Economic Appraisal Guidance
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NI Practical Guide to the Green Book

10.  

Implementation, Management and Monitoring
10.1  

Implementation
10.1.1   Economically justifiable and financially affordable proposals are of no value if they cannot be implemented. In this context, implementation refers to those activities that are required during the period after appraisal to put in place a policy, or complete a programme or project. The implementation of proposals must be considered as part of the appraisal process, enough to ensure at least that proposals are viable, risks are manageable, and that benefits can be realised, before significant funds are committed. These aspects of appraisal develop iteratively as with the analysis of costs and benefits.
10.2  

Programme and Project Management17
10.2.1   Programme management is a structured framework for defining and implementing change within an organisation. It provides a framework for implementing business strategies and initiatives through the management of a portfolio of projects that give organisations the capability to achieve benefits that are of strategic importance. All large programmes should have recognised programme management methodologies with relevant governance and responsibilities defined.
10.2.2   Effective management of projects is an essential element of resource control. It is vital that Departments have in place robust, proactive systems for project management, to ensure that projects are managed satisfactorily and within budget. Evidence of effective project management systems under implementation will be a factor in considering projects for approval and in setting revised delegated limits. Although this section focuses upon projects, the underlying principles are also broadly applicable to policies and programmes.
10.2.3   DFP expects Departments to manage projects according to the most up to date good practice guidance produced by the Office of Government Commerce (OGC). There are several strands to this guidance, including:-
  • The principles and procedures set out in the current OGC Achieving Excellence in Construction guidance. These are designed specifically for use in construction or capital works projects, and DFP recommends their use in such cases.
  • The principles and procedures as set out in the latest OGC PRINCE (Projects In a Controlled Environment) documentation. These are applicable to projects in general. DFP recommends their use for all projects other than construction or capital works projects.
  • The concept of Gateways and Gateway Reviews.
10.2.4   Brief elaboration of these principles and concepts is given below. However, to ensure that they are applied appropriately in practice, Departments should seek advice from DFP's Central Procurement Directorate (CPD) and refer to the relevant OGC guidance. The latter may be found at the OGC website http://www.ogc.gov.uk/ It includes the Successful Delivery Toolkit (located at http://www.ogc.gov.uk/resource_toolkit.asp) which is a useful resource containing proven good practice for procurement, programmes, projects, risk and benefits management.
10.3  

Construction (or Capital Works) Projects: OGC Achieving Excellence in Construction Guidance
10.3.1   The principles in the current OGC Achieving Excellence in Construction guidance should be applied and should be reflected in NI Departments' documented client procedures for the management of projects. This guidance advises Departments of the principles for the management of capital works projects which should be integrated into Departmental systems. Departments should have in place procedures to control capital projects which, as a minimum, include these principles. Where a Department is at present applying more rigorous guidelines it should of course continue to do so.
10.3.2   The "Achieving Excellence in Construction" initiative is explained at the OGC Government Procurement Service Website
10.3.3   The Achieving Excellence suite of guidance replaced the Construction Procurement Guidance series in 2003. The new series reflects developments in construction procurement over recent years and builds on departments' experience of implementing the Achieving Excellence in Construction initiative. In taking forward Achieving Excellence, new targets for government clients have been established; these are outlined in the Achieving Excellence documents. DFP's Central Procurement Directorate (CPD) will coordinate on the adoption and dissemination of this guidance.
10.3.4   The current OGC Achieving Excellence suite of guidance includes:

Achieving Excellence - Building on Success
Achieving Sustainability in Construction Procurement
Improving Standards of Design in the Procurement of Public Buildings
Achieving Excellence in Construction: A Manager's Checklist
Construction Projects Pocketbook
AE Guide 1   Initiative Into Action
AE Guide 2   Project Organisation
AE Guide 3   Project Procurement Lifecycle
AE Guide 4   Risk and Value Management
AE Guide 5   The Integrated Project Team
AE Guide 6   Procurement and Contract
AE Guide 7   Whole Life Costing and Cost Management
AE Guide 8   Improving Performance
AE Guide 9   Design Quality (forthcoming)
AE Guide 10  Achieving Excellence Through Health and Safety
AE Guide 11  Sustainability (forthcoming)
10.3.5   These guides are available in full on the OGC Government Procurement Service Website.
10.3.6   The principles set out in the OGC guidance form part of a continuum of good capital project management practice. They are especially important in relation to major projects which involve considerable expenditure, but are relevant to projects of all sizes. Departments should exercise their judgement in applying appropriate control measures to projects of different size and scope.
   

