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From push to pull - the role of assurance in delivering capital programme outcomes by Neal Argent and Matt Henderson, 19th May 2015

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From push to pull - the role of assurance in delivering capital programme outcomes
by Neal Argent and Matt Henderson
19th May 2015

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From push to pull - the role of assurance in delivering capital programme outcomes by Neal Argent and Matt Henderson, 19th May 2015

  1. 1. From push to pull – the role of assurance in delivering capital program outcomes Presentation to the Association for Project Management Neal Argent and Matt Henderson
  2. 2. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 1 Some common perceptions of assurance Assurance is disruptive to my team They are telling me nothing I don’t already know We need a strategy to get through the audit We are in a period of flux therefore can we defer We feel threatened by the review Someone else reviewed this last month The report is too negative It’s backward looking and retrospective It’s a tick box exercise
  3. 3. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 2 Business causes of capital program failure The program is not affordable Organisation is not fit for purpose Commercial strategy drives the wrong behaviours Poor data management leads to inaccurate reporting and bad decisions Gaps in program management and controls capability Risk management and governance of decisions is not effective
  4. 4. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 3 Assurance as a catalyst to improve program performance Assurance needs to be forward looking to keep a program out of trouble
  5. 5. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 4 Profiling assurance across the lifecycle Risk Levelof Assurance Time Ability to influence Expenditure 1. Outcome Definition 2. Feasibility 3. Concept Design 4. Detailed Design 5. Delivery 6. Project Close Project Initiation Strategic Business Case Outline Business Case Full Business Case / Investment Decision Commissioning Closure Paper Assurance effort is often focussed during delivery and yet successful outcomes are influenced more at the front end
  6. 6. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 5 The role of assurance and the 3 lines of defence Program assurance functions Senior Management Delivery management Corporate audit External audit 3rd Line: Independent Assurance 2nd line: Management Assurance 1st line: Management Controls* Program and project management 3Lines of Defence distinguishes between management assurance and assurance delivered independently of management
  7. 7. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 6 Coordinating assurance effort across the 3 Lines of Defence 2nd Line of Defence – Assurance 1st Line of Defence – Management Controls Project Risk profile 3rd Line of Defence – Independent Audit 2nd line provides support direct to 1st line. 2nd line provides a functional report to 3rd line to monitor integrity of advice. Scalable resource base 3rd Line: Independent Assurance 2nd line: Management Assurance 1st line: Management Controls 1. Outcome Definition 2. Feasibility 3. Concept Design 4. Detailed Design 5. Delivery 6. Project Close Risk-based The 2nd Line of Defence should keep the 1st Line focussed on delivery
  8. 8. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 7 A risk-based approach to Assurance 1. Outcome Definition 2. Feasibility 3. Concept Design 4. Detailed Design 5. Delivery 6. Project Close Gaps and overlaps in assurance can result from an unstructured approach
  9. 9. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 8 From push to pull… Assurance Maturity Basic Moderate Complex / Comprehensive ► Compliance reviews ► Focus on technical / quality assurance ► Layering of assurance - potential assurance gaps and overlaps ► Limited reporting and follow-up ► Low level Board visibility ► A ‘tick box’ exercise ► Viewed as unpopular and disruptive ► Project Governance and Assurance established ► Risk-based techniques introduced ► Coordinated and integrated assurance planning ► ‘Continuous Improvement’ / follow-up techniques introduced ► Self assurance ► ‘Technical’ assurance as a component of integrated ‘Business’ assurance ► Golden thread from assurance to decisions. ► Value-rich analytical techniques (benchmarking, analytics) ► A ‘pull’ not a ‘push’ ► Open transparent culture A mature assurance approach will improve performance resulting in a ‘pull’ from management
  10. 10. 15 May 2015 From push to pull – the role of Assurance in delivering capital program outcomes Page 9 Wrap up – developing capability to assure proven ‘business’ risks • Of 365 megaprojects, 64% are facing cost overruns • 73% report schedule delays • “65% of projects failures are due to softer aspects such as people, organisation and governance”
  11. 11. Thank you
  12. 12. EY | Assurance | Tax | Transactions | Advisory Ernst & Young LLP © Ernst & Young LLP. Published in the UK. All Rights Reserved. The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF. ey.com About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member organizations of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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