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Moving Forward in Asset Management. Financial Management Institute, Ontario Chapter November 19, 2008. Executive Summary Changing Landscape for Asset Management – The Fed AA and New TB Policies, MAF and Integrated Management Assets and Acquired Services Framework and Investment Planning

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Moving forward in asset management

Moving Forward in Asset Management

Financial Management Institute, Ontario Chapter

November 19, 2008


Overview

Executive Summary

Changing Landscape for Asset Management – The Fed AA and New TB Policies, MAF and Integrated Management

Assets and Acquired Services Framework and Investment Planning

HRSDC in Context

Overview


Executive summary

The landscape for how assets are to be planned and managed in the federal government is changing. Asset Management is now to be managed at a Government Wide and department wide level – changes strategy and tactics for managing.

Key Management Tools are to be implemented – a more strategic Investment Plan, new Project Management and Asset Management approaches and stronger link to financial and non-financial information and supporting systems – decisions based in the contribution of assets to Program Delivery, continuously measured and assessed.

Will be shaped by ongoing Government direction, Speech from the Throne, Fiscal Update, the Budget 2009, Federal Accountability Act and the Environment – with greater agility to respond to these key statements of government direction.

At HRSDC current asset base is at a stage requiring a significant renewal, in facilities and IT infrastructure – so a time to build solutions aligned with the new expectations to deliver sound stewardship, value for money and service excellence.

Executive Summary


Executive summary cont

HRSDC asset decisions over the next five years must address a series of key changes in the nature of the portfolio’s work, for example:

Implementation of Citizen-centered service - Points of Service strategy, Service Experience Model to support in person delivery through strategic locations for in-person service delivery

Improvement in performance and efficiency in operations

Evolution and integration of service channels

The need for significant re-investment and extensive change in processes is required so that the underlying infrastructure supports the accountabilities and controls associated with the Accounting officer under the Federal Accountability Act and to realize the benefits from a new Enterprise Resource Planning System.

A robust Investment Planning process has been introduced establishing a consolidated and standard approach to the development and allocation of investments in projects and the asset base for the department on a Canada wide basis.

Supporting asset related plans and processes are now the foundation for department wide decision making – aligned with government priorities.

Executive Summary (cont.)


Moving forward in asset management

Financial Administration Act

Federal AccountabilityAct

TBS Policy on Investment Planning (new)

Management Accountability Framework

Asset Management is Governed by a Broader Framework of Laws and Policies – Measured through the Management Accountability Framework

Select projects that:

Investment Process


What does the new policy framework for the management of assets and acquired services require

Department’s demonstrate that

3.1. Decisions with respect to the management of assets and acquired services:

are consistent with government priorities and departmental mandates, enable program outcomes, address critical risks, and comply with legislation, regulations and policies;

demonstrate public service values and ethics, rigorously assess health and safety, actively promote environmental stewardship, contribute to broader government objectives and ensure access, service quality, privacy, and security;

encourage innovation by considering the full range of options available to best meet program needs;

are informed by financial and non-financial performance measures and results; and

are fair, transparent and accessible to serve Parliament's appropriation and oversight role and the Treasury Board's management role.

So a high bar is set but a less intractable web of rules to constrain how we build sound solutions

What does the new Policy Framework for the Management of Assets and Acquired Services Require……


What does the new policy framework for the management of assets and acquired services require1

Department’s demonstrate that (cont’d)

3.2. Value for money and sound stewardship in the management of assets and acquired services are achieved through:

strategic and integrated decision-making and management processes at a government-wide, horizontal, portfolio, departmental and program levels to optimize the use of assets and services;

risk-based and complexity-based approach to processes, systems, capacity, resourcing, oversight and reporting to promote the attainment of program outcomes;

a life cycle management approach reflecting direct and indirect costs of assets and services, to ensure affordability, cost effectiveness and performance;

consideration of asset performance and utilization in retention and disposal decisions made in support of program delivery;

What does the new Policy Framework for the Management of Assets and Acquired Services Require……


What does the new policy framework for the management of assets and acquired services require2

Department’s demonstrate that (cont’d)

3.2. delegation of authority based on need, capacity and on an effective regime of accountabilities and responsibilities;

efficient and effective business processes; and

management systems, processes and information that provide the basis for managing performance and for assigning costs to support:

effective fact-based decision-making, budgeting and reporting consistent with the Management Resources and Results Structure (MRRS)

re-allocation in response to changing priorities,

risk-based oversight and monitoring and

demonstrated compliance with legislation, regulations and policy.

