Capital project planning, design, delivery and operation process review City of Nanaimo November 20, 2017

Transcription

1 Capital project planning, design, delivery and operation process review City of Nanaimo November 20, 2017

2 Background Deloitte s Scope Conduct a review of the City s project planning, design, delivery and operational processes (the Review). More specifically, the scope of the Review focused on four (4) departments: Engineering & Public Works (ENGPW) Parks & Recreation (PR) Fire Rescue (FR), and Information Technology (IT) As a subsequent phase, the City intends to enhance its project management practices by developing processes and tools, and providing training to its staff Approach To complete the Review, Deloitte implemented a four (4) phase approach. Phase 1 Phase 2 Phase 3 Phase 4 Project Initiation Gathering and analysis of data Recommendations development Reporting 2

3 Background (cont d) Methodology The Project Lifecycle Framework outlines the major review areas and the focus areas under each major review area: 3

4 Background (cont d) City of Nanaimo Organizational structure Capital plan Over the next five (5) years, the City intends to spend $188 million on capital projects including construction and IT projects. $70 $60 $58.6 Through 2021, a total of $188 million allocated to fund capital projects Capital Projects Planned Budget ($ million) $50 $40 $30 $20 $47.5 $29.4 $26.6 $26.4 $10 $

5 Background (cont d) Capital plan The ENGPW department is responsible for delivering approximately 77% of the City s Capital Plan over the next 5 years. 5

6 Findings and recommendations 6

7 Capital project planning Finding # 1: The capital planning process appears to be well understood; however, there is no standardized project prioritization framework in place for the various departments Strategic Alignment Does the project meets City Initiatives, Strategic Priorities, Department Objectives, or Department Innovation? Risk Mitigation Would the project reduce the City s or Citizens exposure to a risk or impact if the service or product not offered? Leverage Potential Value & Significance. Does the project add Value to stakeholders? Can the Significance be measured in terms of what is being done or not being done? Cost What are the implementation and maintenance forecasted costs? Quick Wins What the timeline to implement the project? Profile Multiplier Is the project mandated by Council, City Manager, corporate initiative, citizen perception? Recommendation # 1: Implement the framework currently being developed, for staff to prioritize and select capital projects for Council s consideration. 7

8 Capital project planning (cont d) Finding # 2: The City s Asset Management initiatives are evolving; however, they are underutilized for its annual capital planning process. Recommendation # 2: The City should continue to promote asset management thinking throughout the organization. Finding # 3: There appears to be disconnect between the long term Official Community Plans (OCPs) and the annual capital plans. Recommendation # 3: The City should ensure that a process is in place to promote alignment with community planning groups in the annual capital project planning cycle. 8

9 Capital project planning (cont d) Finding # 4: Inadequate workforce planning causes departments to over-commit in terms of their capacity to deliver projects, resulting in frequent budget carry-forwards. Recommendation # 4: The City departments need to undertake a more accurate capacity analysis prior to assigning resources and committing projects for any given year. 9

10 Project management Governance and roles and responsibilities Finding # 5: Lack of a Structured Project Management & Governance Framework limits the ability to ensure consistent project delivery practices across various departments. Recommendation # 5: Develop a Project Management Framework, governed by a new Project Management Office (PMO), and compliant with Project Management Institute s (PMI) PMBOK. 10

11 Project management (cont d) Finding # 6: Accountability and ownership for project definition is unclear and lack of clarity on the deliverables and approvals required for the various phases of the project lifecycle. Recommendation # 6: Implement an oversight process that follows mandated project lifecycle stages. Hold stage gate reviews with stage checklists to ensure compliance. Finding # 7: Project Execution Plan (PEP) does not exist. Approaches for project implementation are adhoc, and lack planning and oversight. Recommendation # 7: Develop requirements for a PEP and integrate into the oversight process as part of the stage gate review sessions. 11

12 Project management (cont d) Finding # 8: Project roles and responsibilities are not clearly defined across various departments. Recommendation # 8: Refine the roles and responsibilities of all internal and external stakeholders involved in the various phases of the project lifecycle and develop a RACI matrix. Stage 1: Planning Task Define project need and alignment with departmental strategy & priorities Develop ballpark budget (Class 4) and identify funding source(s) Identify High-level Project Risks Identify Stakeholders Estimate Project Start/End Dates and Major Milestones Identify Approval Requirements (e.g., Council Report/Approval process) Stage 2: Design Task Planning Design Procurement Construction Closeout Complete project classification form and assign PM Project Sponsor A A A A A A Project Sponsor A Project Manager Project Manager Design Lead Design Lead Construction Lead Construction Lead Identify key project resources (Design Lead, Construction Lead) A R Hold kickoff meeting (including RACI discussion) A R C C Develop stakeholder register and outline stakeholder management plan A R C I Engage stakeholders (if necessary) A R C I Refine Project Scope A R C C Coordinate Design Sub-Disciplines A R Prepare Schematic Design A C R I Determine Delivery/Procurement Approach A R C C Develop Risk Register A R C C Develop Outline Project Schedule A R C C Develop Class 4 cost estimate A R C C Finalize project budget and contingency determination A R C C Develop project charter A R I I Consolidate Stage Gate Deliverables A R C C Hold Stage Gate Review A R I I 12

