cross cutting risks at the Oversight Board has been very useful. We need similar processes to cover, eg:
• Planning / scheduling (re the simultaneous nature of the reforms)
• Managing financial ‘gaps’
• Contractual / Service Management
• Large project boards can be very unwieldy, we have to find an effective size for governance.
• Procurement are normally involved in all the key programmes / projects. Formulating a top level procurement plan across these initiatives would help in visibility of key stages of work and hence the resource required at various stages in the cycle.
• We still seem to take quite a long time from idea formulation to final implementation. As such benefits take longer to realise. We should examine ways of speeding up the whole process.
• Having an independent chair person has been really useful to us and our partners and I would recommend this as good practice.
• We haven’t always been good at setting and sticking to targets. Things do and will always change but we should be more robust in our planning.
• Getting Gateways embedded needs good people to make them work well. They are very good for raising issues for the SRO.
• We do implement things – we just need to get better at the transition planning.
• There is evidence of more sharing of information and views at the Oversight Board. However we do need to challenge each other more and take a ‘corporate’ approach to situations.
• We don’t always seem to get the right amount of training/awareness carried out in a timely manner. Some of this is a problem with contractors but we need to better control these issues.
• We have gone through a learning curve and now there is better co-ordination across programmes and projects.
• We can still improve in managing the scope of our projects and the overall phasing of them when projects are running in parallel.
• We have had some quite awful experiences in training and transition. Whilst we have in the main overcome these, we could have avoided some by better sharing of lessons.
• In the main where Gateway reviews have been used, they have been beneficial at highlighting important issues. The application across different Departments is variable however.
• Initiating weekly meetings with all key stakeholders and utilising a RAG status for management actions has enabled us to keep good visibility on the project.
• Not too sure if we have taken the lessons learned from training in various projects to heart. We still seem to have instances of training issues recurring in later phases.
• Our programmes and projects all have an impact on end users (staff or public). We need to adopt an ethos of looking at the issues from their point of view, especially when we are expecting behaviour change as a result.
• Important to mange at Reform portfolio level in order to see across the whole picture, eg:
• affordability
• key deadlines / milestones / Gateway schedules
• risk assessment
• procurement strategies
• TU involvement
• communication etc.
• The Governance worked really well – all key stakeholders involved supported me as project manager to get things done.
• The Oversight Board is now more engaged across the portfolio which has helped people to see all of what is going on.
• I don’t personally get much value from the Oversight Board

3: People – ‘The skills, knowledge, experience we need’ including eg:

• Key Roles / SRO / Programme & Project Managers / PMO
• Skill development / equality
• Specialist requirements / Legal / Procurement / Contractual / IT etc
• ‘Partners’ and Consultancy support
• Induction / education / awareness
• Intelligent Client roles / Critical friend
• Look for SROs from across the organisations for cross cutting programmes / projects
• It appears that we lose knowledge and experience when key people leave – we must better capture the lessons from these people.
• Contract Management is growing in importance. We need to get recent lessons and experience across to a wider community.
• Involving ‘business as usual’ (operational) managers in the whole process did put additional pressure on them. The payback was that they understood the new system and were genuinely committed to making it work.
• We have to be more controlled and rigorous in the way we manage partners. We should be managing them. Sometimes it feels that it is the other way around.
• We could do more to select and develop our programme / project managers and in some cases SROs).
• There continue to be signs of lessons being learned over and again in new projects / phases. We need to improve our sharing of lessons and encourage people to learn from each other. There are still some Departments who appear not to wish to use available programme and project disciplines.
• We still try and get away with part time resource. We need to be honest with ourselves about the level of resourced needed. Given that we will always take risks in this area, we could do more to support people who find themselves in this position.
• Obtaining top level senior support and leadership helped tremendously in priority, visibility, communication and sending the right messages.
• It is possible to play brinkmanship with resources and possibly our project was too lean. Additional resource would have given headroom to allow others to learn on the project.
• It appears that we do not have in place a real strategic engagement with TUS. We have managed expectations but this has been more in a short term / tactical sense.
• A main lesson we learned was to secure the right skills at the right time, in line with contractual terms. This is especially so when people are still carrying out their ‘day job’. At the outset you need to get agreed plans for resource release with the relevant departments.
• Involving the lawyers early on was the right move. This resulted in a robust contract and also helped build our level of commercial skill.
• With more contracts being entered into we need to further develop key commercial and contractual skills. We rely too heavily on a few people at present.
• We probably do need a more strategic approach with TUS across the reform projects in order to inject greater levels of consistency.
• We have definitely experienced the loss of knowledge and experience as people move on. We need to capture this experience as we progress, not wait until the end of a project or programme.
• We have some good experienced people managing the projects.
• More full-time people on projects would help – we still expect that part-time is good enough for some roles.
• The cadre of expertise is starting to build. Departments however have different ways of deploying programme / project management techniques. Some level of consistency would probably help further build the skill levels.
• It is important to build a body of skills / experience as a ‘virtual centre of excellence’ which have the knowledge and credibility to offer support to others.
• There is no doubt that we are gaining skills in programme / project management and that the approach is here to stay. However there are inconsistencies across Departments.
• As people move in careers / leave, we often do not try to capture and spread experience before they move on. Obviously they take their personal experience with them to the new role but not in a planned way normally.
• People are now valuing skills in programme and project management more highly. Their inclusion in core competencies and SCS Master classes are helping to strengthen the message.
• Not anticipating certain issues in advance lead us to underestimate demand in our help desk. Hence individuals became over loaded and this had personal implications for them.

