Transitioning to Investment Planning - RPIC · Transitioning to Investment Planning Lessons learned...

RPIC Regional Workshop 2011

Transitioning to InvestmentPlanning

Lessons learned implementing the Policies on Investment Planningand the Management of Projects

Real Property Institute of Canada Regional Workshop, Vancouver BC, June 14, 2011


Agenda

Copyright Interis Consulting Inc. 2010 2

1 – Introductions & Session Overview

2 – Policy Review

3 – Overall Findings

4 – Investment Planning Elements

5 – DFO Implementation

6 – Lessons Learned

7 – Questions


Copyright Interis Consulting Inc. 2010

Introductions

Your Presenters

• Greg McIntyre, CMC,• Principal, Western Region, Interis Consulting

• Kevin Muldoon, BA, CGA• Manager – Capital Planning and Analysis

Department of Fisheries and Oceans•

3



Session Objectives

1. Provide a quick review of the Policy on Investment Planning(IP) and Policy on the Management of Projects (MP)

2. Review overall departmental findings and experiences

3. Present key components of an effective investmentgovernance framework for increasing departmentalperformance

4. Discuss challenges and present tips to addressing challenges

5. Share DFO’s experience in implementing the TB Policies onIP and MP

4


What you will learn Today

Understand policy requirements and challenges

Understand the key elements needed to establish ainvestment planning process

Walk away with some tools and techniques to addresschallenges in your organization

Hear from DFO’s experience in implementing policies

5Copyright Interis Consulting Inc. 2010


History and Experience

• Initial creation of the tools

• Test drive

• Pilot• DND, RCMP, CBSA, Environment Canada

• Implementation support• CFIA, DFO, INAC, PWGSC



Policy Review

• Policy on Investment Planning• More than just a repalcement for Long Term Capital Plan• Assets and Acquired Services

• Policy on the Management of Projects• Organizational Project Management Capacity Assessment• Project Complexity and Risk Assessment• What is a Project?



Project Complexityand RiskAssessment(s)

Assess project risk andtrigger action to mitigateor respond to risk

OrganizationalProjectManagementCapacityAssessment

Assess the department’sproject managementcapacity and makenecessary changes

Produces quantitative, comparableresults to: Identify organizational weaknesses/risk areas

with respect to project management

Measure changes in PM maturity and projectcomplexity

Avoid over- or under -investing inproject management maturity

Investment Plan

Implement / enhanceprocess for allocatingresources to investments,aligned to departmentalpriorities

Resource allocation based on priorities

Increased quality of information fordecision making

Increased quality of information aboutproject risk to inform decision



Policy Review: Policy on the Management of ProjectsThe OPMCA is an organization-

wide score, and the PCRA isscored on a per-project basis.

If the PCRA score is greaterthan the OPMCA Score :

•Department is required tosubmit a project brief

•Department is required tosubmit a TB Submission

•Regular monitoring by TBS andupdates to PCRA whenchanges occur


A B

C

D


Investment Planning: Performance-oriented culture

• Clarity within the organization of strategic outcomes, andthe activities and initiatives to achieve outcomes, as wellas employees’ role in achievement

• Excellence in program management – resources aremanaged in alignment with strategic outcomes, and workis carried out efficiently and effectively

• Regular measurement of results and use of results toguide improvement and learning

• A performance-oriented culture – achievement andresults are emphasized and institutionalized throughrewards and recognition practices, while balanced withemphasis on employee support and engagement

Characteristics ofa performance-oriented culture


For further reading, refer to the Telfer School of Management and Interis Consulting paper titled “High PerformanceOrganizations in the Public Sector” available at http://www.optimumonline.ca/article.phtml?id=365


Policy Overview: Benefits

• The Investment Planning approach brings• Improved accountability for management of the

investment planning process, and managementof investments in assets and acquired services

For Real Property Practitioners this meansworking with clients to plan real propertyprojects during the departmental planning cycle

• Greater flexibility to assess risk and complexityof investments and manage accordingly, ratherthan on the basis of dollar value

Real Property Project Managers will have theability to execute projects that are lower risk withless TB oversight

What are thebenefits to

Departments?Real PropertyPractitioners?