Roles
10.3.7   A key principle is the establishment of roles. Departments' documented client project management procedures must identify the client roles of Investment Decision Maker, Project Owner (or Senior Responsible Owner) and Project Sponsor. The procedures must also draw a clear distinction between the client roles and the provider roles. The latter roles are that of the Project Manager, the design functions and the works contractors. The main client and provider roles are defined in AE Guide No 2.
10.3.8   Whereas the client roles can be undertaken by intelligent lay-persons with appropriate training, the Project Manager must have technical expertise. The Project Manager is the person appointed by the Project Sponsor to be responsible for managing the project on a day-to-day basis. He or she must ensure that the Department's agreed systems and procedures are adhered to and that the contractor/supplier complies with requirements. The Project Manager reports progress to the Project Sponsor at agreed intervals.
10.3.9   In addition, in the case of projects that are above the delegated limit, there will be an approving authority role that will be exercised by the Supply Divisions of DFP. The Project Sponsor should report progress to the approving authority at agreed points during the management of the project. Departments must submit progress reports to Supply in accordance with any conditions/timetable set at the time the project was approved by DFP.
   

Project Planning and Control
10.3.10   Proper attention must be paid to planning and controlling the project at all stages. AE Guide No 3 includes a general framework for construction procurement, describing all the main stages in a project's development. This should be adapted to suit the needs of the specific case in hand.
10.3.11   Greater emphasis should be given at project initiation stage by way of definition, estimating and risk assessment and management under the responsibility of the Project Sponsor. The Project Sponsor should ensure that there is a clear project brief which provides a comprehensive statement of the Department's requirement for the project. This should be based on close consultation between the Project Sponsor, Project Owner, users and stakeholders.
10.3.12   Greater thoroughness prior to formal approval is considered to be one of the most important factors in achieving better control and performance. Performance in terms of completion within budget and time depends crucially on thorough specification, and careful assessment of cost and time required, and the development of a Project Execution Plan.
   

Project Execution Plan
10.3.13   The Project Execution Plan is the key management document governing the project strategy, organisation, control procedures, responsibilities, and, where appropriate, the relationship between the project sponsor and the project manager. It is a formal statement of the user needs, the project brief and the strategy agreed with the project manager for their attainment. The scope of the plan will depend upon the size and nature of the project. It is a live active management document, regularly updated, to be used by all parties both as a means of communication and as a control and performance measurement tool. Fuller guidance on the Project Execution Plan is given in AE Guide No. 3.
10.3.14   The Project Sponsor should ensure that a Project Execution Plan is agreed. The Project Sponsor must be satisfied that the Project Execution Plan represents a viable and realistic plan for implementing the project and achieving its objectives.
   

Cost Management
10.3.15   It is essential that capital projects should be managed on time and within budget. AE Guide No. 7 contains appropriate guidance on budget estimation and cost management, including allowance for risks and whole life costs. Applying these guidelines should help alert Departments to potential cost overruns in sufficient time to take appropriate remedial action. When monitoring project management performance, sponsoring Departments should pay particular attention to the management of risk giving rise to time and cost slippage.
   

Project Reports
10.3.16   The project manager should issue regular reports to the project sponsor regarding the current status of the project, key issues and problems requiring resolution and the steps being taken to resolve them. The project sponsor should normally forward copies or summaries of them to the project owner for information and will draw the project owner's attention formally to any matters of serious concern to the department.
   

Advice
10.3.17   Advice on establishing appropriate systems for the management of construction or capital works projects is available from CPD. Their website is at http://www.cpdni.gov.uk/
10.4  

