Part 1: Introduction

1.1
In this Part, we describe:

• the purpose of this follow-up report;
• what the Stronger Christchurch Infrastructure Rebuild Team (SCIRT) is and what it does;
• how we carried out our follow-up work; and
• the structure of this report.

Purpose of this follow-up report

1.2
In 2013, we carried out a performance audit to assess the effectiveness and efficiency of arrangements to repair Christchurch's horizontal infrastructure (our 2013 report).¹ Specifically, we audited how three public entities were managing the rebuild of the horizontal infrastructure² through an alliance called SCIRT. The three public entities managing the rebuild of Christchurch's horizontal infrastructure, which we refer to in this report as "the public entities", are:

• Christchurch City Council (the Council);
• the Canterbury Earthquake Recovery Authority (CERA)³; and
• the New Zealand Transport Agency (NZTA).

1.3
This report looks at the progress the public entities have made in addressing recommendations from our 2013 report, and their preparation for the future.

What the Stronger Christchurch Infrastructure Rebuild Team is and what it does

1.4
SCIRT is an alliance of three "owner participants" (the Council, CERA, and NZTA) and five "non-owner participants". CERA is a funder, and the Council and NZTA are funders and asset owners.

1.5
The five non-owner participants are City Care Limited, Downer New Zealand Limited, Fletcher Construction Company Limited, Fulton Hogan Limited, and McConnell Dowell Constructors Limited. The non-owner participants are responsible for doing the repairs. Each non-owner participant has a delivery team within SCIRT, which is responsible for completing projects within the SCIRT programme. When we refer to delivery teams in this report, we mean the teams from the five non-owner participants.

1.6
SCIRT is responsible for rebuilding most of the horizontal infrastructure damaged by the major earthquakes on 4 September 2010 and 22 February 2011. In 2013, the public entities set out their funding arrangements for rebuilding the horizontal infrastructure in the Cost Sharing Agreement and the Memorandum of Understanding. The Crown estimated that it would spend $1.8 billion, with CERA funding 60% of eligible costs for the water infrastructure (underground freshwater, wastewater, and stormwater pipes) and NZTA funding 83% of the roading infrastructure. The Council estimated spending of $1.14 billion under the Cost Sharing Agreement. SCIRT is a temporary alliance formed under the Alliance Agreement and is expected to finish its construction programme by 31 December 2016. Some of the work funded under the Cost Sharing Agreement to repair the horizontal infrastructure is not part of the SCIRT work programme.

1.7
Two bodies govern the SCIRT programme: the Horizontal Infrastructure Governance Group, and the SCIRT Board. Figure 1 below summarises the different roles of the two groups, their membership, and how they are chaired. See paragraphs 3.6-3.18 for more information about the governance arrangements.

Figure 1
Membership and roles of Horizontal Infrastructure Governance Group and SCIRT Board

1.8
The SCIRT Integrated Services Team is the operational arm of the Alliance that manages the SCIRT work programme by designing, costing, and overseeing construction of projects by the delivery teams. The SCIRT Integrated Services Team is made up of managers and staff seconded from the participating entities, and various consulting practices. In this report, we use ‘SCIRT' to refer to the SCIRT Integrated Services Team when talking about the entities involved in delivering the SCIRT programme.

How we carried out our follow-up work

Our 2013 report

1.9
In 2013, we audited how the public entities were managing the horizontal infrastructure rebuild through SCIRT and found that:

• SCIRT had many of the good-practice characteristics of alliancing;
• SCIRT projects seemed reasonably priced, given the circumstances; and
• SCIRT was delivering other benefits, including increasing the skill level of the construction workforce and fostering innovation.

1.10
In 2013, we also highlighted some risks that needed to be managed. In particular:

• SCIRT's effectiveness was being increasingly hindered by a lack of clarity about governance roles and responsibilities, and by limited involvement from CERA in the governance of SCIRT.
• The public entities did not have a common understanding of the levels of service that the repaired horizontal infrastructure should deliver.

1.11
In our 2013 report, we made seven recommendations about how the public entities could address these risks:

We recommend that the Canterbury Earthquake Recovery Authority, Christchurch City Council, and the New Zealand Transport Agency:

1. change the governance framework to address ambiguity about roles and responsibilities, including the role and responsibilities of the independent chairperson.