What does the new Policy Framework for the Management of Assets and Acquired Services Require……


Policy framework for the management of assets and acquired services require

Departments Demonstrate that

Deputy Heads are responsible for implementing an effective management framework, including departmental procedures, processes and systems, that demonstrates how the department is managing based on the principles identified above.

The framework must demonstrate how the management of assets and acquired services is effectively integrated with program, expenditure, financial and human resources related considerations to promote value for money.

Deputy Heads are responsible for ensuring that the monitoring of assets and acquired services management practices and controls is in place within the department and for acting expeditiously when control failures are identified.

Policy Framework for the Management of Assets and Acquired Servicesrequire….


Asset management starts in investment planning

The Investment Plan is Aligned with departmental strategic planning, reflecting a departmental, portfolio, horizontal and government-wide perspective and takes into account strategic government-wide initiatives;

Framed by the outcomes in the department's Management Resources and Results Structure – Program Activity Architecture – addresses the greatest risks to departmental objectives;

Assesses the performance, including cost, and risks of assets, services arrangements and projects;

Considers alternative and innovative options for meeting assets and services requirements, including internal and external delivery models and a range of instruments;

Asset Management Starts in Investment Planning


The key asset related aspects of investment planning

Is within existing reference levels and takes into account the whole-of-life cost of stewardship based on the life cycle of assets and services.

Information systems are in place that support planning, budgeting and accounting for resource allocation and which enable performance measurement and reporting related to the management of departmental investments.

The presentation of key departmental priorities and strategies over a five-year investment horizon demonstrating consideration of portfolio, horizontal and government-wide objectives and priorities, as well as a clear link to departmental program activities and outcomes.

The Key Asset Related Aspects of Investment Planning


The key asset related aspects of investment planning1

An explanation of the department's risk management approach to investment planning, including the identification of areas of greatest risk to program integrity, risk mitigation strategies and residual risk.

Descriptive information is provided on planned investments with elaboration for those investments in assets or acquired services deemed to have significant strategic, public policy, operational, risk and financial implications for the department.

Each planned investment, at a minimum, outlines: the total estimated cost of the investment, investment or procurement strategies, and opportunities for achieving broader government objectives.

The Key Asset Related Aspects of Investment Planning?


The key asset related aspects of investment planning2

The presentation of key departmental priorities and strategies over a five-year investment horizon demonstrating consideration of portfolio, horizontal and government-wide objectives and priorities, as well as a clear link to departmental program activities and outcomes.

An explanation of the department's risk management approach to investment planning, including the identification of areas of greatest risk to program integrity, risk mitigation strategies and residual risk.

Descriptive information is provided on planned investments with elaboration for those investments in assets or acquired services deemed to have significant strategic, public policy, operational, risk and financial implications for the department.

Each planned investment, at a minimum, outlines: the total estimated cost of the investment, investment or procurement strategies, and opportunities for achieving broader government objectives.

The Key Asset Related Aspects of Investment Planning


Moving forward in asset management

Investment Planning within the Annual Government Expenditure Management Cycle

Supplementary Estimates A

ARLU decisions

Federal Budget Tabled

Supplementary Estimates B

Tabling of DPR

TB Government Performance Report to Parliament

Government of

Canada

RPP Due

Speech from the Throne/ Economic Update

Government Expenditure Plan Main Estimates Part I & II Tabled

Departmental Performance Report

Confirmation of Departmental Budgets

MAF assessment and discussion

Branch and Regional Business Plans finalized and PMAs completed

SCMB Fall Retreat

Strategic priorities / key initiatives

DPR Due

Report on Plans and Priorities

SCMB Discussion on proposed approach for business planning

Based on functional guidance, Regions prepare and submit business plans

Draft Business Plans from NHQ Branches for functional guidance

Integrated Business Plan Call Letter to NHQ Branches

Stage 1 Investment Proposals - List

Environmental Scan and Corporate Risk Profile

Ongoing Stage-Gate Investment Process: Project Gating, Monitoring, Review and updates to budget forecasts