PRINCE: Management of IT and Other Projects
10.4.1   PRINCE (Projects In a Controlled Environment) is a structured method for effective project management that is designed for use on any type of project in any environment. It contains a complete set of the concepts and processes required for a properly run and managed project. It was originally established by the CCTA in 1989, but the latest version (PRINCE2) was published by the Stationery Office in 200218 . General information on PRINCE 2 including details of other PRINCE2 publications is available on OGC's PRINCE 2 website at http://www.ogc.gov.uk/methods_prince_2.asp
10.4.2   PRINCE2 is used extensively by the UK government, and is widely recognised and used in the private sector, both in the UK and internationally. Its key features are:-
  • Its focus on business justification;
  • A defined organisation structure for the project management team;
  • Its product-based planning approach;
  • Its emphasis on dividing the project into manageable and controllable stages to which resources are committed one at a time;
  • Its flexibility to be applied at a level appropriate to the project;
  • Management by exception; and
  • Management of risk.
10.4.3   The way that PRINCE2 is applied to each project will vary considerably, and tailoring the method to suit the circumstances of a particular project is critical to its successful use.
10.4.4   Under PRINCE2, senior management direction and control of the project is exercised through a Project Board, representing Executive, Senior User and Senior Supplier interests. The role of the Senior Responsible Owner (SRO) is crucial. He is responsible for ensuring that the project or programme meets its overall objectives and delivers its projected benefits. The role of the Project Manager is also vital. He is given the authority to run the project on a day to day basis on behalf of the Project Board, within constraints specified by it. These and other roles are explained in the PRINCE2 document.
10.4.5   PRINCE2 includes guidance on appropriate project management documentation, including, for instance, the Project Brief and the Project Initiation Document (PID), which provides the baseline of estimated costs and time against which progress of the project is monitored. The Project Manager should provide the Project Board with Highlight Reports to summarise progress at defined intervals. PRINCE2 always focuses on delivering specific products to meet a specific Business Case. Throughout the project, the Business Case is reviewed and progress is measured against any revised expectations of achieving defined benefits. Any deviations from the original Business Case must be controlled through the Project Board.
10.4.6   The PRINCE2 model includes eight distinct management processes, from setting the project off on the right track, through controlling and managing the project's progress, to the completion of the project. These processes define the management activities to be carried out during the project. In addition, PRINCE2 describes a number of components that are applied within the appropriate activities, covering organisation, plans, stages, controls, risk management, configuration management, change control and quality review. These processes and components are described fully in the PRINCE2 manual.
10.4.7   CPD and the IS Services Branch of DFP's Business Development Service can provide advice on the application of PRINCE2.
10.5  

The Gateway Process
10.5.1   New procurement projects are subject to Gateway Reviews. The Gateway Process examines a project at critical stages in its lifecycle to provide assurance that it can progress successfully to the next stage. It is designed to be applied to projects that procure services, construction/property, IT-enabled business change projects and procurements utilising framework contracts.
10.5.2   In simple terms, a Gateway Review is a peer review of a procurement project carried out at a key decision point by a team of experienced people, independent of the project team. Procurements are any finite activity designed to deliver a government requirement and involving government expenditure. Gateway Reviews need to be scheduled into programme and project plans.
10.5.3   The Gateway Process is based on well-proven techniques that lead to more effective delivery of benefits together with more predictable costs and outcomes. The process considers the project at critical points in its development. These critical points are identified as Gateways. There are six Gateways, four before contract award and two looking at service implementation and confirmation of the operational benefits. Gateway 0 generally applies to a programme while Gateways 1-5 apply to its individual projects. The process emphasises early review for maximum added value.
10.5.4   The Project Owner (PO) or Senior Responsible Owner (SRO) uses the Project Profile Model (PPM) to determine the level of risk associated with a project. A PPM template is available from CPD. The scale of the review should be decided based on the degree of risk involved with the project and the potential impact to the business. Gateway Reviews must be undertaken on all projects with a PPM score of 31 or more. However, a PO/SRO may request Gateways Reviews on a project with a lower score where that project is complex, innovative or has a specific risk.
10.5.5   The teams vary in size but typically are between three and five people. Each review takes about three to five days, with a complete report provided to the PO/SRO before the team leaves the site. The targeted review is designed to avoid any delay to the project.
10.5.6   A Gateway review is conducted on a confidential basis for the PO/SRO and ownership of the report rests with the PO/SRO. This approach promotes an open and honest exchange between the project and review teams delivering maximum added value. Accountability rests with the SRO/PO for the implementation of recommended remedial action and project progression.
10.5.7   CPD is responsible for the Gateway Review Process in the Northern Ireland public sector and will provide guidance, Review Teams and training.
10.6  