Lessons Learned

1. Be prepared – this initiative is a huge undertaking.However big you think it is, it is significantly bigger!

2. Clear definition of foundational terms are necessary,specifically definition of “Project” and “AcquiredService”.

3. Preparation of the Investment Plan is just the start ofthe journey. A lot of work follows to change the waydepartments allocate and reallocate resources. It isimportant for Real Property Practitioners tounderstand how planning is conducted and decisionsmade. Need to proactively understand client needs.



Lessons Learned

4. Stakeholder Engagement - You must get seniormanagement sponsorship and support from the outset.These policies impact your whole organization. Buildawareness with a consistent message. Then communicate,communicate, communicate!

5. Actively manage the change in your organization6. In the self assessment process, be honest with yourselves

as you self-assess, and be honest with Treasury BoardSecretariat as you share those scores.

7. Engage TBS early and use your analyst as much as youcan – keeping them aware of your progress and using theirsupport throughout will smooth the final stages (rather thansurprises down the road).



Lessons Learned: Define key terms for your organization


Lesson Learned Tips

Fisheries and Oceans CanadaTransitioning to Investment Planning

Real Property Institute of CanadaRegional Workshop

Vancouver BCJune 14, 2011

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Context - DFO

• From Coast to Coast to Coast• Average annual Budget of $1.7 B

– Annual Capital Budget of $328 M

• >10,500 yees (including CCG)• Asset base of ~ 25,000 assets

– Replacement cost of assets > $19B• Real Property

– Buildings, Breakwaters, Structures,• CCG

– Fleet of large and small vessels, helicopters, Moveable assets• Small Craft Harbours

– Fishing harbour sites - wharves, breakwaters, launching ramps, slipways,floating wharves, electrical systems,.

• IM/IT– Hardware, Software, Customized applications

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Investment Plan Elements

• Process is largely predicated on the department’spre-existing capital project process

• Introduces the concept of a risk based approach toplanning, not simply risk as measured in dollars

• Is an evolution and will continue to change andimprove

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Investment Plan Elements

• Investment Planning at DFO is comprised of thefollowing elements:– Framework– Cycle– Governance Structure– Project Gates– OPMCA– Internal Delegation of Authority

Investment Plan Framework/Cycle

StrategicContext GovernmentPriorities,Mandate,Vision,Core Values ,StrategicOutcomes,Environmental

Scan ProgramPlanning

RPP BusinessPlans

AnnualReferenceLevelUpdate (ARLU),MainEstimates, SupplementaryEstimates

Investment Requirements

InvestmentPriority ProjectRanking Framework

PeerReview Process

BudgetAllocation Decision

InvestmentProjects Projects

P e r f o r m a n c e M o n i t o r i n g

a n d R e p o r t i n g

Investment Planning

BudgetAllocation Decision NonProjects

Risk M

anagem

ent

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IP Governance Structure

• Decisionmakingbody • Mandate:recommendforapprovaltotheDeputyMinister,multiyearfinancialmanagementandresourceallocation

• Expectedoutcomes:financialresourcesareallocatedandmanagedwithpruden ce, probityandtransparencyintheachievementofdepartmentalprogramresults.

DMBFinance Committee (DMB ‐ Fin)

• Cre ated ‐ – Chairedby DGBudgeting,Planning&ResourceManagement . • Responsible forrecommendingthe portfolioof investments totheDM BFinance Committee,andissupportedbyCP&A

• Membership includes DGrepresentativesfromtheCOEsaswellascorporate services.

DG Investment Management Committee

• Responsibleforleadingandguidingth etransitionfromtheCapitalPlanning FrameworktotheInvestmentPlanningapproach.

• IPWGincludesrepresentativesfromallCOEs,MajorCrownProjects,Integrated TechnicalServices,Finance,CommunicationsandRiskManagement.