Stage-Gate Investment Process: Project Gating, Monitoring, Review and updates to budget forecasts

Stage 1 Assessment of Proposals

Start of approved projects

Budgeting Investment Planning

Investment Allocation finalized

Update Value Assessment Tool

Tools, training, development

Investment Plan to TBS

Stage 1 Approved List of Investment Proposals and Funds required

TB Investment Submission (if required)

Update Investment /Plan

Supp (A) Due To TBS

Supp (B) Due To TBS

Budget Allocations finalized

Branch/ Regional notional budget allocations determined CFOB

Budget Adjustments due to Federal budget

ME Due To TBS

P6 Forecast

P8 Forecast

P10 Forecast

P4 Forecast


Moving forward in asset management

Investment Plan 2008/09 – 2012/13

Asset Management is Addressed Through Key Asset Plans

and Major Project Investments

“By Stage” View

Investment Support

Investment Plan 2008-09 to 2012-13

  • Investment Support team within CFOB has started to support and provide guidance

  • Key tools and templates available (or under development)

There is now a starting point: - a list of the large projects - positioned in a pipeline- next decision gates identified

Investment Review Board “the gate keepers”


Moving forward in asset management

Terms of Reference of the IRB

  • The Investment Review Board (IRB) is a sub-committee of the portfolio Corporate Services Committee (CSC) with a mandate to:

  • develop and recommend for approval by the Portfolio Senior Management Board (PSMB) the Portfolio Investment Plan (formerly Long Term Capital Plan) aligned with the overall strategic direction, objectives and priorities and plans of the Department;

  • provide oversight to project investments using the Stage-Gate methodology and other matters related to investments;

  • approve or recommend as appropriate procurement transactions greater than $1M and/or those of a sensitive nature; and,

  • oversee implementation of budget allocation decisions approved by the PSMB as they pertain to investment items vs. on-going operations.

  • In fulfilling it mandate, the IRB is accountable for:

  • ensuring investment, project and contracting decisions represent value for money, sound stewardship and reflect a service excellence culture;

  • ensuring projects in the Long-term Capital Plan/Corporate Investment Plan are aligned with and will realize the Department’s Strategic Plan at an enterprise level, including regularly updating the plan and assessing progress in its implementation;

  • monitoring investments, projects, procurement processes, and benefits realization commitments at an enterprise level, and assessing the impact on budgeting and allocations from a multi-year perspective;

  • recommending process improvements to support the continuous improvement of the Investment Management Process; and,

  • recommending appropriate control systems for HRSDC including Delegations of Authority, Project Approvals and Procurement Review.


Moving forward in asset management

The Plan and Investment Oversight Process were designed to drive out the important priorities

Transform Business Delivery Model

Accelerated long term strategy for transformational service delivery improvement

COULD DO ($$$)

Improving Performance and Cost Effectiveness

Business Process Re-engineering(e.g. Process Automation, Contact Centres)

Enhanced IT Platforms(e.g. mainframe transition, knowledge mgmt)

Enhanced Accommodation Network(i.e. Service Experience Model)

Transition Business Delivery Model

SHOULD DO ($$)

Base-level National Accommodations Plan

Base level IT Infrastructure

LTCP Minimum Requirements

Maintain Current Business Delivery Model

MUST DO ($)

Financial constraints and capacity are key considerations


Key considerations in investments in assets at hrsdc

Consider:

Alignment – Are these projects supporting the strategies of the GoC and of HRSDC/SC ? Are they collectively “telling the same story”? Is it clear how these projects are building towards a future vision?

Client Needs – Are we meeting the most critical needs for service and service improvements with this set of projects?

Value for Money – Is there a long term benefit to HRSDC/SC from this set of projects? How can this be measured?

Risk – Are the risks understood? Is there acceptable risk relative to the impact to the department’s priorities surrounding this project, including the risk of not proceeding? Is this a complex project with high project implementation risk?

Capacity for all Branches to participate in the projects – Can we implement flawlessly? Do our employees have the capacity to absorb the changes?

