Part 4: Transfer of assets and information, and sharing and applying lessons

Effectiveness and efficiency of arrangements to repair pipes and roads in Christchurch - follow-up audit.

4.1
In this Part, we discuss the:

Summary

4.2
As part of our follow-up work, we looked at the arrangements for transferring information from SCIRT to the Council. We also looked at the handover of assets from SCIRT to the Council after projects have been completed. This is important because, if the Council has greater knowledge about the condition of its assets, it can manage its assets more effectively and efficiently for the benefit of the people of Christchurch.

4.3
Recently more promising progress has been made in planning the transfer of information from SCIRT to the Council about its assets. The main challenge is that the Council's current systems are not readily able to use the information from SCIRT.

4.4
Handover of assets from SCIRT to the Council was not meeting targets in 2014 to early 2016. However, there have been recent improvements.

4.5
As part of our follow-up work, we also decided to look at how the public entities and SCIRT are recording and sharing lessons learned. This is because lessons from SCIRT are relevant to future alliances, asset management, responses to future natural disasters, and innovation in delivering horizontal infrastructure.

4.6
We found that SCIRT is:

  • identifying many lessons about managing and delivering a horizontal infrastructure rebuild;
  • encouraging continuous improvement by sharing these lessons; and
  • applying some of the lessons.

4.7
The public entities need to continue their work in actively and systematically identifying, recording, and sharing their lessons from SCIRT and the Alliance approach. The public entities also need to manage the risk that their own lessons might be lost when staff leave or organisations change.

Preparing to transfer information to better manage horizontal infrastructure assets

Promising progress has recently been made in planning the transfer of information to the Council. The Council has a unique opportunity to be in a strong position to improve its understanding of the condition of its assets, which will in turn improve the future management of assets. Recent momentum needs to be sustained to fully realise this opportunity.

4.8
Transferring information from SCIRT to the Council involves several challenges. These include:

  • The Council's current systems are not readily able to use the information from SCIRT.
  • The asset condition information from SCIRT will become dated over time (and decrease in value) if it is not updated.
  • The Council's staff need the right training to effectively use any new technology, systems, and processes.
  • The Council and entities need to manage the risks associated with the transfer of information.

4.9
If the Council does not change its systems and processes, it will not fully realise the value of SCIRT's information and systems.

4.10
During our fieldwork in mid-to-late 2015, we found that there had been limited progress after planning workshops involving Council and SCIRT staff held in July 2014. The Council had set up a group in 2014, prepared a definition of the problem, and prepared a business case. Interviewees, however, expressed concern about the pace of the Council's progress in planning for the transfer and inadequate communication about the transfer.

4.11
Since the public entities and SCIRT held a workshop in October 2015, there has been more promising progress. The public entities and SCIRT have agreed on what success will look like, and have agreed on a range of workstreams covering:

  • physical delivery of SCIRT and non-SCIRT programmes;
  • data information systems;
  • contractual close-out of SCIRT (this covers the administrative activities required after construction is finished to verify that parties have fulfilled their obligations);
  • learning and legacy, including the story of SCIRT, horizontal infrastructure, and the horizontal infrastructure programme;
  • preparing the Council for success, including adopting different asset information and management policies, systems, and practices;
  • communications and stakeholder management; and
  • governance arrangements.

4.12
After the workshop, the Infrastructure Programme Transition Group was set up, with members from the public entities and SCIRT. In November 2015, the Horizontal Infrastructure Governance Group endorsed the Infrastructure Programme Transition Group's terms of reference, and its purpose to provide transition planning and management of the Transition Implementation Plan.

4.13
In March 2016, the Infrastructure Programme Transition Group confirmed which entity is responsible for each workstream and the Infrastructure Programme Transition Group's role in relation to each workstream, noted high-level risks for transition work, and prepared a Transition Implementation Plan. The Horizontal Infrastructure Governance Group endorsed the Transition Implementation Plan at its meeting on 22 March 2016.

4.14
The transition implementation phase is scheduled for April 2016 to June 2017. This takes into account the close-out period11 after construction work (scheduled to be finished in December 2016). Detailed deadlines are prepared by the entities responsible for each workstream, and monitored by the Infrastructure Programme Transition Group.