We recommend that the Canterbury Earthquake Recovery Authority:

2. contribute more consistently to effective leadership and strategic direction for the Stronger Christchurch Infrastructure Rebuild Team.

We recommend that the Canterbury Earthquake Recovery Authority, Christchurch City Council, and the New Zealand Transport Agency:

3. use the governance arrangements to provide timely guidance to the Stronger Christchurch Infrastructure Rebuild Team on the priorities and direction of the rebuild;
4. agree on the levels of service and quality of infrastructure that the rebuild will deliver, in conjunction with confirming funding arrangements, and consider a second independent review of the Infrastructure Recovery Technical Standards and Guidelines;
5. use a coherent framework for measuring key aspects of the Stronger Christchurch Infrastructure Rebuild Team's performance that integrates project-level delivery team performance with alliance objectives and overall programme delivery, and is based on sound measures tested through the Stronger Christchurch Infrastructure Rebuild Team's internal auditing regime;
6. ensure that their framework for auditing the Stronger Christchurch Infrastructure Rebuild Team provides them with adequate assurance that the Stronger Christchurch Infrastructure Rebuild Team is well managed and delivering value for money; and
7. in conjunction with strengthening performance measures, provide feedback to the Stronger Christchurch Infrastructure Rebuild Team to improve the analysis and information included in reports to the Stronger Christchurch Infrastructure Rebuild Team Board and make these reports more useful.

1.12
This follow-up report looks at the progress the public entities have made in addressing those seven recommendations. We also assess the arrangements for transferring information and assets from SCIRT to the Council and for learning and sharing lessons. These arrangements are worth looking at because:

• a successful transfer of assets and information from SCIRT to the Council should increase the Council's understanding of the condition of its assets, which will improve the future management of these assets for the benefit of the people of Christchurch; and
• the lessons learned could inform future alliances, repairs (including in response to natural disasters), and management of horizontal infrastructure assets.

Our objectives and expectations

1.13
The main objective of our follow-up work was to assess and report on:

• how the public entities have addressed the recommendations in our 2013 report;
• the arrangements for transferring assets and information from SCIRT to the Council; and
• the arrangements for learning and sharing lessons from the horizontal infrastructure rebuild.

1.14
We expected the public entities to have made improvements as a result of our recommendations since our 2013 report, and we expected those improvements to have contributed positively to SCIRT's effectiveness and efficiency.

The scope of our work

1.15
We looked only at the SCIRT programme, which is confined to the city boundaries of the Council. We did not:

• look at repair work delivered under other arrangements or outside the Council's city boundaries;
• inspect construction work or carry out a technical review of the engineering design solutions that SCIRT uses; or
• assess the performance of the individual delivery teams or other contractors working with SCIRT.

How we carried out our work

1.16
To carry out our work, we:

• interviewed staff from the public entities and SCIRT;
• reviewed and analysed relevant documents from SCIRT and the public entities;
• reviewed external reports about SCIRT and repairing Christchurch's horizontal infrastructure; and
• analysed relevant data.

1.17
We carried out our fieldwork and analysis in mid-to-late 2015.

Structure of this report

1.18
In Part 2, we discuss the progress of repairs under the Alliance Agreement.

1.19
In Part 3, we discuss the public entities' improvements to governance arrangements (our recommendations 1-3, and 5-7).

1.20
In Part 4, we discuss the Council's position for managing horizontal infrastructure in future, and the continuous improvement practices and legacy of SCIRT.

1.21
In Part 5, we discuss the effect of decisions about levels of services and funding (our recommendation 4).

1.22
In Part 6, we discuss immediate priorities, and considerations for the future.

1.23
In those Parts where we follow up on an earlier recommendation, we describe that recommendation, what we found in our 2013 report, the changes made since our 2013 report, and our assessment of those changes. The Appendix on summarises progress in addressing our seven recommendations.

1: Further information is available in our 2013 report, Effectiveness and efficiency of arrangements to repair pipes and roads in Christchurch. Available on our website: www.oag.govt.nz.

2: Horizontal infrastructure is made up of roads (including retaining walls and bridges), freshwater and wastewater pipes, and the stormwater drainage network.

3: Some of CERA's role, including relating to horizontal infrastructure repairs, is carried out by a newly formed group in the Department of the Prime Minister and Cabinet.