4: Involvement – ‘Making sure we keep people involved and up to date’ including eg:

• Stakeholder Management and engagement
• Communication (internal / external)
• Consultation: TUS / Public / Government Bodies
• Ministerial engagement
• Use of shared service
• Any models or processes adopted, eg Benefits realisation, must be flexible for use across all departments without being too onerous.
• Make sure our major investments are positioned to deliver as part of our commitment to the overall public good.
• Many of the things we do now have a wide range and levels of stakeholders. In some projects we have under-estimated the resource required to manage these effectively. Certain stakeholders can be challenging, political and unpredictable.
• We still need to strengthen the overall vision/picture for some of these reforms in order to help ‘buy-in’ by staff, users and politicians.
• Need to take an holistic view of our portfolio so that we are clear on the overall objectives and benefits of all these reforms and hence make it easier and more effective to communicate them.
• In-house people and contractors spending time with end users and front line managers has helped a lot. Discussions and workshops are key to this. We have also used ‘super users’ to help get a credible message across.
• Where it is a cross cutting project (across Depts.) it is very important to involve these Depts early on in order for them to understand their role and the resources they need to commit.
• Because Depts. Carry out processes in slightly different ways, it is key to work closely with them in order to agree the most appropriate routes for implementation.
• Getting high level involvement and commitment from partner/supplier organisations is also key to building effective working relationships.
• We must find ways of ensuring ‘customers’ are involved.
• With many key stakeholders you have to spend time ensuring that differing expectations are understood and managed effectively.
• It is important that we start taking a more consistent approach to our users and to how we manage shared services in the future.
• An approach that involves all key stakeholders at the front end should help in both surfacing the anticipated benefits and in realising them in later phases of the programme/project.
• We are getting increased exposure now to programmes and projects and we need to improve how we manage relationships with all our partners.

These are long term relationships and often need different approaches at the various levels between organisations.

• There are major initiatives going on in, eg: Education, Health and Local Government. We must find an effective way of sharing lessons and offering mutual support. There could be many shared services opportunities.
• We still feel that further processes could be put into place to help visibility and share experiences across the RPA programme.
• Departments are keen to co-operate more and we should capitalise on this.
• It is important that Departments do not see initiatives like these as being ‘done to them’ by DFP.
• Co-ordination of key communication strategies for the public and staff is something we need to get better at.
• It is important to ‘sell’ the projects at the start of their lifecycle in order to generate the required ‘buy-in’ by those involved or affected by the project.
• We have hit issues in our key projects and mainly overcome them by learning the hard way through perseverance rather than by learning from others.
• We used a consultative joint forum with TUs to help get involvement across the key strands of activity.
• In the past we have not been good at always acting in a ‘corporate’ way. We have to be aware that stakeholders have to be involved and won over in order town their commitments on the project, including their financial contributions.
• We have definitely made in-roads on communications in a more joined up way. This has not always been the case and messages were not always clear to staff. We now use a single ‘Reform Bulletin’ to help co-ordinate key messages.
• There is still a feeling amongst certain Departments that things have been ‘done to them’ by DFP. We have to continually widen the levels of involvement.
• As you would expect, people are heavily focused upon their own programme or project. This can inhibit time to share lessons and the time to communicate more widely to interested parties.
• Doing stakeholder analysis at DFP level would be more effective for all the projects rather than for each individual initiative.

Appendix (ii)

List of people seen for discussions:

Adrian Arbuthnot	DFP Supply, G5
Barry Lowry	DID, Programme Director ICT Assist
Bill McCluggage	DFP (DID) Head of egov. Reform Leader
Brendan Devlin	DRD, I Assist transition board
Bruce Robinson	Perm. Sec. DFP, Leader in NI Reform
David Orr	Ex Dir, CPD, replaced C. Thompson in SRO role
David Sterling	Water Reform, now DETI G3
David Thompson	DFP Treasury Off of Ac, SRO Account NI
Dennis Licence	Chair – Oversight Board
Derek Baker	DFP SRO of HR Connect
Emma Wilson	DFP Reform support
Ian Maye	DoE, ex SRO of ePIC Planning, Waste
Jim O’Hagan	DFP Finance Director, G5
John McMillen	Key figure, SRO etc in RPA
Kathie Walker	Ex – Centre of Excellence for Delivery
Leo O’Reilly	DFP, second Permanent Secretary
Mike Beare	DFP, Records NI Progamme Manager
Noel Lavery	DETI ex SRO Network NI
Peter Glynne	DFP (DID), driving Reform benefits
Stephen McDowell	Centre of Excellence for Delivery
Tom Gilgunn	CPD Head of ICT/Strategic Procurement
Tom Kennedy	DFP (DID) Programme Director Network NI
Tommy O’Reilly	Programme Director HR Connect WP2010
Trevor Steenson	Land & property, SRO GeoHubNI
William Duddy	NI Water, major reform