4.15
The Council is doing a range of work to prepare itself for the transition. For example, the Council is having joint workshops with SCIRT to learn more about SCIRT's work, including about SCIRT's high-level operational processes, and the interactions and dependencies between SCIRT systems.

4.16
The transition work is broader than transferring information from SCIRT to the Council. It also includes ensuring that the Council is in a sound position to use that information for the benefit of Christchurch. In July 2015, the Council started the Advancing Asset Management Programme to help the Council increase its capability to deliver and maintain assets through their life cycles. The Council will revisit its draft business case in 2016, because of the Transition Implementation Plan and changes from the Council's recent restructuring. In the meantime, the Council is seconding some staff to SCIRT to get practical experience of how SCIRT works.

4.17
In our view, the Council needs to sustain its recent momentum to realise the full benefits of SCIRT's information and work. To do this, it needs the support of the other public entities, SCIRT, the Infrastructure Programme Transition Group, and the Horizontal Infrastructure Governance Group.

Handover of assets not meeting targets

Handover of assets from SCIRT to the Council was not meeting targets. However, there have been recent improvements.

4.18
SCIRT aims to complete the handover of assets within 90 days of projects being completed. When a delivery team completes a project, that team and SCIRT prepare the assets for transfer to the Council (the asset owner). This includes collating information about the specifications and location of the assets.

4.19
The handover of assets from SCIRT to the Council has not met SCIRT's targets. SCIRT and the delivery teams have improved the handover process but, as at February 2016, 17 individual projects (out of 43) have been in the handover stage for more than 90 days. Some of the reasons for this include the time taken, or required, to verify the cost of the project, collate and check information about the assets, and resolve any quality issues.

4.20
Because the rate of handing projects over is slower than planned, the Council has a large balance of "work in progress". The Council is not able to accurately classify these assets in its financial statements as "completed assets", "assets under construction", and "operating expenditure". As a result, the Council has not depreciated completed assets. The Council has also not been able to revalue damaged assets. These two reasons contributed to us issuing a qualified audit report12 for the Council for 2015.13 The Council is also unable to get insurance and valuations for assets in the "work in progress" balance.

4.21
Improvements to the handover of assets need to continue so SCIRT can clear the backlog, targets can be met, and the Council can manage its assets effectively and responsibly.

Identifying, sharing, and applying lessons

SCIRT is identifying, sharing, and applying many lessons about managing and delivering a horizontal infrastructure rebuild. The public entities need to continue actively and systematically identifying, recording, and sharing their own lessons from SCIRT and the Alliance approach. The public entities also need to manage the risk that their own lessons might be lost when staff leave or organisations change.

Identifying lessons

4.22
SCIRT is identifying lessons, and the public entities recognise the value of learning and are also identifying lessons. SCIRT maintains a register of innovations and initiatives. It has used this register to promote, monitor, and report innovations from early ideas to working results. The register allows lessons from ideas suggested by staff and delivery teams to be recorded systematically and continuously identified. As at August 2014, SCIRT had recorded 550 innovations, compared with 161 innovations at February 2013. We refer to the value of these initiatives in paragraph 4.36.

4.23
Delivery teams also identify practical lessons and share them within SCIRT, including with other delivery teams (see paragraph ). SCIRT recently changed some of its key performance indicators to encourage delivery teams to identify and share lessons and innovations.

4.24
The public entities are identifying their own lessons, and are starting to systematically record them. For example, the Horizontal Infrastructure Team in CERA started a lessons register in late 2014.14 The lessons were incorporated into the CERA Learning and Legacy project in 2015. These lessons were from SCIRT and the wider horizontal infrastructure programme, including lessons about managing and governing the horizontal infrastructure programme.

4.25
Staff from the public entities and SCIRT held a workshop in October 2015 to prepare a plan for managing the transfer of assets back to NZTA and the Council (see paragraph 4.11). The Transition Implementation Plan developed subsequently includes workstreams on identifying and sharing lessons.

4.26
The public entities need to continue their work in actively and systematically identifying and recording their own lessons. The public entities also need to manage the risk that their own lessons might be lost when staff leave or organisations change. We encourage the public entities to continue with their recent projects to better identify lessons.

Some lessons are being shared

4.27
SCIRT shares lessons through formal and informal channels. Within SCIRT, lessons are distributed through newsletters and at regular meetings with delivery teams. For example, SCIRT shares lessons about how to avoid accidentally damaging utilities (such as underground internet cables). We understand that lessons are also being shared within the delivery teams' organisations, beyond staff in Christchurch.

