CONTENTS GOVERNMENTS SEEK NEW ANSWERS TO FAMILIAR CHALLENGES BUILD OR BUST: THE INTRACTABLE INFRASTRUCTURE CHALLENGE FINDING A NEW WAY TO DELIVER

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2 CONTENTS GOVERNMENTS SEEK NEW ANSWERS TO FAMILIAR CHALLENGES BUILD OR BUST: THE INTRACTABLE INFRASTRUCTURE CHALLENGE FINDING A NEW WAY TO DELIVER SOUTH AFRICA: GAUTENG DEPARTMENT OF INFRASTRUCTURE DEVELOPMENT (GDID) BRAZIL: DEPARTAMENTO NACIONAL DE INFRAESTRUTURA DE TRANSPORTES (DNIT) TIME TO DELIVER

3 Government infrastructure i is critical for improving a country s competitiveness and economic growth as well as its citizens health and wellbeing. Infrastructure supports competitiveness by making production faster and simpler and helping information to flow and people to travel. It s the supporting fabric for all economic development from educating the workforce to maintaining the parks and recreation facilities where people enjoy their leisure time. A growing body of empirical research confirms that improved access to infrastructure contributes to But this is only one part of a bigger picture. Routine maintenance programs also require the same level of support, and considerable investment for infrastructure to deliver social and economic benefits. Several studies indicate that simply maintaining current infrastructure with selective improvements, will require countries to invest at least 3 percent of their GDP. iii higher indicators of societal wellbeing. ii High-profile capital projects receive considerable attention and support. Yet less than half meet their goals of on time, on budget and meet scope and quality standards. Nearly one-third are cancelled before completion and for every 100 projects that start, 94 of them are restarted. OF PROJECTS MEET THEIR GOALS ARE CANCELLED BEFORE COMPLETION In general, poor estimations and the complexity of interactions, schedule, suppliers and stakeholders often mean goals are not met. ARE RESTARTED i Transportation and logistics (roads, railroads, waterways, ports, airports), telecommunication (telephony, data network, television), energy (electric, gas, coal, nuclear, oil), sanitation (water, sewer, waste). ii iii 3

4 GOVERNMENTS SEEK NEW ANSWERS TO FAMILIAR CHALLENGES Collectively, governments around the world spend billions of dollars every year to plan, design, develop and deliver essential infrastructure. To take just one example, the Organisation for Economic Co-operation and Development s (OECD) figures for spending on roads alone in seven of the world s largest economies between 1995 and 2013 comes to a total of nearly US$3.5 trillion. iv And while that figure is substantial, it s a fraction of the likely investment required to maintain current and future infrastructure across all categories. It s widely acknowledged that the spending required to renew and maintain current infrastructure is likely to dwarf what s planned for new projects. A few examples make this case graphically. The American Water Works Association estimates that the US needs to spend over US$1 trillion over the next 25 years just to replace water mains. v The UK is planning to spend 425B (US$600 billion) on economic and social infrastructure projects between 2016 & vi The city of Halifax, Nova Scotia, Canada, estimates that its 2,000km of water and sewer pipes will need C$2.6 billion (US$2.02 billion) investment for repair and replacement. vii And in the two years between 2009 and 2011, US states collectively invested US$20 billion on new roads. In the same period they spent more than US$50 billion on maintaining and repairing existing ones. TOWARDS BUILDING NEW ROADS WAS SPENT ON ROADS IN SEVEN OF THE WORLD S LARGEST ECONOMIES BETWEEN 1995 AND 2013 MAINTAINING AND REPAIRING EXISTING ROADS iv v Buried No Longer: Confronting America s Water Infrastructure Challenge, American Water Works Association, vi National Infrastructure Delivery Plan , Infrastructure and Projects Authority, 2016 vii 4

5 BUILD OR BUST THE INTRACTABLE INFRASTRUCTURE CHALLENGE Governments around the world are already spending very large sums on multiple projects and are under pressure to deliver more. Demands are coming from citizens who want improved roads, schools, hospitals, public transport, etc. However, meeting those needs with government budgets already under significant pressure is likely to be extremely challenging unless new approaches to delivery can be developed and implemented. 5

6 FINDING A NEW WAY TO DELIVER In response, Accenture believes that the time is right to critically examine the processes that to date have failed to deliver and, in their place, develop a new set of practices that can bring about a step change in results. Governments need to: 1. Align economic, industrial, social and environmental needs, public policy and the use of limited resources through better project portfolio definition, scheduling, funding and management strategy; 2. Increase the overall efficiency and effectiveness of project execution through: Standardizing and streamlining processes across projects lifecycles; Promoting continued evaluation of the portfolio capacity to deliver the results and goals promised, by introducing new reporting, tracking and metrics associated with a balanced governance model; Creating an effective ecosystem for delivery with a single oversight PMO body supported by an integrated IT platform for both project management and business functions; Promoting collaborative management, from the very beginning of the project, of a multidisciplinary project team, with clear roles and responsibilities, tied to the governance model, and collaborative mechanisms to collect and provide information and feedback from key stakeholders. Implementing results-oriented management, by tying projects to clearly-defined outcomes in the portfolio definition phase; 6