13 Project management (cont d) Finding # 9: Inconsistent or inappropriate staff qualifications /experience, and under-resourced departments. Recommendation # 9: Review current staffing levels; establish formal project management qualifications, training or experience as a requisite for future recruits; and encourage existing staff to undertake training. Project management processes Finding # 10: Absence of a policy mandating portfolio or project management practices. Recommendation # 10: Introduce a new policy that mandates the use of project management leading practices. Finding # 11: Lack of project management procedures and a Project Management System in place. Recommendation # 11: Develop an integrated project management tool (using Excel and/or SharePoint) that includes a set of interconnected templates and sub-tools, and meets the requirements of the Project Management Framework. Provide training to ensure adoption. 13

14 Project management (cont d) Procurement and contracting strategy Finding # 12: Lack of formal defined contract strategy evaluation for large projects. Recommendation # 12: The City should undertake formal defined contract strategy evaluation for large projects, taking into account factors such as potential project risks, market conditions, complexity of the project, and internal capacity. Finding # 13: The recently adopted procurement policy establishes governance protocols for the purchasing of all goods and services. Recommendation # 13: The City project managers should continue to work with the Purchasing department and ensure strict implementation of the procurement policy. Reporting Finding # 14: Lack of clear guidelines for project/portfolio reporting. Recommendation # 14: Develop reporting protocols to include specific information needed to support decision-making at senior organizational levels, and to demonstrate transparency around the performance of projects. Finding # 15: Lack of clear guidelines for contractor reporting. Recommendation # 15: Establish and mandate clear guidelines for contractor reporting, and develop table of contents and metrics to be included as part of the contract requirements with third parties. 14

15 Project management (cont d) Estimating and cost management Finding # 16: No formal guidelines for developing estimates, across all stages of the lifecycle. Recommendation # 16: Establish clear guidelines for estimating, with requirements for costing to be based on specific project documentation, site visits, actual unit rates from completed projects (not only from recent bids received), and with adjustment ratios as needed. 15

16 Project management (cont d) Estimating and cost management Finding # 17: Lack of clear guidelines for establishing contingency and for contingency drawdown. Recommendation # 17: Develop guidelines for establishing contingency and managing contingency throughout the lifecycle, with clear assignment of responsibility over contingency reallocation and drawdown. 80% 60% 40% Contingency (%) 20% 0% -20% -40% -60% Planning Design Procurement Construction Close-out Project Lifeycyle Upper Limit Lower Limit 16

17 Project management (cont d) Estimating and cost management Finding # 18: Lack of a cash flow forecasting methodology which takes into account the construction and spending cycles. Recommendation # 18: Develop an approach to cash flow forecasting that takes into account industry best practices, and project spend timing and magnitude patterns, thereby providing a more accurate picture of the spending curve at the portfolio level. $20,000,000 Over-budget project: cost management plan details how costs should be monitored and controlled throughout the life of the project $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Planned Budget Actual Contingency Finding # 19: Lack of a standardized tool for project cost tracking. Recommendation # 19: Develop a coherent project-based cost management and tracking tool, in line with industry practice. 17

18 Project management (cont d) Schedule management Finding # 20: Project schedule management is generally informal. Recommendation # 20: Develop guidelines for baseline schedule development and management. Scope management Finding # 21: Project scoping appears to be siloed, lacking coordination between various City departments. Recommendation # 21: Mandate the use of Project Charter for all large projects, with clear scope definition requirements. Finding # 22: Inconsistent application of change management processes. Poor tracking of change control and contemplated changes. No visibility over forecasted changes. Recommendation # 22: Develop and standardize a change control process that follows industry practice, and develop templates for change request forms and change log. Finding # 23: The project close-out procedures are not well developed yet, with unclear rules around documentation, review and archiving of as-builts, warranty information, and document storage. Recommendation # 23: Develop project close-out procedure including a checklist, and mandate the compliance with the checklist s requirements. Risk management Finding # 24: The practice of risk management is generally informal within project teams. Recommendation # 24: Formalize the risk management process and address lack of compliance of risk procedures. 18

19 Next steps 19

20 Prioritization of recommendation The level of impact and ease of implementing the recommendations were scored by Deloitte based on a scale of 0 to 5. A score of 5 implies that the recommendation is of high impact or easy to implement; whereas a score of 0 implies that the recommendation is of low impact or hard to implement. 20

21 Implementation roadmap Some recommendations are high-impact opportunities which can be implemented over short and medium term, while others relate to opportunities that may be addressed in the longer term, once critical inefficiencies have been addressed. 21

22 Appendix 22

23 Stage gate checklist 23

24 Project sizing tool 24

25 Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. The information contained herein is not intended to substitute for competent professional advice.