• Responsiblefor coordinatingthecontentforsubmissionintotheinvestmentplan.

Investment Planning

WorkingGroup (IPWG)

• COEs /FunctionalAreasparticipateintheactivitiesthatcomprisetheInvestment PlanningCycleinordertoinvestinandmaintain theirassetbase. • DGs areaccountableforeachCOE/SectorandRegion

Centresof Expertise(COEs)

• Toprovidestrategicadviceandaforumfordiscussionofinternalservicesandothermattersasdirecte dbytheDeputyMinistertosupportFisheriesandOceansCanada’s(DFO)StrategicOutcomes.

StrategicOutcomeCommittee

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Investment Plan Project Gates

Annex 222

AIP PPA EPA

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Organizational Project Management Capacity

• The DFO self-assessed OPMCA score was “3” orEvolutionary ;– the department has the capacity to successfully deliver projects

that achieve evolving strategic objectives and tends to haveintegrated multi-project planning and control

• Given DFO received approval of this class, it meansthat:– The organization has the capacity to successfully deliver

projects to achieve evolutionary strategic objectives– TBS would delegate authority to DFO for projects with an

assessed risk score of 3 or less– Number of TB Submissions should decrease

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Phased Implementation

• Key Tasks :– OPMCA– Document Investment Plan

• Context• Governance, Planning and Process• Investments

– Project identification and risk assessments– Delegation of Authority– Create DG level oversight committee– Key briefings to DM ADM– Treasury Board submission to TBS: IP and OPMCA

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Phased Implementation (cont’d)

Transitional Model(Mar’09 – Mar 31’10)

Define Investment Planningframework to position

investment planning withinbroader DFO planning context

Conduct OPMCA to determinecurrent DFO project

management capability

Full Implementation(Apr’11 – Mar ’12)

To refine Investment Planningprocess to ensure that it iscomprehensive and reflectsDFO priorities

Act

iviti

es

To adapt Capital Planninggovernance and processes tomeet requirements of TBInvestment Planning Policy

Adjust Capital Planninggovernance and processes toreflect investments (not just

capital) and acquired services

Common priority rankingprocess & criteria to reflect DFO

priorities

Full implementation of PCRAand project gating

Review governance to ensurerepresentation of all functionalareas that identify and manage

investments

Integration with DFO CorporateProcesses

(Apr’ 12 – Mar ’13)

Performance of investments ismonitored, measured and

reported

Investment and resourceallocation decisions are

informed by all relevant sourcesof information

Investment Planning isintegrated with other relevantDFO planning and reportingprocesses

Decision-making process toensure investment selectionreflects capacity to deliver

PCRA training and roll-out

Determine how to align /integrate the investment

planning with the businessplanning process

Decision on project managementframework for the department

Obj

ectiv

es

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Lessons Learned - Key issues

• Was DFO Adequately prepared to implement?

– Better positioned than most, as a result of the existing LTCPprocess.

– DFO was a “Wave II ” department.• Although DFO benefited from some of the lessons learned from

Wave I departments, TBS analysts were still on a learning curve andthe department had to self define many requirements.

– As time goes on the bar will be set higher and expectationsgrow

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• What worked well with the transition process ?

– One accountable person leading both aspects – OPMCAand the IP

– Establishment of a knowledgeable Investment PlanningWorking Group (IPWG) with authority

– Establishment of Project Charter, Terms of reference

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• What are some area of improvements for next wave ofclients of the transition process ?– A more senior level group who:

• Had increased authority,• Could dictate priorities

– A single objective, dedicated team working solely on theprojects, would’ve been preferred

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• How did DFO identify investments/project inventory

– A robust LTCP process was already in place,• Communicated key differences between old and new processes to

the different stakeholders.