Appendix (iii)

Documents viewed:

DAO (DFP) Delivering Success in Government Acquisition based Programmes & Projects (21 Oct 2004)

DAO (DFP) ICT Enabled Business Change ( 4 Dec 2003) (Planned to be rewritten and issued end 2008)

DH Gateways Analysis (Helen Donlan, DH Gateway Team Leeds)

End Project Report – Electronic Libraries March 2002

H of C - Public Accounts Committee – Achieving value for money in the Delivery of Public Services (2005 – 06)

Lessons Learned Workshop notes (April 2008)

Lessons Learned – Decriminalised Parking Enforcement (March 2007)

Lessons Learned – Draft process Annex H Supplement to DAO 33/03 (April 206)

Lessons Learned / 2008 – Network NI Project

Lessons Learned Matrix (2008)

NIAO - Springvale Educational Village (Nov 2006)

NIAO – Fire and Rescue Training Centre (Dec 2006)

OGC – Gateway Checklist / Best Practice Guides (2007/08)

OGC – MSP Guidelines

Programme & Project Lessons Draft Level 1

Programme & Project Lessons Draft Level 2

SSA – Modernisation Board Progress Summary (12.3.08)

Training Across the Civil Service Reform Projects (Emma Wilson)

Annex 2

Northern Ireland Civil Service
A Process for Managing Lessons
Recommendations

Produced for : Tom Gilgunn (DfPNI)
Produced by: Alan Fellows
Draft Version 2: 14 August 2008

Page

Contents:

1: Introduction 75

2: Summary of views on a process for Learning Lessons 76

3: Recommendations and Next Steps 77

Appendices:

(i) Suggestions for Learning Lessons which emerged 78

(ii) List of people seen 81

(iii) Documents viewed 82

1 Introduction

This assignment was undertaken during June and July 2008.

The overall purpose was to:

• Summarise the key strategic management lessons from Programmes and Projects to date
• Produce atop level draft management check list to aid future programmes and projects
• Recommend ways of capturing and disseminating lessons learned in the future.

The main sources of information for this assignment were:

• Short discussions / interviews with a selected group of Senior Managers, SROs, Programme and Project Managers.
• Input from other best practice sources.

This document concentrates upon recommendations for a process for managing lessons. There are two other reports available from this assignment:

• Senior Management Checklist for programmes and Projects – draft checklist framework
• Strategic Management Lessons from our Programmes and Projects – Executive Summary

2 Summary of views on a process for Learning Lessons

This section summarises the views expressed by interviewees regarding appropriate processes for capturing and disseminating lessons for programmes and projects. A more detailed list of comments appears in appendix (i)

General Principles for the Process:

• Start with something straightforward / simple and then build upon it.
• Encourage honesty – ‘tell it as it is’ approach.
• Design it to help people – not to audit them.
• Use stories to help bring the lessons alive.
• Ideally design it to work across all Departments to help consistency and a corporate approach.

Capturing the Lessons:

• Try and use a number of existing sources (rather than invent completely new ones), eg:
• Gateway process
• PPE
• Appraisals / verbal debriefs
• Audits
• Input from other Government Departments and external organisation, non-executive directors.
• Collect the stories by interviewing key programme and project members at various stages. (Perhaps make use of a Business School student/body to do this and turn them into case studies).

Sharing the Lessons:

• Make sure the key ones appear in DAO and other official notifications.
• Produce simple lists of who to go to for what. (Pointers / guides / check lists / links to what already exists, eg MSP / Gateways). Support with more detail on a simple database for people who want/need more information.
• Present the Case Studies on training modules, eg: Professional Skills for Government (to be presented by the practitioners, eg SROs / Programme and Project Managers).
• To get the high visibility PSG to sponsor from time to time special forums / master classes / or conference [or part of one] with internal and external guests.
• Periodic debate of strategic lessons (eg quarterly / 6 monthly) at PSG / Oversight Board / or other senior forum eg. Financial Directors)

It is important to use more than one method of collection and sharing to allow the best possible chances of collecting relevant information from various view points and sharing the lessons in a variety of ways according to the different audience needs.

