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Governance and Accountability for Three Christchurch Rebuild Projects

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Governance and Accountability for Three Christchurch Rebuild Projects B.29 [15s] Governance and accountability for three Christchurch rebuild projects Office of the Auditor-General PO Box 3928, Wellington 6140 Telephone: (04) 917 1500 Facsimile: (04) 917 1549 Email: [email protected] Website: www.oag.govt.nz Publications by the Auditor-General Other publications issued by the Auditor-General recently have been: • Central government: Results of the 2014/15 audits • Delivering scheduled services to patients ‒ Progress in responding to the Auditor-General’s recommendation • Matters arising from the 2015-25 local authority long-term plans • Earthquake Commission: Managing the Canterbury Home Repair Programme ‒ follow-up audit • Ministry for Primary Industries: Preparing for and responding to biosecurity incursions ‒ follow-up audit • Governance and accountability of council-controlled organisations • Queenstown Lakes District Council: Managing a conflict of interest in a proposed special housing area • Reviewing aspects of the Auckland Manukau Eastern Transport Initiative • Annual Report 2014/15 • Service performance reporting: Results of the annual audits of TEIs for the year ended 31 December 2014 • Request for inquiry into the regulation of the ancient swamp kauri industry • Kaipara District Council: The Auditor-General’s decision on requests to make a report under section 44 of the Local Government Act 2002 • Consulting the community about local authorities’ 10-year plans • New Zealand Police: Enforcing drink-driving laws ‒ Progress in responding to the Auditor- General’s recommendation Website All these reports, and many of our earlier reports, are available in HTML and PDF format on our website – www.oag.govt.nz. Photo acknowledgement: Notification of new reports Chris Tse, Office of the Auditor-General. We offer facilities on our website for people to be notified when new reports and public statements are added to the website. The home page has links to our RSS feed, Twitter account, Facebook page, and email subscribers service. Sustainable publishing The Office of the Auditor-General has a policy of sustainable publishing practices. This report is printed on environmentally responsible paper stocks manufactured under the environmental management system standard AS/NZS ISO 14001:2004 using Elemental Chlorine Free (ECF) pulp sourced from sustainable well-managed forests. Processes for manufacture include use of vegetable-based inks and water-based sealants, with disposal and/or recycling of waste materials according to best business practices. B.29[15s] Governance and accountability for three Christchurch rebuild projects Presented to the House of Representatives under section 20 of the Public Audit Act 2001. December 2015 ISBN 978-0-478-44229-8 Contents Auditor-General’s overview 3 Part 1 – Introduction 7 Why we carried out our audit 7 How we carried out our audit 8 How we are reporting our findings 9 Part 2 – The Christchurch rebuild and the three projects we looked at 11 The Christchurch rebuild 11 The projects we looked at 11 Part 3 – What we found 20 Bus Interchange 20 New Central Library 20 Acute Services Building 21 Part 4 – Clarity of purpose 23 Project purpose 23 Governance versus management 24 Lessons 24 Part 5 – Accountability 25 Accountability for the project 25 Accountability to the public 26 Lessons 27 Part 6 – Roles and responsibilities 28 Roles and responsibilities of governance and management groups 28 Lesson 29 Part 7 – Leadership 30 Leadership of risks and issues 30 Review and improvement 32 Lesson 33 Part 8 – Information and reporting 34 Project reporting to governance groups 34 Sharing information within the project 35 Sharing information outside the project 35 Lessons 36 Part 9 – Capability and participation 37 Independence 37 Governance capability 38 Representation 38 Iwi representation 39 Lesson 39 Appendix – Our recommendations 40 Figures 1 – Principles of good governance 8 2 – Bus Interchange project governance structure 13 3 – New Central Library project governance structure, December 2014 15 4 – New Central Library project governance structure, October 2015 16 5 – Acute Services Building project governance structure 19 2 Auditor-General’s overview The Canterbury earthquakes in 2010 and 2011 destroyed large parts of Christchurch and the Canterbury region. Since then, central and local government have been leading a programme of recovery that includes many projects to rebuild essential facilities and infrastructure. These projects are taking place in a challenging environment. They are in a city and region that have a high volume of construction work, disrupted infrastructure, and a population still recovering from a major disaster. Effective governance arrangements are essential to provide direction and oversight that help these projects deliver the right facilities for Cantabrians for the right cost and at the right time. Clear accountabilities are also needed so that people know what the projects’ intended outcomes are and whether these outcomes are being achieved. I decided to look at the governance arrangements for three of these projects: the Bus Interchange, the New Central Library, and the Acute Services Building at Christchurch Hospital. I chose these projects because they are being led by different entities, are of different sizes, are at different stages, and face different challenges. They also have different governance arrangements. Bus Interchange The Canterbury Earthquake Recovery Authority led the Bus Interchange project. The governance arrangements for this project were well thought out, with clear roles for each part of the governance structure. People understood these roles. The main governance group included people who were able to provide independence, leadership, and direction. The Bus Interchange has been completed successfully on time and within budget. As with all projects, there were some challenges along the way. However, the governance structure meant that these could be addressed effectively and efficiently. New Central Library Christchurch City Council (the Council) is responsible for the New Central Library project. When we first looked at this project in December 2014, its governance arrangements were not adequate. The arrangements were not well defined, and there was no clear separation of governance and management. We could not identify a group providing effective governance at a project level. Although the project was progressing, significant funding and affordability risks were apparent. 3 Auditor-General’s overview In April 2015, we told the Council what we had found. Since then, the Council has made substantive changes to its governance arrangements for the project. In October 2015, we visited the Council again to see whether the changes had made a difference. The new arrangements are still in the early stages, but we found more clarity about project governance (including a separation of governance and management), more independence in the governance structure, and improved reporting. We also found stronger leadership in addressing the project’s main risks. The new arrangements put the Council in a much better position to lead the project to its successful completion. Acute Services Building The Acute Services Building is using a new governance model for health projects. Under this model, the Ministry of Health (the Ministry) is responsible for managing the project and a new independent group, the Hospital Redevelopment Partnership Group (the HRPG), provides governance. The new arrangements were introduced quickly, without enough planning for how they would work in practice. As a result, accountabilities, roles, and responsibilities are not clear to everyone involved. In particular, the role of Canterbury District Health Board, which would have been responsible for governance and management under the previous model, was not thought through. Without clarity, people have not always agreed who does what. Tensions, which were already high, have increased. At times, these tensions have created an environment that is neither productive nor pleasant. When this happens, the HRPG has had to spend its time resolving conflict rather than focusing on the best outcomes for the project. Despite these difficulties, the HRPG has provided strong leadership. The HRPG has managed to keep the project moving forward with the support of both the Ministry and Canterbury District Health Board. The Government has agreed to use this new governance model for other major health projects. The Ministry needs to ensure that lessons are learned from its experience in Canterbury and are applied to other projects. The Ministry has already identified a programme of work to address some of the weaknesses we found. 4 Auditor-General’s overview Overall lessons We identified some features that contribute to effective and efficient governance. Clear accountabilities Being clear about who is accountable for project outcomes supports effective governance. Although some accountabilities were clear, all three projects we looked at would benefit from producing a clearer accountability framework that includes specific and general accountabilities that apply to the project at all levels. Accountability to the public was best when people were told how their input had been applied to the project. There was also good public accountability when a range of social and other media were used to keep people up to date about project progress. Clear roles and responsibilities Governance was most effective when there was a clear structure and when accountabilities, roles, and
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