Part 1: Introduction

1.1
In this Part, we discuss:

• the purpose of our audit;
• what we audited;
• what we did not audit;
• how we carried out our audit; and
• the structure of this report.

1.2
Every year, government agencies invest hundreds of millions of dollars in new products and services. Ministers need to know that there is a system for encouraging and providing adequate incentives for the effective and efficient use of capital resources.

1.3
Gateway™ reviews are independent peer reviews of a project or programme and are repeated at key points in the project or programme's life cycle. These reviews provide advice and support to the project sponsor.¹ The reviews focus on how to help the project or programme progress successfully rather than finding out what might have gone wrong.

1.4
Gateway reviews were introduced in New Zealand in 2008, among a range of initiatives to strengthen capital asset management in the public sector. Up to 31 May 2016, there have been over 180 reviews covering more than 80 projects and programmes, involving about 40 departments and agencies.

1.5
Examples of projects and programmes that have had Gateway reviews are the Transmission Gully project, a patient information system for South Island district health boards, the refurbishment of Government House, the New Zealand Defence Force's new Pilot Training Capability programme, and the Inland Revenue Department's Business Transformation programme.

1.6
Each Gateway review costs the agency $75,000. This fee covers the direct costs of the reviews as well as the cost of administering the reviews. With 25-30 reviews carried out each year, Gateway reviews have an annual cost of about $2 million.

1.7
Initially run by the State Services Commission, Gateway reviews moved to the Treasury at the end of 2013. The reviews are currently managed by the Treasury's Investment Management and Asset Performance team.

1.8
We carried out a performance audit to assess whether Gateway reviews have been designed and implemented to deliver benefits to major projects and programmes in New Zealand.

1.9
Specifically, we looked at:

• whether Gateway reviews are an appropriate tool for major capital projects and programmes in New Zealand;
• whether Gateway reviews are planned, designed, and implemented effectively to deliver benefits to major capital projects and programmes;
• whether agencies, review teams, and the Treasury have the capacity and capability to ensure that Gateway reviews are run effectively and efficiently; and
• whether there is evidence that benefits are being realised as a result of using Gateway reviews.

1.10
We looked at Gateway reviews that were completed before and after 2013, when the Gateway review function moved to the Treasury. However, where we looked at how Gateway reviews are managed, our focus was on how the Treasury currently runs the reviews.

1.11
We did not audit other monitoring and assurance activities for public sector projects and programmes. However, we did look at how Gateway reviews fit in with those other activities.

1.12
To carry out our audit:

• We analysed data about all the Gateway reviews that had been completed up to 31 May 2016.
• We looked at 67 Gateway review reports, and followed the progress of eight projects through all their Gateway reviews.
• We spoke to reviewers who, between them, have been involved in about 60 Gateway reviews.
• We spoke to agencies with a combined experience of 63 Gateway reviews.
• We reviewed documents about the implementation and management of Gateway reviews.

1.13
In Part 2, we describe what a Gateway review involves.

1.14
In Part 3, we consider whether Gateway reviews are an appropriate tool for major capital projects in the New Zealand public sector.

1.15
In Part 4, we discuss whether Gateway reviews are planned, designed, and implemented effectively.

1.16
In Part 5, we consider whether there is adequate capability and capacity for Gateway reviews.

1.17
In Part 6, we discuss whether there is evidence that Gateway reviews are bringing benefits to projects and programmes.

1.18
In Part 7, we consider the future for Gateway reviews.

1.19
In this report, we use the term "Gateway unit" to mean the team of people responsible for running Gateway reviews, previously in the State Services Commission and now in the Treasury. We also use the term "projects" to mean both projects and programmes, unless we specifically state otherwise.

1: The project sponsor is often called the Senior Responsible Owner, or SRO. For Gateway reviews, this means the most senior person with direct responsibility for the funding and performance of the project or programme. They are usually part of an executive team.