Key Considerations In Investments in Assets at HRSDC


Moving forward in asset management

National Accommodation Program (NAP)

  • NAP is the departmental program that ensures appropriate accommodations are provided and sustained to support the delivery of Human Resources and Development Canada (HRSDC)/ Service Canada (SC) programs within an approved departmental financial and management framework.

  • NAP is managed by Corporate Accommodation Management (CAM) within SC Chief Financial Officer Branch (CFOB) and regionally managed by 11 Regional Accommodation Management (RAM) groups.

  • NAP= HRSDC/SC Accommodation Program

    = A budget

  • Department has operates under a full funding regime governed by a Master Occupancy Agreement (MOA), HRSDC/SC holds the funds for its accommodation budget and is responsible for reimbursing PWGSC for actual rent and accommodation services.


Moving forward in asset management

NAP Provides an Overview of the National Real Property Portfolio

  • Approx 435 total sites with various Business lines collocated

  • - 329 sites housing Service Canada Centres

    - 100 sites housing Processing Centre

    - 17 sites housing a Call Centre

    - 5 sites housing an ITC

    - 10 RHQ + 28 NHQ

    - Warehouses, Labour, Integrity, etc…


Moving forward in asset management

Business Lines:

SCC:$38M

Call Centres:$10

Processing:$35

Admin:$15

Other:$2

Business Lines:

SCC:$22M

Call Centres:$3

Processing:$23

Admin:$11

Other:$1

Business Lines:

SCC:$19M

Call Ctrs:$7

Proc:$7.5M

Admin:$14

Other:3

Business Lines:

SCC:$8M

Call Centres:$10

Processing:$15

Admin:$11

Other$0

Business Lines:

SCC:$7

Call Centres:$0

Processing:$.8

Admin:$8

Other:$.3

$49M

94 Projects

$100M

130 Projects

$60M

77 Projects

$16M

48 Projects

$44M

32 Projects

11/12

12/13

08/09

10/11

09/10

The Plan Rationalized Proposed Projects Across the Country

(Rent $186M)

(Rent $191M)

(Rent $176M)

(Rent $182M)

…that far exceed the 07/08 Baseline

(Rent $180M)


Moving forward in asset management

The investment priorities for the next 5 years – Strategic Alignment

NAP Plan is

integral to the Investment

Plan

  • Sound Plan = an investment strategy

  • Effective governance (PWGSC)

  • Project/financial and Information management

  • End-to-end process – sound basis for accountability

  • Changing business model – Points of Service, Strategy, Service Experience model and standards; Contact Centre/National Payments and Processing; Passports, longer term impacts call, click and in-person,

  • Functionality/Utilization of space/sites, Physical performance of space/sites, Financial performance

Strategic

Alignment of

Investments

Basic Business

Requirements

= Refit/Fit-ups & Lease actions

  • Acquisition - Operation

  • Maintenance - Disposal


Moving forward in asset management

Accommodation Investments are Assessed through Objective Criteria

Accommodation Criteria

  • Carry over & Financial Obligation

  • Health & Safety

  • Student Space

  • Lease Expiry (Must be tendered)

  • Space Saving

  • Investment can be Delayed

  • HR Strategy

    CCSB Criteria

  • SCC New Point of Service

  • SCC Improvement to SDS –

  • existing space

  • SCC Improvement to SDS – space increase

  • SCC Improvement seeking prime SDS

  • Meets or aligned with POSS

  • Financial and Program Management

  • Affordability

  • Program Management

  • Capacity to Deliver

  • Call Centre / Processing Criteria

  • Call Centre Strategy

  • Meets/aligned with Call Centre Strategy

  • Processing Strategy

  • Meets/aligned with Processing Strategy


Im it considerations

Design and implement a common benefits delivery platform

Assess requirements and business case

Leverage COTS technology opportunities

Proactively integrate and manage citizen information

Integrated citizen information

Develop Contact Center Strategy:

Improve access to services

Integrate channels

Improve agent tools

Modernize corporate administrative management systems

Implement Enterprise Resource Planning System (ERP)

Application Modernization

Mainframe Transition

IM/IT Considerations


Strategy

Making choices through Business IT Alignment

Governance: IPRC and DG IT Priorities Committee

Operating Model – how IITB operates

People

Processes

(e.g.)