4.28
SCIRT has a learning legacy project to share lessons with a wider audience. In particular, the project identifies and shares lessons learned from setting up and managing an alliance to respond to a natural disaster. SCIRT has an agreement with the University of Canterbury Quake Centre to help deliver the learning legacy project.

4.29
A SCIRT learning legacy website is planned, and it will be available to the public and other interested parties. Its content will be organised by themes that reflect the different areas of innovation and work that SCIRT has done.

4.30
SCIRT has shared its experiences and practices with the Council. After a request from the Council, SCIRT hosted a workshop in February 2016 for elected representatives and senior managers from the Council. The purpose of the workshop was to increase the Council's understanding of what SCIRT does, and demonstrate how some of SCIRT's practices can help the Council in the future.

4.31
In 2013, an internationally recognised civil engineering professional body, the Institution of Civil Engineers, awarded SCIRT the Brunel Medal. The Institution of Civil Engineers awards the Brunel Medal for excellence in civil engineering. In connection with this award, Duncan Gibb, former Executive General Manager of SCIRT, has travelled internationally to speak about his lessons and experiences from SCIRT.

4.32
The public entities have been sharing lessons, but not in a planned or routine way. This is important, because the public entities have identified some of their own lessons as well as those from SCIRT. For example, the Council has shared lessons at conferences and through articles in publications, such as the Institute of Professional Engineers New Zealand's Engineering Insight magazine. CERA shares lessons within its organisation, with other public entities, and with international organisations such as the United Nations and the World Bank.

4.33
The public entities do not currently have a repository (such as a website or publication) where their lessons can be accessed by others. However, CERA and the Council are planning to prepare a website, or websites, about lessons on the recovery from the Canterbury earthquakes.

4.34
As mentioned in paragraph 4.25, the public entities have workstreams on identifying and sharing lessons from the horizontal infrastructure rebuild. The public entities also intend, once they complete the horizontal infrastructure rebuild, to share lessons publicly from their various reviews of the horizontal infrastructure rebuild.

4.35
In our view, something to consider and put in place at the start (after the emergency phase) of a major programme like this is a regular "lessons learned" process, leading to continuous improvement, which benefits other programmes. We encourage the public entities and SCIRT to continue, and build on, their sharing practices, within the programme and with a wider audience.

Some lessons are being applied

4.36
SCIRT and its delivery teams have been applying lessons. Interviewees described SCIRT as a "learning organisation" that continually applies lessons to its work. As at August 2014, SCIRT's application of innovations from the value register has resulted in an estimated saving of $37.4 million. Examples include improving the process for handing assets over to the Council and NZTA, and stockpiling and drying hydro-excavation material to limit the costs of disposal.

4.37
The public entities have applied some lessons from SCIRT. For example:

  • The Council is going to change its asset management practices for designing and delivering assets. The Council has also introduced changes in its approach to horizontal infrastructure (for example, building a vacuum sewer system).
  • NZTA has shared SCIRT's health and safety practices with its suppliers, who have voluntarily adopted them. NZTA recognises the benefits of the collaborative client-led approach of the rebuild and is fostering more collaboration in its internal work and its work with the sector.
  • CERA is applying its improved understanding of the appropriateness of design solutions and the level of financial management required, based on issues identified in earlier and similar work.

4.38
NZTA and the Council have seconded some staff to work at SCIRT. Most of these staff have now returned to their home organisations, where they are using the experience and knowledge they gained at SCIRT. This is important for the Council and NZTA because they will have staff who are knowledgeable and skilled in applying asset management tools, systems, and practices. SCIRT also benefited from having staff seconded from NZTA and the Council because of their asset and network knowledge.

11: The close-out period is for practical completion certification and payment. This is when the SCIRT has completed all repairs to practical completion. Practical completion means that the repairs can be used for their intended purpose without material inconvenience, and that the repairs are complete except for minor defects and minor omissions that are still to be completed.

12: See our audit blog "The Kiwi guide to audit reports" at http://blog.oag.govt.nz/ for more information.

13: Christchurch City Council (2015), Annual Report 2015, Christchurch, page 152.

14: This register will now be updated by staff responsible for horizontal infrastructure in the Department of the Prime Minister and Cabinet.