Audit of the Procurement Phase of the New Bridge for the St. Lawrence Corridor Project – Governance and Risk Management
April 2015
Table of Contents
- Executive Summary
- Background
- Audit Objective and Scope
- Audit Approach
- Audit Findings
- Conclusion and Recommendations
- Statement of Conformance
- Management Response and Action Plan
1 EXECUTIVE SUMMARY
1.1 Introduction
On October 5, 2011, the Government of Canada announced that the Champlain Bridge over the St. Lawrence River between the cities of Montreal and Brossard would be replaced by a new crossing. The New Bridge for the St. Lawrence Corridor (NBSLC) Project is one of the largest current infrastructure projects in North America. The NBSLC project includes building a new bridge, reconstructing and widening the federal portion of Highway A15 and replacing the Nun's Island Bridge.
On February 13, 2014, project authority was transferred from the Minister of Transport to the Minister of Infrastructure, Communities, and Intergovernmental Affairs, and Minister of the Economic Development Agency of Canada for the Regions of Quebec. This established Infrastructure Canada as the lead organization responsible for overseeing and managing the NBSLC project. The Department has worked in an integrated manner with officials from the contracting authority, Public Works and Government Services Canada as well as with Public Private Partnerships Canada, and with legal advisors from the Department of Justice.
1.2 Audit Objective and Scope
The audit objective was to assess the adequacy and effectiveness of the governance structure and risk management framework in place for the procurement phase of the NBSLC project.
The audit criteria are as follows:
- An effective governance structure was established with clear roles and responsibilities;
- Adequate monitoring mechanisms and processes were in place to support decision-making and enable appropriate follow-up; and
- An adequate project risk management framework was in place to proactively manage project risks.
The audit scope focused on Infrastructure Canada's role since it assumed responsibility for the NBSLC project in February 2014. Specifically, we assessed the NBSLC project team's role in the areas of project governance, risk management and oversight and monitoring. The time period considered in the audit was from February 2014 to January 2015.
1.3 Conclusion
Overall, an adequate and effective governance structure and risk management framework was in place for the procurement phase of the NBSLC project. Specifically, the governance structure had clear, documented accountabilities, roles and responsibilities and worked as intended. Appropriate and effective monitoring and reporting processes were in place to support decision-making. Finally, a detailed risk register was developed and risk mitigation strategies were presented to all governance committees to support project decision-making.
There are no recommendations specific to the procurement phase of the project as this phase is winding down at the time of the drafting of this report. However, three recommendations are provided as the project moves into the construction phase. The Assistant Deputy Minister, Federal Montreal Bridges, should:
- Review the governance committee structure to ensure that there is an appropriate level of oversight provided with due consideration for an efficient and streamlined approach.
- Establish a formal process for the development, review and approval of senior committee meeting minutes to facilitate the retention of corporate memory of items for discussion, information and decision.
- Assess the utility of implementing an information management / project management software solution to the overall administration of project management. Such a solution could add significant value in having all key project information, including risk management and mitigation strategies, in one accessible location. This would be particularly relevant for a large scale project involving multiple private and public sector players.
Management response: Management agrees with the recommendations and action plans have been put in place to address the areas for improvement identified.
The audit findings, conclusions and recommendations relate only to Infrastructure Canada and do not reflect the management practices employed by any other department.
2 BACKGROUND
The current Champlain Bridge over the St. Lawrence River which links the cities of Montreal and Brossard, was put into service in June 1962. In 2011, the Jacques Cartier and Champlain Bridges Incorporated, which owns and operates the existing Champlain Bridge, commissioned an engineering study jointly with the Ministère des Transports du Québec, which concluded that the bridge should be replaced as soon as possible. As a result, the Government of Canada approved a bridge replacement project later that year.
Canada's Economic Action Plan 2013 confirmed investments for various infrastructure projects, including the replacement of the Champlain Bridge. The New Bridge for the St. Lawrence Corridor project includes building a new bridge, reconstructing and widening the federal portion of Highway A15, and replacing the Nun's Island Bridge. Responsibility for the NBSLC project was assigned to Transport Canada.
