Part 7: Leadership

7.1
In this Part, we discuss:

• why leadership is important; and
• our main findings about how well each project met our expectations of leadership.

Why leadership is important

7.2
Effective leaders model behaviours and actions that promote expectations of high standards of performance, professional conduct, and achievement. They show this in many ways, including:

• scrutinising and challenging proposals to inform and make good decisions;
• owning those decisions and being ready for scrutiny;
• ensuring clear and open communication within and outside the project;
• complying with relevant legislation and other requirements; and
• promoting a culture that commits to learning and continuous improvement.

7.3
Leadership is critical to a project from early stages through to outcomes. Poorly led projects can be managed to specifications but might compromise wider outcomes.

7.4
Good leaders can also identify opportunities from adversity. If their strategic views and insights are lacking, the project might miss opportunities for new and innovative approaches to achieving the outcomes.

Leadership of risks and issues

7.5
We saw examples of strong leadership from the Bus Interchange and Acute Services Building project governance groups. This leadership helped those projects to make progress towards a successful outcome when difficulties arose.

7.6
We did not see the same leadership for the New Central Library project. This resulted in risks not being addressed that could have caused the project to fail. Under the new governance arrangements for this project, leadership has improved and steps have been taken to manage these risks.

7.7
Members of the Bus Interchange Project Steering Group told us how they had made a difficult decision to delay opening the first stage of the Bus Interchange. Although the building was ready on time, a software problem was identified a few days before the planned opening date.

7.8
CERA, supported by ECan, which is responsible for bus services, decided to delay the opening. CERA explained that it had set up its contracts so that the main contractor and software supplier were collectively responsible for fixing the problem.

7.9
The problem was fixed within a few days, and the Bus Interchange was able to open with only a week's delay. This left enough time to vacate the Justice and Emergency Services Precinct site on schedule.

7.10
In our view, this was a good example of leadership in risk management and decision-making. It shows that the project's leaders were willing to make a difficult decision in the best interests of the project. They had the confidence to do this because they had prepared well for this type of setback.

7.11
Strong HRPG leadership has kept the Acute Services Building project progressing even when there has been disagreement between the Ministry and the DHB. The HRPG's leadership has been able to compensate for problems caused by the lack of clarity in project roles and responsibilities.

7.12
Despite their differences, people from both the Ministry and the DHB told us they think that the HRPG is leading the project well. Strong leadership is particularly important for this project, which is a much larger and more complex project than the other two we looked at.

7.13
In our view, this has been possible only because of the attributes of the members of the HRPG. We saw evidence of this leadership when we observed an HRPG meeting. However, although good leaders are important, a strong governance structure should not depend on individuals. Without strengthening other parts of the arrangements for the Acute Services Building project, the project would be at risk if the HRPG members chose to leave.

7.14
In December 2014, when we first looked at the New Central Library project, we saw weaker leadership that put the project at risk. Despite progress, the Project Control Group did not address significant risks to the project's affordability and funding.

7.15
For example, the Project Control Group had prioritised making the library as big as possible, even when indicative costs were significantly more than budget. Project reports also show that the Project Control Group dismissed smaller and cheaper options, and simply accepted that cost was a risk. The Project Control Group had also not considered how to manage a potential shortage of funding.

7.16
The new governance arrangements for the New Central Library project have been designed to strengthen leadership by including more senior people from the Council, as well as an independent chairperson. The Council has appointed an experienced Development Director to provide project management leadership. The Development Director has been responsible for putting the governance improvements in place.

7.17
The new Project Steering Group has been in place since August 2015. Therefore, the group has had limited opportunity to demonstrate its leadership of the project.

7.18
However, because its members are more senior and experienced than the Project Control Group, they are better placed to provide oversight. When we spoke to them, they had a good understanding of the main project risks and issues and where leadership was needed to address these.

7.19
Since December 2014, the project's Development Director and, more recently, the Project Steering Group have taken a leadership role in addressing the affordability and funding risks. Funding remains a major risk for the project, but it is clearly recorded as such. People at all levels are well informed about the risks and the steps in place to address them. Now, the Project Steering Group actively oversees risk management.

Review and improvement

7.20
The Bus Interchange and New Central Library projects reviewed and changed their governance arrangements. This has helped to improve how their governance groups perform, so that they can oversee the projects more effectively.

7.21
Internal and external reviews can help ensure that governance arrangements are fit for purpose throughout the life of the project. Project reviews can also provide assurance to governance that the project is on track, identify project risks, and suggest improvements.

7.22
CERA, as an organisation, was particularly strong in this aspect. CERA shows a genuine commitment to continually improving the way it governs and manages its projects. The Bus Interchange Project Steering Group supported this.

7.23
A full programme of risk-based assurance and probity reviews supports CERA's commitment. These reviews provide CERA and the Project Steering Group with assurance about their governance and management of the project. Although the Bus Interchange is now complete, this approach will be valuable to the other projects CERA is leading, some of which have several years to run.

7.24
As we describe in this report, the Council has reviewed its governance arrangements and has put in place several improvements. These improvements were the result of the Council's internal review and the early findings from our work.

7.25
This willingness to recognise and address weaknesses in the governance arrangements has made a clear improvement to how the New Central Library project is being governed. In our view, further improvement could be achieved by introducing an ongoing programme of review and assurance, such as Independent Quality Assurance, for all of the Council's major capital projects.

7.26
Although it has had some reviews, the Acute Services Building project has had less independent scrutiny than we expect for a project like this. The Canterbury District Health Board Facilities Development Project is large and complex. We expected to see a range of independent reviews to provide assurance that the project is on track to deliver its intended outcomes.

7.27
So far, only mandatory Gateway reviews and some probity assurance about contract tenders have taken place. However, we understand that the HRPG is considering commissioning an Independent Quality Assurance or similar review of the Acute Services Building project.

7.28
Because the governance arrangements for this project are based on a new model, it would be particularly beneficial to review the arrangements regularly. In response to our early findings on the Acute Services Building project, the Ministry has identified a programme of work to address some of the problems we found. An ongoing programme of review would help provide assurance that any changes made are, and continue to be, effective.

Lesson

7.29
Strong leadership helps deliver effective governance and can compensate for weaknesses in other aspects. This is achieved by involving people with the right skills and attributes.