In order for it to be an effective learning process it will need:

• A senior champion – preferably at PSG level. This could be part of a general ‘Champion’ role for programme and Project Management (PPM).
• A process owner and necessary staff/roles.
• Buy-in and credibility from the Departments.
• Good marketing / communication in order that people know it exists.
• A regular review and audit of usage and effectiveness (eg. six monthly).
• Appropriate funding

3 Recommendations and Next Steps

1. Talk through the approach with senior managers and the PSG, to ensure continuing support for a ‘Learning Lessons’ process. Discuss, and ideally appoint, a sponsor / champion for this process or a wider PPM Champion at PSG level.

2. Appoint an overall ‘process owner’ who will ensure an effective process is put into place that works efficiently without overburdening bureaucracy.

3. Using the suggestions made on the process, select those to be followed and implemented. Develop a top level plan and benefit criteria for introducing the process. Focus upon a simple approach to begin with, eg; checklists / contact lists.

4. Establish an organisation wide ‘peer group’ made up of experienced Programme and Project mangers to act as a quality assurance mechanism on lessons collected and disseminated.

5. Introduce a process to review the effectiveness of Lessons Learned, eg: six monthly or annually and to track associated benefits from it.

Appendix (i)

Suggestions for Learning Lessons which emerged

‘What do you think may work best?’

Analysed under:

1: General Principles for the process(es) to be used

2: Suggestions for Capturing Lessons

3: Suggestions for Sharing the Lessons

1 General Principles for the process(es) to be used:

• Has to be a more pro-active way of getting the messages across – must do harder ‘face to face’ selling of the lessons
• Somehow we have to have a more formal mechanism without it being bureaucratic
• Ideally use ‘face to face’ mechanism supported by documentation / web based information for those who wish to look further
• We do capture some lessons but we don’t want reports just to sit on the shelf.
• Make sure there is good leadership / champion to encourage the capture and dissemination of lessons
• Reinforce the culture of learning from others by leading from the top.
• Don’t just use one route – get lessons into different events / documents to help overall cultural shift
• Cannot just rely on a web site as this may be too passive.
• Departments have to see that sharing lessons is important to them in order for them to give it time and priority.
• Have to encourage Departments to endorse good practice for capturing and sharing lessons.
• People under pressure to get things done rather than standing back to note / learn lessons from elsewhere.
• Centre of Excellence needs to take a more active role in getting lessons exposed.
• The emphasis needs to be on support, helping people to get it right – not any form of audit.
• Have to encourage people to be open and honest on the lessons for them to be of real value.
• Lessons need to cover the whole lifecycle, start to end.
• Must expose lessons to all levels of management – we must build it into core skills and competencies.
• Make sure all Departments buy-in to the process. You could try different processes in different Departments.
• The process will need to be ‘driven’ to make it work.
• Start with a ‘Quick Win’ – something simple that can be built upon.
• Lessons have to encompass both positive and negative views and be honest / credible.
• Have to engender the right spirit in the Departments for people to be open to express the lessons
• Use a ‘light touch’ to begin with – stay away from over bureaucratic / academic processes.
• We do need a more formal approach but it has to be in context with the priorities of the business.
• Focus on something simple.
• Accountability for capturing and disseminating lessons has to lie in the Departments – so they own the process, or at least buy into it.
• Information held on a database of lessons must be credible. So it may be necessary to have an ‘approved stamp’.
• Start at the real basics – key and core lessons and then gradually build on that.

2 Suggestions for Capturing Lessons:

• Put together a special Forum across NICS of interested parties and hold a number of these events a year.
• Publish a list of who to go to / who has experience of programmes / projects / contracts / procurement etc.
• Presentations / Guidance at Oversight Board / Procurement Board.
• Get the Centre of Excellence to collect the lessons – preferably verbally and to analyse them and keep them up to date.
• Make sure we debrief people on programmes / projects before they move to a new role
• Prefer to see ‘check lists’ and ‘pointers’ in preference to loads of detail.
• Get some case studies / stories written up that people can read / listen to.
• Use the Gateway process to specifically pick upon lessons at various levels at each Gate.
• Perhaps a Forum aimed at differing audiences, eg: Financial / Commercial / Contractual / Legal.
• Use PPE to help collect information and point people to these.
• Writing up / using case study approach would make it more practical and pragmatic.
• The Gateway Process is good at standing back and looking at projects from differing view points – so we could incorporate lessons into this.
• Need to set up ‘virtual library’ / repository of knowledge that can be easily maintained and accessed.
• Talk to people at the end of projects and during them in order to capture the information – Centre of Excellence could do this.
• Make sure you collect information on benefits realisation at various stages when programmes and projects go live.
• PPE can be too narrow – need to get lessons captured at differing levels.
• Use the notion of a ‘critical friend’ or ‘independent’ to capture the lessons, ie: someone with no vested interest.
• Could use Non-Execs. Where they exist to help capture strategic management lessons.
• We have to capture lessons as they happen, or otherwise there is a danger they will get forgotten.

