From push to pull – the role ofassurance in delivering capitalprogram outcomesPresentation to the Association for Project Management

Neal Argent and Matt Henderson

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 1

Some common perceptions of assurance

Assurance isdisruptive to

my team

They are telling menothing I don’talready know

We need astrategy to get

through the audit

We are in a period offlux therefore can we

defer

We feelthreatened by

the review

Someone elsereviewed this

last month

The report istoo negative

It’s backwardlooking and

retrospective

It’s a tick boxexercise

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 2

Business causes of capital program failure

The program is notaffordable

Organisation is not fit for purpose

Commercial strategydrives the wrongbehaviours

Poor data managementleads to inaccuratereporting and baddecisions

Gaps in programmanagement and controlscapability

Risk management and governanceof decisions is not effective

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 3

Assurance as a catalyst to improve programperformance

Assurance needs to be forward looking to keep a programout of trouble

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 4

Profiling assurance across the lifecycle

Ris

k

Leve

lof

Ass

uran

ce

Time

Ability toinfluence

Expenditure

1. OutcomeDefinition

2.Feasibility

3. ConceptDesign

4. DetailedDesign 5. Delivery 6. Project Close

ProjectInitiation

StrategicBusiness

Case

OutlineBusiness

Case

FullBusiness

Case/ Investment

Decision

Commissioning ClosurePaper

Assurance effort is often focussed during delivery and yetsuccessful outcomes are influenced more at the front end

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 5

The role of assurance and the 3 lines ofdefence

Program assurance functions

Senior Management

Deliverymanagement

Corporateaudit External audit

3rd Line:IndependentAssurance

2nd line:ManagementAssurance

1st line:Management

Controls*Program and

projectmanagement

3Lines of Defence distinguishes between management assuranceand assurance delivered independently of management

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 6

Coordinating assurance effort across the 3Lines of Defence

2nd Line of Defence –Assurance

1st Line of Defence –Management Controls

Project Risk profile

3rd Line of Defence –Independent Audit

2nd line provides support direct to 1st line.

2nd line provides a functional report to 3rd

line to monitor integrity of advice.Scalable resource base

3rd Line:IndependentAssurance

2nd line:ManagementAssurance

1st line:Management

Controls

1. OutcomeDefinition

2.Feasibility

3.ConceptDesign

4.DetailedDesign

5. Delivery 6. ProjectClose

Risk-based

The 2nd Line of Defence should keep the 1st Line focussedon delivery

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 7

A risk-based approach to Assurance

1. OutcomeDefinition 2. Feasibility 3. Concept

Design4. Detailed

Design 5. Delivery 6. Project Close

Gaps and overlaps in assurance can result from anunstructured approach

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 8

From push to pull…

Assurance Maturity

Basic Moderate Complex / Comprehensive

► Compliance reviews► Focus on technical /

quality assurance► Layering of assurance

- potential assurancegaps and overlaps

► Limited reporting andfollow-up

► Low level Boardvisibility

► A ‘tick box’ exercise► Viewed as unpopular

and disruptive

► Project Governance andAssurance established

► Risk-based techniquesintroduced

► Coordinated andintegrated assuranceplanning

► ‘ContinuousImprovement’ / follow-uptechniques introduced

► Self assurance► ‘Technical’ assurance as

a component of integrated‘Business’ assurance

► Golden thread fromassurance to decisions.

► Value-rich analyticaltechniques(benchmarking, analytics)

► A ‘pull’ not a ‘push’► Open transparent culture

A mature assurance approach will improve performanceresulting in a ‘pull’ from management

15 May 2015 From push to pull – the role of Assurance in deliveringcapital program outcomesPage 9

Wrap up – developing capability to assureproven ‘business’ risks

• Of 365 megaprojects, 64% are facing costoverruns

• 73% report schedule delays

• “65% of projects failures are due to softeraspects such as people, organisation andgovernance”

Thank you

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Ernst & Young LLP

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