Later that year, a new accelerated timeline of 2018 was established for the completion of the bridge portion of the NBSLC project, three years earlier than previously planned. At the initial stages of the NBSLC project, Transport Canada worked closely with Public Works and Government Services Canada (PWGSC) to obtain the necessary project approvals. A Government of Canada strategic decision was made to procure the NBSLC project as a public-private partnership.
On February 13, 2014, the NBSLC project authority was transferred from the Minister of Transport to the Minister of Infrastructure, Communities, and Intergovernmental Affairs, and Minister of the Economic Development Agency of Canada for the Regions of Quebec. This established Infrastructure Canada as the lead organization and project authority responsible for overseeing and managing the NBSLC project. Infrastructure Canada worked in an integrated manner with officials from the contracting authority PWGSC, as well as with Public Private Partnerships Canada, and with legal advisors from the Department of Justice.
A Memorandum of Understanding between Infrastructure Canada and Transport Canada was developed to facilitate the provision of internal services during the transition period which ended in May 2014.
The NBSLC project had three distinct phases (Figure 1).
Figure 1: Three Project Phases
The period audited covered governance and risk management during the NBSLC project procurement phase. Other project activities that occurred during this phase include the negotiation of numerous agreements that were to be ratified with various entities, such as Québec agencies and municipalities. In addition, land acquisition negotiations, and discussions with the province of Quebec and the City of Montreal, and other strategic activities were also underway.
3 AUDIT OBJECTIVE AND SCOPE
The audit objective was to assess the adequacy and effectiveness of the governance structure and risk management framework in place for the procurement phase of the NBSLC project.
The audit criteria are as follows:
- An effective governance structure was established with clear roles and responsibilities;
- Adequate monitoring mechanisms and processes were in place to support decision-making and enable appropriate follow-up; and
- An adequate project risk management framework was in place to proactively manage project risks.
The audit scope focused on Infrastructure Canada's responsibilities since it assumed responsibility for the NBSLC project in February 2014. Specifically, we assessed the NBSLC project team's role in the areas of project governance, risk management and oversight and monitoring. The time period considered in the audit was from February 2014 to January 2015.
4 AUDIT APPROACH
The approach and methodology used conforms to generally accepted practices, processes, procedures and standards of internal audit in the Government of Canada, and conforms to the Treasury Board Secretariat Policy on Internal Audit and the Institute of Internal Auditors Standards for Internal Auditing. Audit criteria were sourced from the Treasury Board Project Management Policy and relevant elements of the Office of the Comptroller General's Audit Criteria Related to the Management Accountability Framework.
The audit was conducted in three phases - planning, examination, and reporting - with deliverables prepared at key points. During the audit interviews with officials from Infrastructure Canada, Transport Canada, Justice Canada, PWGSC and Public Private Partnerships Canada were conducted, documentation reviewed and an audit risk assessment completed.
Throughout this audit engagement the audit team worked collaboratively with officials from the Office of Audit and Evaluation at PWGSC to ensure a consistent and coordinated approach to the conduct of their respective audits of this project. Infrastructure Canada's audit work focused on the project authority's role, while PWGSC's audit work assessed its role as contracting authority for the procurements in the preparatory phase of the NBSLC project, as well as for a selection of contracts in support of the main bridge project.
A site visit was conducted to obtain a better understanding of the NBSLC project. Preliminary audit findings were communicated to the auditee to validate facts and to confirm the clarity, accuracy, and completeness of the information reported.
5 AUDIT FINDINGS
5.1 Governance
It was expected that:
- An effective governance structure was established with clear roles and responsibilities; and
- Appropriate monitoring mechanisms and processes were in place to support decision-making and enable appropriate follow-up.
Conclusion:
Overall, an effective governance structure was established for the procurement phase of the Project. Accountabilities and roles and responsibilities were clear, documented and working as intended. Appropriate and effective monitoring and reporting processes were established to support decision-making.