3 Suggestions for Sharing the Lessons:

• Management Forum may work – but sometimes there appears a lack of energy / enthusiasm.
• We should have short lessons learned presentations to the PSG.
• If the issues/lessons are big enough they should be presented to Departmental Boards.
• Focused forums could help.
• Put together a special Forum across NICS of interested parties and hold a number of these events a year.
• Publish a list of who to go to / who has experience of programmes / projects / contracts / procurement etc.
• Incorporate in DAO /Best Practice letter from DFP.
• Presentations / Guidance at Oversight Board / Procurement Board.
• The place to share these from time to time is at the Oversight Board.;
• Prefer to see ‘check lists’ and ‘pointers’ in preference to loads of detail..
• Use a ‘one off’ event to bring the interested community up to date with lessons and to point them to more information.
• Get different levels of people to present lessons to the Oversight Board (eg: SROs / Prog-Proj Directors and Managers / Guests from elsewhere.
• Make sure people are aware of best practice (esp. MSP / NAO and OGC lists / Gateway Reference books) that exist already.
• Perhaps a Forum aimed at differing audiences, eg: Financial / Commercial / Contractual / Legal.
• Use PPE to help collect information and point people to these.
• Set up an ‘on line’ library of useful pointers and material.
• Get lessons into educational modules and in CAL.
• Run some ‘Master Class’ sessions and use case studies. Invite selected people – sponsored by Bruce in his new role.
• Use practitioners – those who have done it, to hold short events, eg: lunch time sessions.
• Has to be more than ‘Motherhood and Apple Pie’ – you have to use stories to bring things alive.
• Use the training involved in ‘Professional Skills for Government’ for experienced speakers who have practical knowledge to get the stories across.
• Must expose lessons to all levels of management – we must build it into core skills and competencies.
• Set up a ‘network’ approach – physically and virtually.
• Share lessons from Gateway Reviews (without compromising confidentiality).
• Issue a set of Guiding Principles and things like best practice on Business Cases etc.
• PPE can be too narrow, need to get lessons captured at differing levels.
• SRO’s could debrief each other on lessons
• Use ‘mentors’ to help get lessons articulated.
• People have to follow DAO – so lessons must be linked here. People also must sign up to common causes of failure, so they could also be incorporated here at a top level.
• Produce a checklist of who to speak to for advice.
• Produce a ‘Lessons for Dummies’ booklet.
• Put together a Project Management Forum or Virtual pool to help capture and share lessons.
• If a ‘one off’ was needed, a short road-show could be used.
• Produce a simple subject matter expert contact list to make it easier for people to track down appropriate knowledge.
• Could use Financial Directors meeting / Oversight Board for sharing key strategic lessons.

Appendix (ii)

List of people seen for discussions:

Adrian Arbuthnot	DFP Supply, G5
Barry Lowry	DID, Programme Director ICT Assist
Bill McCluggage	DFP (DID) Head of egov. Reform Leader
Brendan Devlin	DRD, I Assist transition board
Bruce Robinson	Perm. Sec. DFP, Leader in NI Reform
David Orr	Ex Dir, CPD, replaced C. Thompson in SRO role
David Sterling	Water Reform, now DETI G3
David Thompson	DFP Treasury Off of Ac, SRO Account NI
Dennis Licence	Chair – Oversight Board
Derek Baker	DFP SRO of HR Connect
Emma Wilson	DFP Reform support
Ian Maye	DoE, ex SRO of ePIC Planning, Waste
Jim O’Hagan	DFP Finance Director, G5
John McMillen	Key figure, SRO etc in RPA
Kathie Walker	Ex – Centre of Excellence for Delivery
Leo O’Reilly	DFP, second Permanent Secretary
Mike Beare	DFP, Records NI Progamme Manager
Noel Lavery	DETI ex SRO Network NI
Peter Glynne	DFP (DID), driving Reform benefits
Stephen McDowell	Centre of Excellence for Delivery
Tom Gilgunn	CPD Head of ICT/Strategic Procurement
Tom Kennedy	DFP (DID) Programme Director Network NI
Tommy O’Reilly	Programme Director HR Connect WP2010
Trevor Steenson	Land & property, SRO GeoHubNI
William Duddy	NI Water, major reform

Appendix (iii)

Documents viewed:

DAO (DFP) Delivering Success in Government Acquisition based Programmes & Projects (21 Oct 2004)

DAO (DFP) ICT Enabled Business Change ( 4 Dec 2003) (Planned to be rewritten and issued end 2008)

DH Gateways Analysis (Helen Donlan, DH Gateway Team Leeds)

End Project Report – Electronic Libraries March 2002

H of C - Public Accounts Committee – Achieving value for money in the Delivery of Public Services (2005 – 06)