– All proposed and approved projects under the new policy(IP) had to have a Project Complexity and Risk Assessment(PCRA) performed. (Continued on next page)

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• How did DFO identify investments/projectinventory (cont’d)

– The PCRA requirement• PCRAs have 64 questions• Volume >200 projects• New process required

– DFO created PCRA Guidebook

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• How did DFO identify investments/project inventory(cont’d)

– Result of new policy/application of PCRA, allows TBministers and Deputy heads to understand which projectsare riskier than others

– Departments were clearly advised that TB ministers wouldfocus on :

• High risk projects• Those which had relatively higher profiles (i.e. Budget

announcements)• All IM/IT projects

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• How did DFO identify investments/project inventory(cont’d) -• There were other challenges

• Acquired Services• Services obtained through formal arrangements which aid in

achieving specific outcomes• Does not include goods, assets, salaries, statutory expenditures

• Integrating Investment Planning and Business Planning:

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• How did DFO handle Change Management for thecultural change req’d as a result of the policies– Put in place more of a transitional approach to IP with full

TBS support• Step I - amend existing process where deemed appropriate, identify

where the gaps are - create a plan to address them. Adapt to IP• Step II – improve efficiencies/integrate old with new process -• Step III – full integration

– To facilitate Change Management :• Weekly meetings with IPWG• Regular updates to senior officials• Every opportunity was seized to “spread the word”

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• How did DFO manage the relationship withTBS as a result of the policies

– Recognized the size of the project– Continued monthly meetings– Fostered a closer relationship with Program Analyst– Resulted in a respectful trusting relationship

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• Now that DFO has received approval of theInvestment Plan and delegation, some of the nextsteps are :– Promote scalable standardization of all IP aspects– Continue with integration of Investment Planning with

Business Planning– Examine the creation of a Project Management Office (PMO)– Continual improvement wherever they can be found– Update project ranking framework– Require targeted and effective monitoring– Promote transparency

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Lessons Learned - Overall

• Be prepared – this initiative is a huge undertaking.

• Clear definition of foundational terms are critical

• Preparation of the Investment Plan is just the start of thejourney.

• It is important for Real Property Practitioners to understandhow planning is conducted and decisions made

• Need to proactively understand client needs.

36

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• Stakeholder Engagement - You must get seniormanagement sponsorship and support from theoutset.

• Communicate, communicate, communicate!

• Actively manage the change in your organization

• Treat this like a project

• HAVE A PLAN

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• In the self assessment process (OPMCA), be honestwith yourselves as you self-assess, and be honestwith Treasury Board Secretariat as you share thosescores.

• Don’t bite off more than you can chew– Transitional approach is effective – not required to re-

invent everything

• Get the right level of delegation (OPMCA), not thehighest

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• Engage TBS early, and use your analyst as muchas you can– This is a TB submission– Keep TBS aware of your progress and challenges

• Get committed resources (financial and human)who’ll stay with it.– Members need to have this project high on their priority

list– Consider engaging experienced outside experts

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• Project Costing– Improve project cost estimates at all 3 gates

• Project Management Oversight– Standardized processes and templates– Co-ordinate OPMCA II for next TB submission on IP

• Project Summary Notes– Improve pre-expenditure initiation business case

document (at AIP)– Make/Buy/Lease Investment decisions

DFO Priorities since TB approval

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• Project Horizontality

• Project Ranking Framework

• Acquired Services– Improved quantification of Acquired Services

• Provide Updated Investment Plan 2011-12 to 2015-16 to TBS

• Improved project reporting/monitoring

DFO Priorities since TB approval

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Is It Worth It?

• Although lots of work, it will :– Improve;

• project management co-ordination• accountability• consistency across the department

– Increase transparency and project managementeffectiveness by improved monitoring and reporting

– Reduce TB submissions to allow better use ofresources

– Provide value for money for Canadians

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In Conclusion

• This is continually evolving process

• This is a paradigm shift for all stakeholders

• Ultimately it is a marathon not a sprint

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Thank You

• Thank You for your participation today

• For more information on the contents of thispresentation, please feel free to contact as follows:– Greg McIntyre 780-218-4926 [email protected]– Kevin Muldoon 613-993-3864 [email protected]

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Questions?

