Mega Projects and

Governance

TENIA CHATZINIKOLI, MBA, MSc, MEng

Head of Project Risk, Phase One, High Speed 2

Corporate Governance

“Corporate governance is to ensure that an organisation fulfils its overall

purpose, achieves its intended outcomes for citizens and service users

and operates in an effective, efficient and ethical manner”

The Independent Commission on Good Governance in Public Service

Project Governance

Governance in Projects:

Aspects of corporate or organisation governance related to project activities

Ensures that the right projects are selected, executed well and in a sustainable way

Alignment of organisations portfolio of projects with corporate objectives

Ensures that projects are delivered effectively and efficiently

Provides corporate board and key stakeholders with timely, relevant and reliable information

Good Project Governance

“For infrastructure projects good governance is about the balance between the

natural desire of sponsor(s) to retain control, and the need of the delivery team to

have sufficient freedom to allow it to manage the risk to meet the project

objectives”

Infrastructure and Projects Authority, Improving Infrastructure Delivery, Project Initiation Route map, Governance Module

Project Governance Aims

Clarity of objectives

Clarity of roles and accountabilities

Timely decision making based on right expertise and level of information

Sufficient autonomy for the project but also oversight and involvement of the Sponsor, Board and Stakeholders

System of delegations for decision making and authority

Control of Change

Appropriate levels of Assurance

Communications between the key parties

Collaborative culture

Evolving with project lifecycle

The four Governance Pillars

Infrastructure and Projects Authority, Improving Infrastructure Delivery, Project Initiation Route map, Governance Module, June 2016

Heathrow Terminal 5

London Olympic Games 2012

Crossrail

Pilar 1: Accountability

Clarity about who is the Sponsor and the Sponsor’s accountabilities

Clarity about who is governing the project

Setting the governing policy and strategy

Setting requirements and who may control requirements change over time

Selecting execution strategy and delivery model

Accountability for the delivery of benefits

Accountabilities for other parties - Funders, Execution Team, Supply Chain, Asset Operator and key Stakeholders

Definition and allocation of risk accountabilities to each party

ODA – Governance

Multiple Clients

Multiple Stakeholders

Very big public investment

Highly visible public profile

Media focus

Immovable deadline

Dual purpose – “git for Games” and

Legacy

ODA Governance Framework, London 2012 – Learning Legacy

ODA – Accountability Framework

ODA Governance Framework, London 2012 – Learning Legacy

Crossrail – Risk Accountability

Pilar 2: Authority

Types of authorities: Setting policy

Incorporation

Allocation and draw down of money

Procuring and entering into contracts

Acquisition and disposal of land

Limits of delegation

Appropriate levels of delegation to enable timely decision

Sufficient resources in decision making bodies

Decision Gates, Routes and Approval/decision authorities

Intervention points

Gradual delegation

ODA – Decision Gates

ODA Programme Management Framework, London 2012 – Learning Legacy

Crossrail – Review Points and Delegations

Lessons learned from structuring and governance arrangements: Perspectives at the construction stage of Crossrail, Crossrail – Learning Legacy

Alignment

Delivery Model and Operating Model alignment

Corporate governance suitability to deliver the Project

Changes to Corporate Governance needed

Project objectives and corporate objectives

Alignment with other projects in Sponsor’s portfolio

Project and key Stakeholder objectives

Funders involvement in governance

Legislative environment

Corporate culture

Terminal 5 – Objectives Alignment

Crossrail - Agreements

Project Delivery Agreement

(Joint) Sponsor Agreement

Industry Partner Agreements

Crossrail Agreements were based on early consideration of risks - ahead of developing the documents.

The Crossrail Agreements capture the allocation of risks to the appropriate party.

Crossrail – Contingency and Intervention Points

First Intervention Point IP0:

Forecast outturn costs are higher than P50 cost

estimate.

Crossrail to submit and implement remediation plans

Second Intervention Point IP1:

When it is clear that element of the contingency

held by Sponsor will be needed

Sponsor may step in and take more responsibility for

the Project

Third Intervention Point IP2:

If the TfL funds are likely to be exhausted

DfT may step in and take responsibility for the Project

P80-P95 contingency held by the Sponsor

P50-P80 contingency held by the CRL Board

P50 cost estimate held by Delivery Partner

Lessons learned from structuring and governance arrangements: Perspectives at the construction stage of Crossrail, Crossrail – Learning Legacy

Disclosure

Information and frequency of reporting for each governance body

Rules for exception reporting

Escalation routes

Personal conflicts of interest

Transparency in decision making

Assurance requirements

Review over time

Terminal 5 Risk Based Audit

Corporate Audit

Internal Controls

Risk based Audits

Audits of Risk Management Process

ODA Controls and Assurance Framework

Risk governance and Audit in one group

ODA Risk & Audit to provide assurance to ODA (LOD3)

Programme Assurance (LOD2)

Senior Management Assurance (LOD1)

Real time assurance on live projects Integrated assurance aiming

Integrated assurance

Protection from over-assurance

ODA Governance Framework, London 2012 – Learning Legacy

ODA Assurance and Modular Reporting

Annual reports and accounts

Internal Audit Report

Annual Report on Fraud and Theft

ODA Programme Performance Report

Monthly Performance

Programme,

Project

Contract

Finance Report

Other

ODA Governance Framework, London 2012 – Learning Legacy

Risk Management and Governance

Alignment: Between organisation risk capability/appetite and Governance framework

Alignment: Early consideration of risk to support Delivery Model decision

Accountability: Risk allocation to different parties in Agreements documentation

Accountability: Risk framework – a reflection of Governance structure

Authority: Risk management maturity and gradual delegation of Authority

Authority: Management of Contingency funds

Alignment: Risk identification linked to corporate and project Objectives

Disclosure: Provision of Assurance and Risk based Audit

Disclosure: Reporting Risk Management performance and outcomes

About Tenia Chatzinikoli

Tenia Chatzinikoli MBA, MSc, MEng

More than 17 years experience in risk. Leading Risk roles for major projects in the transport sector for public and private sector clients.

Head of Project Risk for the delivery of Phase One of High Speed 2, since October 2014.

Career as a consultant in UK and international transportation industry (CH2MHill, Halcrow and Acer).

Clients including UK Government, Department for Transport, Transport for London, London Underground, BAA, Network Rail, Highways England, Transport Scotland, Irish Rail, Alstom, Utilities, other.

Major projects including High Speed 2, Crossrail, Thameslink, Heathrow Terminal 5, DART Interconnector Tunnel, CTRL, JLE, other.