Lessons Learned Workshop notes (April 2008)

Lessons Learned – Decriminalised Parking Enforcement (March 2007)

Lessons Learned – Draft process Annex H Supplement to DAO 33/03 (April 206)

Lessons Learned / 2008 – Network NI Project

Lessons Learned Matrix (2008)

NIAO - Springvale Educational Village (Nov 2006)

NIAO – Fire and Rescue Training Centre (Dec 2006)

OGC – Gateway Checklist / Best Practice Guides (2007/08)

OGC – MSP Guidelines

Programme & Project Lessons Draft Level 1

Programme & Project Lessons Draft Level 2

SSA – Modernisation Board Progress Summary (12.3.08)

Training Across the Civil Service Reform Projects (Emma Wilson)

Annex 3

Northern Ireland Civil Service

Senior Management Checklist
for Programmes and Projects

Draft Checklist Framework

Assignment Sponsor : Tom Gilgunn (DfPNI)

Produced by: Alan Fellows

Draft Version 2: 14 August 2008

Contents:

Page

1: Introduction 85

2: Summary of Key Management Lessons 86

3: Draft Checklist Framework 90

Appendices:

(i) List of people seen for emerging management lessons 94

1 Introduction

This assignment was undertaken over a period from June to August 2008.

The overall purpose was to:

• Summarise the key strategic management lessons from programmes and projects to date
• Produce a top level draft management checklist to aid future programmes and projects
• Recommend ways of capturing and disseminating lessons learned in the future.

The main sources of information for this assignment were:

• Short discussions / interviews with a selected group of Senior Managers, SROs, Programme and Project Managers.
• Input from other best practice sources.

This report covers the formulation of a draft checklist framework for management lessons.

There are two other reports available from this assignment:

• Strategic Management Lessons from our Programmes and Projects – Executive Summary
• A process for managing lessons - Recommendations

2 Summary of Key Management Lessons

This section summarises the key management lessons that emerged during the assignment and which people saw as important for future programmes and projects. A more detailed list of comments appears in appendix (i).

These have been analysed under four broad areas:

1: Clarity: ‘What are we doing and why ?’

2: Management: ‘How will we / are we managing it ?’

3: People: ‘The skills, knowledge and experience we need’

4: Involvement: ‘Making sure we keep people involved and up to date’

1 Clarity - ‘What are we doing and why?’

to include, eg:

• Objectives / Purpose / Aim
• Investment and anticipated returns
• Business Cases / Affordability
• Benefits sought / realised
• Public Impact assessment
• Ownership and Leadership and Ministerial direction
• Fit to Strategy / other Programmes and Projects
• Measures of Success

2 Management – ‘How will we / are we managing it?’

to include, eg:

• Governance
• Risk / Issue / Contingency Management
• Programme / Project / Planning approaches
• Monitoring / Reporting / Controlling (inc QA/Audit/Gateways
• Implementation / Procurement Processes
• Change Management / Contract Management

3 People – ‘The skills, knowledge, experience we need’

to include, eg:

• Key Roles / SRO / Programme & Project Managers / PMO
• Skill development / equality
• Specialist requirements / Legal / Procurement / Contractual / IT etc
• ‘Partners’ and Consultancy support
• Induction / education / awareness
• Intelligent Client roles / Critical friend

4 Involvement – ‘Making sure we keep people involved and up to date’

to include, eg:

• Stakeholder Management and engagement
• Communication (internal / External)
• Consultation: TUS / Public / Government Bodies
• Ministerial engagement
• Use of shared services

Pointers for Success

The following are the common key lessons that emerged from the various discussions of programmes and projects in Northern Ireland. They are formulated as recommendations for supporting a successful Programme or Project.

Clarity:

1. Be clear on what you are aiming at:

• The Programme / project objective
• Strategic fit with vision / other initiatives
• Remove any ambiguity in the Business Case

2. Get certainty around funding:

• Phased budgets
• Who is contributing what and when – what are the robust assurances?
• Financial ‘sign off’ and authorisation process

3. Specify the target benefits up front:

• Quantitative / qualitative
• Measures / process
• Baselines

4. Ensure strong visible leadership:

• Champion / SRO and other key roles
• Who needs to have ownership

5. Set a longer term Vision:

• To provide a framework to work within
• To help a corporate approach of associated initiatives

6. Take a broader view:

• Look where integration needs to happen
• Ensure interdependencies are highlighted
• Avoid priority clashes

Management

7. Get the Governance balance right:

• Independent members
• Decision making vs consultation and involvement
• Size to avoid bureaucracy

8. Inject rigour and robustness:

• Use of accepted disciplines, eg: Business Case / Prince 2 / Gateway / Risk Mngt
• Departmental freedoms vs consistency

9. Ensure commercial and contractual acumen:

• More ‘partners’ being used and need to be managed effectively
• Longer term arrangements being put in place

