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.