Opportunity Management

Investment management

Project Management

Technology

Strategy:


Technology plan

Architecture Roadmap

Business

Understanding the business strategy and business model

Information

Fragmented today, IM charter & strategy

Application

Service Oriented Architecture

Service Delivery Platform

SADE

Generic Intake capability/Service

Business Rules

Imaging

Testing Improvements

Infrastructure

Modernize, rationalize, business continuity

Telecommunication (ICTR )

Wireless

Servers and Desktop

Commercial Software

Technology Plan


Im it initiatives

Design and implement a common benefits delivery platform

Assess requirements and business case

Leverage COTS technology opportunities

Proactively integrate and manage citizen information

Integrated citizen information

Develop Contact Center Strategy:

Improve access to services

Integrate channels – integrate information.

Improve agent tools

Modernize corporate administrative management systems

Implement Enterprise Resource Planning System (ERP)

Mainframe Transition Program:

De-linking of applications & proprietary technology

Mainframe consolidation

Data consolidation

Application Modernization

IM/IT Initiatives


Moving forward in asset management

The Asset and Invest Processes Meet Key Challenges HRSDC

Challenge: Governance “rules” unclear

Advocacy (of “favourite” projects)

Principle: Visible Governance and decision making forums

Decisions are clear and communicated

Empowered and committed executive team

Agreed to governance, guidelines

Agreed roles and responsibilities

Repeatable and predictable input to the decisions


Moving forward in asset management

The Stage Gatetm Methodology

Stage

Full Team

Commit $

Stage

Larger Team

More $

Stage

Small Team

Small $

Managing Risk by Stage of Work

This is a significant change for most organizations. Project implementation approval and funding is NOT provided at the beginning of the process “because it is a good idea, a mandated requirement”. That commitment is only made AFTER the project has been planned with cross functional team input and a business case developed.


Moving forward in asset management

Summary of Role/Responsibility of Project Oversight

The Investment Management Process describes the minimum oversight required by this committee:

Opportunity Identification and Gate 1:

  • No requirement for formal oversight or steering committee

  • Sponsor ADM and DG must be supportive of opportunity going to DG ITPC and IRM

    Concept Initiation and Gate 2:

    Formal and documented approval of:

  • Scope, Charter and Plan (overall project and for this stage)

  • High Level Business Requ.

  • Options Analysis & Rec. Options

  • Preliminary Business Case

    Planning and Business Case Development and Gate 3:

    Formal and documented approval of:

  • Revised Scope, Charter and Plan

  • Detailed Business Requirements of a recommended option

  • Solution Design

  • RFP document

  • Final/Detailed Plan & Business Case

    Develop and Build and Gate 4:

    Formal and documented approval of:

  • Revised Scope, Charter, Plan

  • Gate 4 presentation - Readiness to Deploy/Install solution

    Deploy/Install and Stablize and Gate 5:

    Formal and documented approval of handover solutions to operations and ready to realize benefits or performance improvement


Moving forward in asset management

Business Case Structure

Problem Definition Workshop and as further refined in Concept Dev. and Planning stages

Section 1 – Project Overview

Section 2 - Problem Definition

Section 3 – Business Requirements

Section 4 – Stakeholder Analysis

Section 5 – Key Drivers

Section 6 – Solution Options

Section 7 – Recommended Solution

Section 8 – Risk Assessment and Mitigation Strategies

Section 9- Procurement Strategy

Section 10 – Implementation Strategy

Section 11- Benefits Realization and Performance Measurement

Section 12- Financials

Section 14- Conclusion

Appendix A – Project Charter and Governance

Summary of Assessments of impacts from each enabler and stakeholder with sign offs

Summary of Business Requirements Document

Summary of all key assumptions, critical success factors from the Business Requirements document

Summary of options analysis done by the

Project Team and of Options Analysis/Risk Assessment Workshop in Concept Initiation

Summary of output from Risk Assessment Workshop

Summary of the Procurement Strategy and Plan

Consolidation and summary of

  • Project Plan (from Project Manager)

  • Change Mgmt plans for clients and employees (key enablers)

  • Specific requirements for next stage (from project team)

Summary of the benefits of the project and how they will be measured and by when they will be realized

Project Costs and ongoing costs from each impacted stakeholder. Financial Model completed by Financial Advisor. Includes recommended non financial benefits and Financing Options.


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