10. Develop early Change Management strategies:

• Put change / behaviour management strategies and plans in place as early as possible.
• Be realistic about the challenges of the required changes in addition to the benefits

11. Where possible take an integrated approach to planning:

• Get forward views on, eg: procurement, funding, training, phased delivery
• Get messages across to staff / public / TUs in a co-ordinated way
• Joint / corporate risk management

People

12. Use SROs from across the organisation for cross cutting projects:

• Can also help with independence

13. Be honest about the amount of resource required:

• Mix of full time / part time roles
• Time required for training

14. Always include people from operations / business as usual (BAU):

• They know the business
• To get required ownership

15. Get scarce skills in place for managing the growing number of ‘partner’ relationships:

• Procurement / contractual / legal / negotiating skills more in demand

16. Use your experienced resource to help others:

• Esp Programme / Project Managers / SROs etc. to get consistency of approach

17. Collect lessons throughout the life cycle:

• Don’t let expertise ‘walk’
• Ensure people know where the expertise is: inc local/organisational/ Departmental/NICS/wider PS contexts

Involvement

18. Get key stakeholders involved early:

• Helps buy-in and gives additional expertise and knowledge
• Can manage expectations better

19. Ensure you take a ‘customer’ perspective:

• Internal and external customers will see things differently
• Allows identification of potential obstacles

20. Prepare Relationship management plans for commercial partners:

• Sets expectations
• Develop contingency strategies in advance

21. Work with the rest of the Organisation:

• Let others know the plans in order to have a more corporate approach
• helps avoid priority clashes.

3 Draft Checklist Framework

This section links the key lessons from the interviews to the various Gates in the Gateway process. This attempts to illustrate the key focus of activity in the various stages during the lifecycle to produce a senior management checklist. The Gateway framework provides a practical way of looking at the major stages in the lifecycle. Given that many projects and programmes are subject to the Gateway Review process, it seems a sensible, pragmatic route to follow for the checklist.

The draft checklists that follow show the lessons that have emerged from those associated with actual programmes and projects in Northern Ireland. These are at a top level management view.

This matrix could also be expanded in the future to incorporate best practice lessons from elsewhere if required.

At later stages too, it could be enhanced and linked to additional material at more detailed levels as this is collected and made available. Some lessons at a detailed level already exist and it would be relatively straightforward to reference these for readers requiring more information.

It is also acknowledged that not all Programmes and Projects across all Departments have been part of the interview process. Hence this is a draft checklist framework that can evolve with time and broader input.

The checklist is designed as a matrix showing the lessons as ‘pointers for success’ linked to the Gateway lifecycle stages or gates. A coloured RAG status has been adopted to illustrate the relative importance of the lessons to the various stage.

RED Critical / High importance to that stage

AMBER Very Important to that stage

GREEN Important to that stage

These are subjective assessments based on the way lessons were expressed during the interviews. People will have differing views probably based upon their own experience. It is therefore recommended that additional quality assurance be carried out on any management checklist before it is issued. This could be achieved by obtaining input on the RAG status from SROs / programme and Project Managers and other key experienced people – eg: NIAO.

Bearing in mind that the purpose of a checklist is to help managers avoid pitfalls in future programmes and projects, there will always be some element of interpretation needed. However, consensus from across experienced people on the RAG assessment should provide the necessary confidence.

For those not familiar with the Gateway Stages, the definitions are as below:

0 : Strategic Assessment	The need for the programme confirmed – check that it is likely to achieve the desired outcomes
1 : Business Justification	The business requirement can be delivered - affordability, achievability and value for money established
2 : Delivery Strategy	The acquisition and delivery strategy are appropriate for the desired business change; implementation plans are in place.
3 : Investment Decision	The project is still required, affordable and achievable; implementation plans are robust; investment decision is appropriate.
4 : Readiness for Service	The organisation is ready to make the transition to implementation; ownership and governance are in place for operation.
5 : Operations Review and Benefits Realisation	Confirm smooth operation, delivery of outputs and achievement of benefits.

Management Checklist Framework - Schematic

3: Draft Checklist Framework (Senior Management Checklist for Programmes and Projects)

Key Lesson / Success Pointer			Gateway Phase / Lifecycle Stage
0 Strategic Assessment	1 Business Justification	2 Delivery Strategy	3 Investment Decision	4 Readiness for Service	5 Ops Review + Benefits Rlstn
Clarity	1	Be clear on what you are aiming at	RED	RED	AMBER	AMBER	AMBER	AMBER
	2	Get certainty around funding	RED	RED	AMBER	RED	AMBER	GREEN
	3	Specify the target benefits up front	RED	RED	AMBER	RED	AMBER	AMBER
	4	Ensure strong visible leadership	RED	RED	RED	RED	RED	RED
	5	Set a longer term Vision	RED	RED	AMBER	AMBER	GREEN	GREEN
	6	Take a broader view	RED	RED	RED	RED	AMBER	AMBER

