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Govt scales back depth of Treasury major project reviews

Govt scales back depth of Treasury major project reviews

By Paul McBeth

Sept. 21 (BusinessDesk) - The Treasury will publish just one major report on the government's major project pipeline, replacing the other two reports with high-level updates in an effort to cut costs.

The government's financial adviser started publishing the four-monthly reports last year, which track the major projects monitored by the Treasury to provide an additional oversight of the Crown's "most complex, high-value investments". Four have been published since November last year, and Finance Minister Bill English today said only the July report will be published in future with the March and November papers replaced by "interim, high-level updates that will show entries and exits from monitoring, as well as any changes in confidence ratings".

"This change will save agencies’ compliance costs while retaining appropriate levels of oversight," English said. "This transparency ensures all agencies are as well-equipped as possible to deliver these projects on time and on budget for the benefit of New Zealanders."

Budget documents show an annual $2.4 million has been allocated for the Treasury's gateway reviews and major project monitoring, functions that had previously been held by the State Services Commission.

Today's report shows the Treasury is watching 55 projects across 33 agencies estimated to cost $36 billion. That's 11 percent of the government's investment portfolio, but 45 percent of the cost.

Eight projects exited the Treasury's oversight in the period, while 17 were added, most of which were new health and transport initiatives.

Of the 55 projects, just one - the police's $63.6 million human resources management information system - was tagged red, meaning a successful delivery would need changes to the budget, schedule, scope or benefits. A further two - Health Partnerships' national infrastructure platform and the national bowel screening programme - needed urgent action to deal with major risks, with a red/amber rating.

That accounts for about 5.4 percent of all projects on the Treasury's watchlist. The government agency said 5-to-10 percent of projects are typically tagged red or red/amber, and previous reports have had between 12 percent and 16 percent of projects facing challenging circumstances.

In a separate Q&A document, the Treasury said the police project's timeline had slipped "due to the additional time required to resolve a greater number of errors than expected during testing, arising from the complexity of integrating different systems", and that would increase the programme's costs.

"We think it’s appropriate for police to delay the go-live date for the project to ensure it works as intended, and conversations with commercial suppliers are continuing," it said.

The Treasury upgraded its assessment of the national bowel screening programme due to the Ministry of Health's consultation with district health boards on delivery dates and their ability to absorb costs, but the financial adviser was still concerned that the roll-out timeframe was difficult to achieve. The projected cost of the programme was withheld, though minister Jonathan Coleman allocated $39.3 million to it in this year's budget.

On Health Partnerships' infrastructure platform, the Treasury said the project was delayed because the original supplier's offering wasn't ready to be deployed. Health Partnerships is working closely with IBM and hopes to agree on a way forward by the end of this week, the Treasury said. The project's budget was also withheld, and forecast expenditure wasn't available.

The Auditor-General yesterday released a report on the Treasury's gateway reviews, which are designed to provide independent and timely advice to the people responsible for major projects and programmes. Between 25 and 30 reviews are taken each year at a cost of about $2 million, and since they were introduced in 2008, 180 have been done for more than 80 projects costing some $45 billion.

Auditor General Lyn Provost said the reviews delivered benefits to individual projects, and while there were limitations to the 'one-size-fits-all' approach, the Treasury was aware of those.

The Treasury said it was tailoring how the reviews are used with other tools, such as major projects monitoring and the investor confidence rating, which assess the performance of individual agencies in managing investments and assets.



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