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Supporting Slides

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Phased Implementation

• Moving to the new policy on Investment Planning-Assets andAcquired Services required a TB submission.

• The submission requested :– Approval of the management principles, processes, and practices

reflected in the Department of Fisheries and Oceans Investment Plan;• Governance structure• Planned Investments , and

– Approval of the department’s IP Organizational Project ManagementCapacity Assessment (OPMCA)

• (Class 3 – “Evolutionary” was sought)

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Phased Implementation (cont’d)

• Implementation and Integration of IP

– Transitional Model: Phase I involved transitioning the organization froma Capital Planning framework to an Investment Planning framework

– Full Implementation: Phase II involves refining the investment planningprocesses to:

• Ensure that investments are comprehensive and reflect DFO priorities.• Full Implementation phase is targeted for fiscal year 2011-12.• Key element will be to begin integrating Investment Planning with the

Departmental business and operational planning– Integration with DFO Corporate Processes: Phase III is where full

integration occurs:• Involves integrating the investment planning processes with DFO’s corporate

planning and performance reporting processes.• Complete integration phase targeted for FY 2012-13

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Internal Delegation of Authority – Matrix -cont’d

Risk

4 TB TB Extreme

3Associate Deputy Minister /

Commissioner, CCGDeputy Minister High

$1 M to $5 M above $5M

2Assistant Deputy Minister /

Deputy Commissioner, CCG

Associate Deputy Minister /

Commissioner, CCGMedium


1Centre of Expertise

Director General

Assistant Deputy Minister /

Deputy Commissioner, CCGLow


Note : All Project Approval Documents and Project Complexity and Risk Assessments (PCRA) must be reviewed and approved by the

Chief Financial Officer

Total Estimated Cost (millions) - Excluding taxes

Internal Delegation of Authority Signing Matrix

Pro

jec

t C

om

ple

xiy

an

d R

isk

As

se

ss

me

nt

Ra

tin

g

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Investment Plan Framework

StrategicContext GovernmentPriorities,Mandate,Vision,Core Values,StrategicOutcomes,Environmental

Scan

ProgramPlanning RPP

BusinessPlans

AnnualReferenceLevelUpdate (ARLU),MainEstimates, SupplementaryEstimates

InvestmentPlanning

Projects P e r f o r m a n c e

M o n i t o r i n g a n d R e p o r t i n g

NonProjects Risk M

anagem

ent

50

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Typical Investment Plan Project Sequence of Events vs Authority to Spend

Gate 1 - Approval In Principle 2 - Preliminary Project Approval 3 - Effective Project Approval 4 - Execution

(AIP) (PPA) (EPA)

Authority to Spend as a % of

Project Total Estimated Cost

(TEC) is graduated.

0% ~10 - 15% ~85 - 90% 100%

Gate Characteristics

Functionnaly approved Capital

Planning Summary Note (CPSN)/

Integrated Summary Note (ISN) is

submitted to CFO. Risk

assessment is included

Functionnaly approved Project Approval

Document (PAD) and a Project

Complexity and Risk Assessment (PCRA)

are submitted to CFO

Project Approval Document (PAD) and a

Project Complexity and Risk

Assessment (PCRA) are updated and

submitted to CFO

Project Complexity and Risk

Assessments are to be kept current

while project is being executed

Authority to spend No authority to incur expendituresGrants authority to incur expenditures is

capped at 10 - 15%

Grants authority to incur expenditures up

to the specified TEC

Grants authority to incur expenditures

up to the specified TEC

Gate Purpose

Project initiation dependant upon

availablity of funds and engineering

studies

Purpose of PPA stage is to develop a

more accurate cost estimate and to

ensure adequate project planning to

minimize risk

Project plans are mature enough so as

to excecute project with confidence of

being on time on scope and on budget

Approvals

COE portfolio of projects are

approved via annual special

meeting on IP at DMB-FIN

Project is approved individually Project is approved individually

Total Estimated Cost (TEC) TEC is an estimate

TEC is a refined cost estimate from AIP

gate. Once PPA, COE has confirmed the

TEC is an indicative estimate.