Red is High / Critical Impact Amber is Very Important Green is Important

Key Lesson / Success Pointer			Gateway Phase / Lifecycle Stage
0 Strategic Assessment	1 Business Justification	2 Delivery Strategy	3 Investment Decision	4 Readiness for Service	5 Ops Review + Benefits Rlstn
Manage- ment	7	Get the Governance balance right	AMBER	RED	RED	RED	RED	RED
	8	Inject rigour and robustness	RED	RED	RED	RED	RED	RED
	9	Ensure commercial and contractual acumen	AMBER	AMBER	RED	RED	RED	RED
	10	Develop early Change Mngt strategies	AMBER	RED	RED	AMBER	RED	GREEN
	11	Where possible take an integrated approach to planning	RED	RED	RED	RED	RED	AMBER

Red is High / Critical Impact Amber is Very Important Green is Important

Key Lesson / Success Pointer			Gateway Phase / Lifecycle Stage
0 Strategic Assessment	1 Business Justification	2 Delivery Strategy	3 Investment Decision	4 Readiness for Service	5 Ops Review + Benefits Rlstn
People	12	Use SROs from across the org. for cross cutting projects	RED	RED	RED	AMBER	RED	AMBER
	13	Be honest about the amount of resource required	RED	RED	RED	AMBER	RED	AMBER
	14	Always include people from Ops / Business as usual (BAU)	GREEN	RED	RED	AMBER	RED	RED
	15	Get scarce skills in place for managing the growing no. of ‘partner’ reltshps	GREEN	GREEN	RED	RED	RED	RED
	16	Use your experienced resource to help others	RED	RED	RED	RED	RED	RED
	17	Collect lessons throughout the life cycle	AMBER	AMBER	AMBER	AMBER	AMBER	AMBER

Red is High / Critical Impact Amber is Very Important Green is Important

Key Lesson / Success Pointer			Gateway Phase / Lifecycle Stage
0 Strategic Assessment	1 Business Justification	2 Delivery Strategy	3 Investment Decision	4 Readiness for Service	5 Ops Review + Benefits Rlstn
Involve- ment	18	Get key stakeholders involved early	RED	RED	AMBER	AMBER	AMBER	AMBER
	19	Ensure you take a ‘customer’ perspective	RED	RED	RED	AMBER	RED	AMBER
	20	Prepare Relationship Mngt plans for Commercial Partners	GREEN	GREEN	RED	RED	RED	AMBER
	21	Work with the rest of the Organisation	RED	RED	AMBER	RED	AMBER	AMBER

Red is High / Critical Impact Amber is Very Important Green is Important

Appendix (i)

List of people seen for discussions:

Adrian Arbuthnot	DFP Supply, G5
Barry Lowry	DID, Programme Director ICT Assist
Bill McCluggage	DFP (DID) Head of egov. Reform Leader
Brendan Devlin	DRD, I Assist transition board
Bruce Robinson	Perm. Sec. DFP, Leader in NI Reform
David Orr	Ex Dir, CPD, replaced C. Thompson in SRO role
David Sterling	Water Reform, now DETI G3
David Thompson	DFP Treasury Off of Ac, SRO Account NI
Dennis Licence	Chair – Oversight Board
Derek Baker	DFP SRO of HR Connect
Emma Wilson	DFP Reform support
Ian Maye	DoE, ex SRO of ePIC Planning, Waste
Jim O’Hagan	DFP Finance Director, G5
John McMillen	Key figure, SRO etc in RPA
Kathie Walker	Ex – Centre of Excellence for Delivery
Leo O’Reilly	DFP, second Permanent Secretary
Mike Beare	DFP, Records NI Progamme Manager
Noel Lavery	DETI ex SRO Network NI
Peter Glynne	DFP (DID), driving Reform benefits
Stephen McDowell	Centre of Excellence for Delivery
Tom Gilgunn	CPD Head of ICT/Strategic Procurement
Tom Kennedy	DFP (DID) Programme Director Network NI
Tommy O’Reilly	Programme Director HR Connect WP2010
Trevor Steenson	Land & property, SRO GeoHubNI
William Duddy	NI Water, major reform

Appendix 4

List of Witnesses who
gave Oral Evidence
to the Committee

List of Witnesses who gave
Oral Evidence to the Committee

1. Mr Leo O’Reilly, Accounting Officer, Department of Finance and Personnel.

2. Mr David Orr, Director of Corporate Services, Department of Finance and Personnel.

3. Mr Derek Baker, Director of Central Personnel Group, Department of Finance and Personnel.

4. Mr David Thomson, Treasury Officer of Accounts, Department of Finance and Personnel.

5. Mr John Dowdall CB, Comptroller and Auditor General, Northern Ireland Audit Office.