The Transport Canada – Infrastructure Canada portfolio approach for 5.1 Governance
The original project authority for the NBSLC project was Transport Canada. In early 2014 a Government of Canada decision led to the transfer of this authority and responsibility for the NBSLC project to Infrastructure Canada. As a result, Transport Canada members of the NBSLC project team became employees of Infrastructure Canada.
The Deputy Minister of Transport, Infrastructure and Communities is responsible for both Transport Canada and Infrastructure Canada. Within the portfolio, the two Associate Deputy Ministers of Transport, Infrastructure and Communities report to the Deputy Minister and both have specific oversight responsibilities with respect to the NBSLC project.
The Assistant Deputy Minister, Federal Montreal Bridges Branch, is the Executive Project Sponsor and has overall responsibility and accountability for the NBSLC project. The Director General, New Bridge for the St. Lawrence, is considered the Project Sponsor.
Project Management Framework for 5.1 Governance
A Project Management Framework was developed at the onset of the procurement phase and described the NBSLC project's objectives, sources of funding, governance structure, lines of communication, and project staff roles, responsibilities and accountabilities. In compliance with the Treasury Board Policy on Project Management, the NBSLC project management framework was put in place and included the Project Brief, Project Charter, Project Management Plan, Risk Management Plan, Change Management Plan, Outcome Management Plan, and Performance Measurement Plan. These key documents clearly identified and communicated roles and responsibilities, and decision making within the governance structure.
The Project Management Framework defined an integrated approach for the NBSLC project team, who were co-located at Infrastructure Canada's offices in both Ottawa and Montreal.
Project Governance Framework for 5.1 Governance
The established governance structure for this project is comprised of a Ministerial Working Group, a Deputy Minister Governance Committee, an Assistant Deputy Minister Steering Committee and an Integrated Project Team.
Ministerial Working Group
This Group met once during the period audited, and functioned as a venue for Ministers to stay current on the NBSLC project, while overseeing its progress and providing government directions on key issues as needed.
Deputy Minister Governance Committee (DMGC)
The DMGC is the senior and main decision-making and oversight body for the NBSLC project. The committee is co-chaired by the Deputy Ministers of Transport, Infrastructure and Communities and PWGSC. Other members include the Chief Executive Officer of Public Private Partnerships Canada, Justice Canada, and other ex-officio representatives from all central agencies, and the Deputy Minister of the Economic Development Agency of Canada for the Regions of Quebec.
The committee met seven times during the period audited and received briefings on all key aspects of the NBSLC project. For instance, at each meeting, the committee received status updates on items such as the management of the selection processes, the development of the NBSLC project agreement, negotiations, land acquisitions, project timelines, risk management strategies, communications and other major issues relevant to the NBSLC project.
Assistant Deputy Minister Steering Committee (ADMSC)
The ADMSC, which was responsible for the management of the procurement phase, is chaired by the Assistant Deputy Minister, Federal Montreal Bridges Branch. The membership reflected that of the Deputy Minister committee. Reporting to the DMGC, the committee provided strategic direction related to all aspects of the NBSLC project, provided recommendations and raised issues to the DMGC as appropriate.
The committee met eight times during the period audited. Based on the information provided in the attendance log, it was noted, that official members' attendance at the meetings was approximately 50 percent; indicating that at about half of the meetings, substitutes attended on behalf of the official members. However, this practice was permitted in accordance with the committee's terms of reference in order to ensure that each participating organization would have an attendee positioned to provide their perspective on key issues and risks. Additionally, the committee chair indicated that pre-meeting conference calls were held as required with Assistant Deputy Minister members in advance of official meetings to ensure that they were aware of and concurred with key information and recommendations put forth to the DMGC.
The committee reviewed a number of project reports including a project dashboard, schedule status updates, the Project Agreement schedule, and the overall critical path. Continuous monitoring of project activities was demonstrated at key milestones and enabled members the opportunity to identify and address issues in a timely manner.
