Part 1: Introduction

1.1
In this Part, we explain:

• why we carried out our audit;
• how we carried out our audit; and
• how we are reporting our findings.

Why we carried out our audit

1.2
The theme for our work programme in 2014/15 was Governance and accountability. We chose this theme because of recent significant changes in legislation and financial reporting standards that affect public sector accountability arrangements. Good governance is important for achieving successful outcomes for major projects.

1.3
We audited three projects that are part of the Canterbury earthquake recovery. The recovery has long-term implications for people's lives as well as the economy. Rebuilding Canterbury is a priority for the Government and involves significant public spending.

1.4
Strong governance is needed to ensure that public funds are spent appropriately, to ensure that entities work together to deliver intended outcomes, and to provide clear accountability for Cantabrians and all New Zealanders.

1.5
The three projects we looked at were:

• the Bus Interchange;
• the New Central Library; and
• the Acute Services Building at Christchurch Hospital.

1.6
We chose these three projects because they are all significant to the rebuild and to the people of Christchurch. The three projects have different lead agencies and governance arrangements. They have different scopes, objectives, and budgets, and face different challenges.

1.7
At the time of our audit, the New Central Library and Acute Services Building projects were preparing for the tender phase. The Bus Interchange was close to completion. Since we completed our audit, the Bus Interchange was completed and has now opened.

How we carried out our audit

1.8
To carry out our audit, we:

• interviewed people who provide governance for each of the three projects;
• interviewed other people who are involved with those projects, including senior managers from the entities involved and people who work on the project teams;¹
• attended governance meetings to observe governance in action;
• reviewed documents about the governance structure for each project; and
• reviewed other documents about the project, such as project reports and meeting minutes.

1.9
We analysed all the information we collected to assess the effectiveness of the governance arrangements for the three projects.

What we looked at

1.10
We looked at the governance and accountability arrangements for each of the three projects we audited. We considered how the governance arrangements were designed, how they are working in practice, and what difference governance is making to the projects.

1.11
We assessed the governance and accountability arrangements of the three projects against six principles of good governance. We identified these principles by drawing on some of our previous reports and other relevant literature. Figure 1 sets out the six principles.

Figure 1
Principles of good governance

What we did not look at

1.12
We did not look at:

• project management, except where we found groups designated as governance groups acting more in a management role;
• policy decisions, including decisions that were already made about the scope and location of the projects we audited and about governance structures, where the Government directed these; and
• programme-level governance, except where this has directly affected the project.

1.13
We looked only at the governance of the three projects we audited. The entities responsible for these projects are also responsible for other projects in the rebuild. Our findings apply only to the projects we audited and not to any other projects. However, lessons from our audit may apply to other projects, and the Canterbury Earthquake Recovery Authority (CERA), Christchurch City Council (the Council), and the Ministry of Health (the Ministry) should consider where else they can apply our findings.

How we are reporting our findings

1.14
For this audit, we decided to report in three ways. First, we briefed each entity on our main findings about each project early on. This meant that the entities could address our main concerns and that our work could influence each project as much as possible.

1.15
As a result of this, the Council has made significant changes to its governance arrangements for the New Central Library project. The Ministry has identified a programme of work to strengthen the arrangements for the Acute Services Building project.

1.16
Secondly, we wrote to the entities responsible for each project to formalise our findings and recommendations. Where applicable, we also updated our findings to reflect progress the entities had made with each project and any improvements they had put in place.²

1.17
Thirdly, in this report, we draw from the findings about each project to see how they compare. We also identify overall themes and lessons about effective governance.

Structure of this report

1.18
In Part 2, we explain the background to the rebuild and the main entities involved. We also describe the three projects that we looked at and explain why we chose them.

1.19
In Part 3, we outline the overall findings for each of the three projects.

1.20
In Parts 4-9, we assess and compare the governance and accountability arrangements for the three projects against each of the six principles in Figure 1.

1: This included people from CERA, the Council, the Ministry, Canterbury District Health Board, the New Zealand Transport Agency, Ngāi Tahu, and the Treasury.

2: The letters we sent for each project are available on our website. We include our recommendations in the Appendix.