Once EPA is received COE has

confirmed the TEC is a substantive cost

estimate

IP Project Gates

IP Internal Delegation of Authority – cont’d

• The Department can execute on its own all projects with aPCRA of 3, or less

• DFO’s delegation of authority matrix ensures approvals arecommensurate with the level of project risk

• This delegation of authority is more flexible than the currentdelegation and grants COEs additional authority at a lowerlevel.

• The approval process is dependent on the PCRA score aswell as the total estimated cost (TEC) of the project, asopposed to the prior Capital Planning process, where the TECwas the sole measure of a project’s risk.

52



Policy Overview: Policy on Investment Planning

• What is the Policy on Investment Planning?• Treasury Board Secretariat introduced the Policy in June 2007

• Replaces the Policy on Long-term Capital Plans (LTCP)• Scope is wider than the Policy on LTCP and includes assets and

acquired services• The Policy on Investment Planning is intended to:

• Align with outcomes as set out in Departments MRRS• Support departmental, portfolio, horizontal and government-wide

priorities• Consider departmental and project-related risks• Support sustainable development and broader social and

economic objectives• The Investment Plan document presents a department /

agency’s governance, investment planning cycle andframework, and planned investments for a five year horizon

53


Policy Overview: Policy on the Management of Projects

• The Policy on the Management of Projects replaces:• Project Management Policy• Policy on the Management of Major Crown Projects• Project Approval Policy

• The new policy is intended to:• Redefine how TBS identifies projects requiring their attention

and oversight• Establish delegation levels for the management of projects

within departments• Requires the completion of an Organizational Project

Management Capacity Assessment and a ProjectComplexity and Risk Assessment



II. Policy Overview: Phased Implementation

New Policies Effectivewith TB approval

Former PoliciesRescinded April 1, 2012*

* Subject to TB approval

Phase 2Departments

Phase 3Departments

Phase 4Departments

TB

REVIEW

Phase 1 Departments

(PILOT)

June 2007 March 2009 April 2009 toMarch 2010

April 2010 toMarch 2011

April 2011 toMarch 2012

April 2012

New policesimplemented;old policiesrescinded

TB

REVIEW

• CBSA

• DND

• Environment Canada

• RCMP

• On-line AssessmentTools

• Training

• Guidance Materials

• Lessons Learned

55Source: TB Policy Presentation to Phase 2 Departments, March 2009

To date, seven departments have receivedTB approval


Investment Planning: Process



Investment Planning: Process


InvestmentGovernance

•Provides direction to the portfolio at the strategic / tactical and operational levels•Defines roles, responsibilities and accountabilities•Establishes reporting and control mechanisms•Resolves obstacles to the success of the portfolio

Sample Governance


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III. Investment Planning: Key Elements

Portfolio /InvestmentExcellence

ProjectExcellence

InvestmentDecision

ExecutiveDecisions

OrganizationalStrategic Goals

Project B Project C

Project A Project D

Investment GovernanceInvestment

PlanningS

trategicD

irection

Results

Results

TacticalD

irectionInvestmentOversightD

O T

HE

RIG

HT

DO

TH

E R

IGH

TPR

OJE

CTS

PRO

JEC

TSD

O T

HE

PRO

JEC

TSD

O T

HE

PRO

JEC

TSR

IGH

TR

IGH

T

ProjectManagement

Practices

Real Property Practitionersshould understand theorganization’s strategic contextand planning cycle




Summary

1. Treasury Board Policies on Investment Planning and theManagement of Projects objectives

• Target Compliance March 2012• Supports departmental, portfolio, horizontal and government-wide priorities• Promotes clearer accountability for managing projects• Emphasizes department-wide management

2. Key Elements of Investment Planning• Investment Planning• Investment Decision• Investment Oversight• Investment Governance

3. Lessons Learned• Define terms so they reflect your organization• Identify a senior level champion• Communicate, communicate, communicate• Be realistic; organizational changes take years to implement

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