Official records of decision were not produced for either the DMGC or ADMSC. However, key decisions and action items were communicated via the ex-officio committee members who debriefed and tasked staff verbally and electronically following each meeting. The decision items and follow-up requirements were monitored by the committees' secretariat, which provided support for both committees. In addition, there was also evidence that for certain key decisions, the Assistant Deputy Minister, Federal Montreal Bridges obtained approvals through electronic mail.
The Integrated Project Team (IPT)
The Integrated Project Team (IPT) addressed the day-to-day management of the NBSLC project implementation and ensured optimal interdepartmental integration. The Project Sponsor led the IPT and its membership included senior management representatives from Infrastructure Canada, PWGSC, Public Private Partnerships Canada and Justice Canada. This structure leveraged the expertise, knowledge and mandate of each entity to support project implementation.
Several sub-working groups that were led by project directors and managers supported the IPT. The four main sub-working groups were focused on the following areas: technical, policy and communications, legal, and procurement.
The IPT and its sub-working groups used a centralized approach to meet the NBSLC project objectives. The IPT's secretariat worked with process activity owners to gather data and prepare reports to support the monitoring of key deliverables and outcomes. For example, the IPT required its sub-working groups to produce weekly or monthly project summary and risk reports in order to monitor key information and to provide briefings to the senior governance committees on issues as required.
Financial monitoring and reporting for 5.1 Governance
The Assistant Deputy Minister, Federal Montreal Bridges is responsible for setting the budget for project activities and for ensuring that the budget allocated to the NBSLC project is appropriate to meet requirements throughout the NBSLC project lifecycle. For the 2014-15 fiscal year, the NBSLC project was allocated an approved budget of approximately $126 million.
Since Infrastructure Canada became the project authority, the NBSLC project team has implemented forecasting tools to ensure that within each specific year, the NBSLC project remains in line with allocated funds as per anticipated timelines. For example, monthly reviews of actual expenditures and forecasts against budgets were performed by the NBSLC project team and reviewed with departmental financial management advisors. At each financial period, the Assistant Deputy Minister meets with the financial management advisor to discuss the Branch's overall budget.
Typically, Infrastructure Canada is responsible for managing contribution agreements with recipients under various programs; however this project required the department to act as the NBSLC project authority for a public-private-partnership major capital project. As such, Infrastructure Canada's Accounting Operations has made changes to the departmental financial management system to account for capital expenditures.
During the course of this audit the NBSLC project team was in the process of implementing the capitalization procedures in compliance with Treasury Board Accounting Standards. Application of these procedures will ensure that capital assets transactions are properly recorded and recognized in the departmental financial system for the production of financial statements.
5.2 Risk Management
It was expected that:
- An adequate project risk management framework was in place to manage project risks.
Conclusion:
Overall, an adequate risk management framework was in place to effectively manage the NBSLC project. A detailed risk register was developed and presented to all committees within the governance structure to assist in the decision-making process.
Project Risk Environment for 5.2Risk Management
In accordance with the Treasury Board Policy on the Management of Projects, the NBSLC project was initially classified as high risk due to a number of factors, including, but not limited to, the condition of the Champlain Bridge, the negotiation of agreements with various stakeholders, potential delays in the procurement process, and potential project costs exceeding planned spending.
However the overall risk rating was reduced to medium, after mitigation measures were established and implemented. One of the key mitigation strategies implemented was the procurement of an engineering firm to provide advice on technical aspects of the NBSLC project.
Risk Management Framework for 5.2 Risk Management
The NBSLC project risk framework was established largely to manage and mitigate project risks. This framework relied on the risk register database that captured all risks to ensure that they were appropriately managed, monitored and mitigated.
Project risks were identified based on environmental scans, experience, and analysis. Each risk was described in terms of potential impacts, and planned mitigation strategies. Once mitigation strategies were identified, subject matter experts were tasked with the identification, assessment and mitigation of relevant risks. The IPT monitored and ranked project risks during their weekly meetings. In addition, updates on the status of project risks were presented at all ADMSC and DMGC meetings.