Performance Management, Measurement and Monitoring
10.6.1   Performance management concerns tracking the success of a policy, programme or project in achieving its objectives and in securing the expected benefits. For appraisal and evaluation purposes, it involves the systematic collection of data relating to the financial management and outcomes of the policy, programme or project during implementation.
10.6.2   Monitoring involves checking at regular intervals that a project, programme or policy is being implemented on target, on time and within budget. This provides an essential source of information, indicating the extent to which objectives are being achieved, giving an early warning of potential problems, and of the possible need to adapt the policy, programme or project to ensure success. Monitoring also provides information for the evaluation stage. To be fully effective, plans for monitoring must form part of the initial planning of a policy, programme or project.
10.6.3   The Northern Ireland Audit Office has stressed the importance of careful monitoring of all projects from the outset, particularly any projects being delivered by a new organisation without a proven track record of successfully delivering publicly funded projects; financial management systems and procedures should come under particular scrutiny.19
10.6.4   The use of formalised capital works management procedures should provide senior management with a hierarchy of performance measures/indicators on the effectiveness, efficiency and economy of their management of capital works. The measures should as a minimum provide the required information for the annual HM Treasury return allowing comparisons of pre-tender to post-tender to outturn cost and duration estimates, and analysis of cost and duration estimate changes.
10.6.5   The facility to compare performance measures/indicators against targets, over time and between sub-groups is an essential aspect of the development of capital works' management procedures.
10.6.6   Effective performance measurement and monitoring means tracking all categories of benefit and ensuring that:
  • Projects have defined target benefits and outputs;
  • Ownership of the delivery of benefits remains with the PO or SRO;
  • Outputs of a project or policy remain consistent with changing government objectives;
  • Costs are closely monitored and managed; and,
  • Forecast costs and benefits are frequently reviewed.
10.6.7   A monitoring system should establish:
  • Whether management data is actually measuring what it purports to measure; and,
  • Sufficient controls to ensure that the data is accurate.
   

Financial Reporting
10.6.8   Regular financial reporting on policies, programmes and projects should be performed. Reports may be integrated into the normal financial reporting cycle of an organisation, issued separately, or possibly combined with the reporting of progress against plan, benefits, and risks. For example, they may be included in highlight reports from Project Manager to Project Board.
10.6.9   Finance reports are likely to show expenditure to date, forecasts for the year, and variances against budgets. In large complex projects, the financial reporting is likely to integrate with contract management, with contractors providing regular 'Work In Progress' statements.
   

Benefits Management and Realisation
10.6.10   The management and planning of policies, programmes and projects should include specific provision for benefits management and realisation. Benefits management is the identification of potential benefits, their planning, modelling and tracking, the assignment of responsibilities and authorities and their actual realisation. In many cases, benefits management should be carried out as a duty separate from day to day project management.
10.6.11   Benefits management complements and overlaps with appraisal. While appraisal provides the justification for the investment, benefits management allows organisations to plan for and achieve the benefits. Costs and benefits cannot be viewed in isolation, and the benefits management process and the overall appraisal should be planned together. Benefits management also interfaces with performance management, a means of measurement and management that monitors and reports achievement of outcomes.
10.6.12   Benefits management is a process that:
  • identifies expected benefits, contributions to business objectives and stakeholders
  • establishes a benefits management structure defining functions, relationships, communications, roles and responsibilities
  • develops models of benefits, including baseline measurements and intermediate and final outcomes
  • defines the benefits, including their attributes and measures, owners and risks
  • assesses value and organisational impact, dependencies and risks; it will also show how the benefits are interrelated
  • develops a benefits realisation plan, including a schedule for delivery, assessment or review points, alignment/linkage/inter-dependencies with other modules, projects or programmes, and business change processes for implementation and delivery
  • establishes accountability for realisation and a means of tracking benefit realisation, including any performance management requirements
10.6.13   Benefits fall into four main categories, as indicated below.
Benefit   Example
FinancialQuantitativeOperating cost reduction, revenue increase
Non-financialQuantitativeNo. of customer complaints, reduction in road accidents, % of Government Departments on-line
Non-financialQualitativeStaff skills, staff morale
OutcomesQuantitative & QualitativeImproved standards of health care
10.6.14   Benefits Realisation Plans should be included in Business Cases. They should identify the benefits to be achieved in the above categories, the activities that will be undertaken to pursue and realise them, and who is responsible for each benefit realisation activity.
10.6.15   Further guidance on benefits management and realisation including workbooks is available as part of the OGC's Successful Delivery Toolkit at http://www.ogc.gov.uk/resource_toolkit.asp
   

Contract Management
10.6.16   When contracts have been let, it will be important to ensure that the respective roles and responsibilities set out in the contract are fully understood and fulfilled to the contracted standard. The likelihood of the benefits being realised will be affected by the contractual terms, and any incentives built in to the contract. Where contracted standards are not fulfilled, the contracting public body should apply mechanisms established in the contract to rectify any under-performance. Guidance is available from CPD on dispute resolution.


17This section of the NI Practical Guide deals chiefly with project management. Guidance on wider management issues is given in Government Accounting Northern Ireland ('GANI') which is available at AASD's website http://www.aasdni.gov.uk/
18Managing Successful Projects with PRINCE2. (Office of Government Commerce, The Stationery Office, 29 April 2002. ISBN 0113308914 £55).
19Grants Paid to Irish Sport Horse Genetic Testing Unit Ltd, NIAO report HC 396, para 52.