“Governance of projects matters because there is a strong correlation between good governance and project success” said Martin Buck, Crossrail Transition and Strategy Director speaking at the APM Governance SIG meeting on 17 December 2014. Martin gave plenty of food for thought to the large audience that attended.
Crossrail is often cited as one of Europe’s largest projects. Having spent more than 3 years being considered by parliament through a ‘hybrid bill’, permission was finally granted in July 2008 and the main phases of the project started in 2009. The project is being delivered by Crossrail Ltd (CRL), a company which was established in 2001 as a 50/50 joint venture company between Transport for London (TfL) and the Department for Transport (DfT). However from 5 December 2008 CRL became a fully owned subsidiary of TfL.
Critical to the success of the project is the governance arrangements to enable CRL to make decisions on behalf of funders and stakeholders. The project has gained much praise from both industry and government, with a report from the National Audit Office (NAO) recently commending the management approaches adopted by CRL. Read the NAO report here http://www.nao.org.uk/wp-content/uploads/2014/01/Crossrail.pdf.
Infrastructure UK – Project Initiation Routemap
Martin highlighted that experiences at Crossrail had influenced the development of the Governance Module within the Project Initiation Routemap (see diagram below) developed by Infrastructure UK, a team within HM Treasury. The Routemap supports the governance of megaprojects by considering the following factors:
- Complexity of the project and it's environment
- Capability of the organisations involved
- Alignment of capability with complexity
More detail is given at Improving Infrastructure Delivery: Project Initiation Routemap - Governance module: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/361175/Governance_Module_30_Sept.pdf
Martin stated that for major infrastructure projects good governance is about achieving a 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.
Martin highlighted the definition by the Independent Commission of Good Governance in Public Services and the APM Directing Change and how he saw the latter as an attempt to “projectise corporate governance”.
Martin spoke of the five areas of governance to consider in designing the model for a project:
- Where does accountability (and risk) lay?
- Authority levels – who has the authority to commit what?
- Alignment - Are the project objectives and goals aligned with business success and benefits?
- Disclosure - How is the project reported on and communicated to the key stakeholders?
- Scale and complexity – are these matched?
Crossrail Governance and Funding
One of the core principles of the governance structure for Crossrail is the clear separation of the sponsor group (or commissioning body), the delivery body (or executing body) and the users. In Crossrail’s case the sponsoring group comprised the two main funders, the delivery body was undertaken by the executive board of Crossrail Ltd (supported by the project management team and supply chain) and the users are the operational team. This separation is vital as some organisations, e.g. TFL, have a role in each of these elements so clarity of reporting and accountability line is essential. CRL has put prominence on core governance principles such as:
- Clear statement of objective and parameters – including arrangement for remedy
- Sufficient autonomy with a single ‘controlling mind’
- A clear system of delegation and process for timely decisions that fall outside the limits of delegation
- Process for controlling changes
- Process for reporting and other communications
- A collaborative culture and working relationships
- Boardroom understanding of project objectives, strategy and approach of what needs to be achieved
- A defined system for assurance at all levels.
Martin explained how the Crossrail project was driven by finance and the securing of funding. Key to initial success in bringing the project to life were the project champions like Ken Livingstone and Alistair Darling. However more importantly was securing the £4 billion contribution via the London Business Rate Surcharge. Together with TfL and DfT, the team managed to close the initial £8 billion funding gap to enable the £14 billion project to proceed. The Sponsor role was therefore focused on the main two primary funders, TfL and DfT. However, in the case of the smaller funders, “funding a project doesn’t necessarily equip you to play a project sponsor role!”
A novel part of the governance structure was the signing of a Project Sponsor Agreement (between the two main funders), followed by a Project Development Agreement (between the Sponsoring Board and the Delivery Body) and a Stakeholder Agreement. This triangulation was built on the previous governance model used by the Channel Tunnel Rail Link project (HS1). These agreements brought the key parties together for the project.
Martin then touched upon the Sponsoring Board and the respective roles including a rotating chair. This mechanism was put in place by the Sponsors to ensure control and reporting. Martin explained how the level of delegated authority increased in four increments as trust and governance maturity has grown. [“Empower and deliver” has become the motto of the governance strategy. – don’t recognise this!]
One of the challenges will be to bring Network Rail closer to the project as it nears completion as it will ultimately be responsible for managing and maintaining Crossrail’s lines and signalling. This is critical as Crossrail now needs to demonstrate how benefits will be realised through the operational life of the railway.
The NAO has stated in their report that “Crossrail had successfully managed the funding elements but needed to get better with benefits realisation” pointing particularly to the increase in “land value uplift as a result of Crossrail”. As The Treasury said “to fulfil the funding gap – the beneficiaries must pay”.
In summary Martin spoke of the complex nature of the multiple stakeholders, the relationships and their management and the essential nature of formal agreements. The project is 60% complete and the London section due to open in 2018 with through running to the surface sections in 2019. The key governance lessons learned to date include:
- Be clear of the importance of governance for project success
- Ensure clarity of governance structure and roles
- Use Sponsorship Agreements to build relationships and commitment
- Provide funding certainty
- Allow autonomy and delegation of power to manage risk and take decisions – but allow it to mature over time
- Provide project champions both political and financial
- Ensure disclosure and transparency
For further reading download:
- APM Governance SIG publications Directing Change, Project Sponsorship, and Co-Directing Change here https://www.apm.org.uk/memberdownloads
- Martin Buck, Transition and Strategy Director at Crossrail, gave an overview of the governance arrangements, their evolution and lessons learned. Martin's slides can be seen below:
Amerjit Walia, Committee Member Governance SIG