Information Management Tools for 5.2 Risk Management
During the procurement phase, the NBSLC project team did not use a project management tool as initially considered to support project monitoring and decision-making. In lieu of having one tool in place to manage overall project timelines, a number of databases and spreadsheets were created by project staff. However, in some cases these tools were somewhat cumbersome and increased manual project administration.
It is noted that both PWGSC and the external engineering firm used project management tools to track progress. The use of such tools is considered a good practice for large projects. The overall management of the NBSLC project could benefit from use of an information management tool, specifically in terms of having all information in one easily accessible location, which would facilitate good corporate knowledge management practices.
6 CONCLUSION AND RECOMMENDATIONS
Overall, an adequate and effective governance structure and risk management framework was in place for the procurement phase of the NBSLC project. Specifically, the governance structure had clear, documented accountabilities, roles and responsibilities and worked as intended. Appropriate and effective monitoring and reporting processes were in place to support decision-making. Finally, a detailed risk register was developed and risk mitigation strategies were presented to all governance committees to support project decision-making.
There are no recommendations specific to the procurement phase of the project as this phase is winding down at the time of the drafting of this report. However, three recommendations are provided as the project moves into the construction phase. The Assistant Deputy Minister, Federal Montreal Bridges, should:
- Review the governance committee structure to ensure that there is an appropriate level of oversight provided with due consideration for an efficient and streamlined approach.
- Establish a formal process for the development, review and approval of senior committee meeting minutes to facilitate the retention of corporate memory of items for discussion, information and decision.
- Assess the utility of implementing an information management / project management software solution to the overall administration of project management. Such a solution could add significant value in having all key project information, including risk management and mitigation strategies, in one accessible location. This would be particularly relevant for a large scale project involving multiple private and public sector players.
Management response: Management agrees with the recommendations and action plans have been put in place to address the areas for improvement identified.
The audit findings, conclusions and recommendations relate only to Infrastructure Canada and do not reflect the management practices employed by any other department.
7 STATEMENT OF CONFORMANCE
The audit conforms to the International Standards for the Professional Practice of Internal Auditing and the Internal Auditing Standards for the Government of Canada as supported by the results of the quality assurance and improvement program.
8 MANAGEMENT RESPONSE AND ACTION PLAN
There are no recommendations specific to the procurement phase of the project as this phase is winding down at the time of the drafting of this report. However, three recommendations are provided as the project moves into the construction phase.
| # | Recommendation | Management Response and Action Plan | OPI and Due Date |
|---|---|---|---|
| 1 | Review the governance committee structure to ensure that there is an appropriate level of oversight provided with due consideration for an efficient and streamlined approach. | Agreed. A review of the governance structure is underway and will be completed in time for the next phase of the project. The governance structure put in place will ensure efficiency while providing appropriate oversight for the project. | OPI: DATE:
|
| 2 | Establish a formal process for the development, review and approval of senior committee meeting minutes to facilitate the retention of corporate memory of items for discussion, information and decision. | Agreed. It is to note that many of the subjects discussed at the committees meetings are for information only and therefore, summary of meetings have not been produced for all committees. However, key decisions by Deputy Ministers are recorded and documented, such as the approval of the RFQ, RFP and PA. Moving forward, official summaries of meeting will become part of all committees meetings. |
OPI: DATE:
|
| 3 | Assess the utility of implementing an information management / project management software solution to the overall administration of project management. Such a solution could add significant value in having all key project information, including risk management and mitigation strategies, in one accessible location. This would be particularly relevant for a large scale project involving multiple private and public sector players. | Agreed. In collaboration with the IM / IT group, a review of upcoming needs stemming from Project Agreement implementation and of available software is underway and will be conducted over the spring and summer to determine what information should be included in the new information management software and which software is best suited to the needs of the group. Target date for implementation of the new software is by the end of October 2015. | OPI: DATE:
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Annex A: New Bridge for the St. Lawrence Corridor Project Governance Structure
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