7 There s no question that this represents a dramatic change and disruption to the status quo. But, in fact, some governments around the world are already pursuing this path and reaping the benefits from doing so. Not only are they achieving substantial cost savings but they are also developing the capabilities that will help them to rapidly deliver the vital infrastructure that their economies and citizens need to prosper. Accenture experience indicates that by implementing this new approach to infrastructure management, governments could see up to 40 percent improvements in project performance indicators, such as on-time and onbudget completions and compliance with scope and quality standards, by leveraging the use of resources for more projects and meeting social and economic needs in a timely manner. 7

8 SOUTH AFRICA GAUTENG PROVINCE TRANSFORMS INFRASTRUCTURE DEVELOPMENT FOR SOCIAL AND ECONOMIC WELLBEING The Gauteng Department of Infrastructure Development (GDID), the body responsible for developing and maintaining Gauteng Province s infrastructure, was tasked with implementing a new nationally mandated best practice approach, incorporating the Infrastructure Delivery Management System (IDMS) and Standard for Infrastructure Procurement and Delivery Management (SIPDM), to transform its management and execution of infrastructure delivery. GDID realized that it needed a partner to help it operationalize the recommendations and best practices contained in the IDMS and SIPDM. Accenture worked with GDID to identify the principal challenges it faced across its entire portfolio, carrying out detailed analysis and capturing all findings in a diagnostic plan. GDID and Accenture then used those findings to develop an implementation plan and operationalize IDMS and SIPDM. That meant creating a new operating model and business processes in line with the best practice frameworks, covering the entire delivery lifecycle, including finance, HR and supply chain. New enabling technology, Oracle Primavera, was put in place. This provides a globally leading project management suite that provides transparency and visibility to support more efficient execution and help create trust between departments at the local, provincial and national levels. The technology solution also included a new projects and maintenance facility Lutsinga Infrastructure House which acts as the nerve center for GDID, offering intelligent reporting and analytics that support the controls and visibility GDID requires to achieve far more effective and efficient infrastructure delivery. All GDID activities are now governed with detailed and standardized business processes. In a clear indicator of improvement, GDID has been able to reverse its previously top heavy staff ratio, with the majority of resources (70%) now able to focus on vital technical, as opposed to administrative, work. 8

9 BRAZIL IMPROVING DELIVERY CAPABILITIES FOR THE FEDERAL TRANSPORTATION SYSTEM The Brazilian government s ambitious plans for growth center on its Growth Acceleration Program (PAC). As part of the PAC, Brazil needs to extend and improve its transportation infrastructure with an investment of US$70 billion in relevant capital projects over the next five years. As the national department reporting to Brazil s Transportation Ministry, DNIT (Departamento Nacional de Infraestrutura de Transportes) is responsible for the Federal Transportation System administration, maintenance, improvement, expansion and operation. Recognizing that its management capabilities needed to be improved to support a project portfolio of this scale, DNIT sought a third-party partner to help design, implement, manage and govern a new program for managing its project portfolio. In response, Accenture, partnering with a local engineering consulting firm, was appointed to provide strategic, tactical and operational management services including: Establishing a master PMO to develop, support and implement a new project management model for DNIT s entire portfolio and monitor and report on the construction, maintenance and operations work carried out by third parties hired directly by DNIT, reporting the status and monitoring progress and risks to DNIT. Establishing a Strategic Management Office to develop, support, implement and run DNIT s strategic planning, governance, corporate risks management and business process management. Optimizing and automating critical business processes (i.e development of engineering projects), including the implementation of management tools, information structures and enhanced corporate governance mechanisms. Implementing collaborative environments and a situation room, using a Balanced Scorecard of more than 100 KPIs, organized on sectorial dashboards providing management/strategic information for decision-making. Back-office procurement, marketing, administrative and technical support. 9

10 ESTABLISH OPTIMIZE IMPLEMENT After 24 months into the project, DNIT has a complete set of processes, tools, reports and governance mechanisms that improve DNIT s delivery capabilities. Accenture worked with DNIT to implement 100+ new processes and 100 new KPIs for more than 30 strategic to operational dashboards. Additionally, we help operate 15 situation rooms and the strategy monitoring and control meetings, monitor and help manage 150+ construction projects, 380 maintenance contracts and more than 50,000 km of roads operation. As an example of tangible results, the situation rooms supported by multidimensional dashboards, tied to a governance model, have helped DNIT respond three times faster to project problems and risks, and build effective and integrated solutions. DNIT expects to see a decrease in projects running over time and budget, quality improvement and reduced scope deviation and execution faults by the start of the third year of the project. ACCENTURE WORKED WITH DNIT TO IMPLEMENT NEW PROCESSES FOR MORE THAN 30 STRATEGIC TO OPERATIONAL DASHBOARDS AS AN EXAMPLE OF TANGIBLE RESULTS... DNIT RESPONDS 3X FASTER and builds NEW KPIS 10

11 TIME TO DELIVER Other governments need urgently to reconsider their own approaches to infrastructure in order to deliver the building blocks of their future competitiveness and citizens wellbeing. By taking a new approach, they have an opportunity to fix the deficiencies that they face today and significantly increase the positive impact of their spending. Without prompt action and transformation, the risks of underdelivering will continue to rise. But with new approaches, it should be possible to reimagine the art of the possible and deliver infrastructure that meets the changing needs of citizens, and the demands of increasingly tough budgetary constraints. 11

12 CONTACT US MARK HOWARD Global Public Service Administration and Regulatory Lead VERNON HARLEY Global Public Infrastructure Development Lead PAULO OLIVEIRA Managing Director, Federal Government, Brazil ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 401,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at Copyright 2017 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture