Capstone - Edmonton Capital Project Prioritization

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    CAPITAL

    PROJECT

    PRIORITIZATION

    6/15/2012

    Edmonton, Alberta, Canada

    International City and County Management Association (ICMA)

    Leadership ICMA Class of 2012

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    Capital Project Prioritization

    Page 1

    Table of Contents

    EXECUTIVE SUMMARY 3

    INTRODUCTION 4

    Who We Are .......................................................................................... 4

    Scope of Project .................................................................................... 5

    Methodology ......................................................................................... 5

    Limitations ............................................................................................ 5

    Overview of Peer Cities and Professional Organizations ........................ 6

    TIMELINE 7

    Best Practices and Peer Research .......................................................... 7

    Recommendations ................................................................................ 8

    PREPARATION OF PROJECTS 12

    Best Practices and Peer Research ........................................................ 12

    Recommendations .............................................................................. 13

    EVALUATION OF PROJECTS 15

    Best Practices and Peer Research ........................................................ 15

    Recommendations .............................................................................. 18

    OTHER FINDINGS ON TECHNOLOGY ASSETS 20

    Best Practices and Peer Research ........................................................ 20

    Recommendations .............................................................................. 21

    CONCLUSION 22

    REFERENCES 24

    APPENDICES 27

    A Timeline Research ......................................................................... 27

    B Definitions of Renewal and Growth ................................................ 30

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    C Tacoma Comprehensive Plan Questions ........................................ 31

    D Austin CIP Prioritization Questionnaire ......................................... 32

    EFt. Lauderdale Memo to Council on Matrix .................................... 33

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    EXECUTIVE SUMMARY

    The Leadership ICMA Team (LICMA Team) assigned to this project was tasked with examining the capital

    project prioritization process in Edmonton, Alberta, Canada and recommending potential process

    improvements. This task was approached through an on-site visit to Edmonton to document the currentCIP process along with peer city and professional association research focused on isolating best practices

    and recommended improvements.

    The LICMA Teams research and eventual recommendations are focused on three key areas involved with

    the CIP process. They are Timeline, Preparation of Projects, and Evaluation of Projects. These areas

    encompass the major steps included in Edmontons CIP process and allow for a step by step analysis of

    recommended process improvements.

    The LICMA Team found through its research that Edmonton is currently a leader in CIP process as defined

    by industry best practices and among the peer cities identified through the project research. This

    leadership in CIP process is highlighted by several key strengths that were identified by the capital staff in

    Edmonton and endorsed by the LICMA Team. These strengths include: a high acumen at identifying capitalneeds, an unbiased approach to decision making, a strong willingness to look at how capital project

    planning fits into the big picture, an experienced and dedicated staff, and strong corporate level review.

    However, despite these strengths, Edmonton encountered challenges as it attempted to update its process

    during the last planning cycle. These challenges are normal for any organization as it attempts to change

    process, and the recommendations of the LICMA Team are aimed at addressing these challenges.

    The first challenge identified during the research was that of improving Council input and participation in

    the capital process to better understand their priorities and challenges in regard to capital budgeting and

    capital projects. The LICMA Team is recommending an amended timeline for the CIP process which

    includes earlier discussion with the City Council in order to gain their input and perspective. In addition,the team is also recommending that these earlier discussions with the City Council include a process of

    completing a weighted scoring matrix of strategic vision priorities.

    The next challenge facing Edmonton is balancing the effectiveness of capital project business cases with the

    staff time dedicated to preparing them. The LICMA Teams recommendation to address this challenge

    focuses on limiting the amount of content that can be included in each topic area, standardizing the

    business case summary sheet, and including a checklist of criteria within the business case that correlate

    with the Citys comprehensive planning and strategic visioning efforts.

    Another major challenge addressed by the LICMA Team is the size and makeup of the CPPC. In its current

    form, the CPPC can be viewed as large and somewhat amorphous, and this condition leads to a dilution of

    the process. The LICMA Team recommends either reducing the membership of the CPPC or breaking it intotwo groups that can act as two filter stages for the projects.

    Overall, the LICMA Team believes that Edmontons CIP team and process is currently operating at a very

    high level and is very effective. Other communities can, and do, currently view Edmonton as a model for

    CIP process and planning. However, by considering the implementation of the recommendations that are

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    included in this report, the LICMA Team feels that Edmonton can further advance the effectiveness of their

    already rigorous and successful process.

    INTRODUCTION

    Who We Are

    Leadership ICMA (LICMA) is a two-year development program for early career local government

    professionals. The program covers leadership philosophy, personal integrity, high-performance

    organization management models, team-building, strategic planning, and project management. The

    final phase of the program consists of consulting for a local government organization with a real-world

    challenge.

    Leigh Byford is the Team Lead/Project Contact. She graduated with a Master of Public Affairs from the

    Lyndon B. Johnson School at the University of Texas. She manages more than $400 million in

    operating budgets and associated performance measures for the Police Department, Parks andRecreation, and Communication and Technology Management Department for the City of Austin, TX.

    Leigh also coordinates all public engagement and outreach on the operating budget. Leigh brings

    strong organizational and analytical skills to the team.

    E.A. Hoppe currently serves as the Assistant Director of Community Services in Richardson, TX, a

    community of nearly 100,000 in the greater Dallas/Ft. Worth region. Functional areas for the

    department include redevelopment and revitalization initiatives, code enforcement, building

    inspection, and environmental sustainability. E.A. attained a Master of Public Administration degree

    from the University of North Texas and a Baccalaureate from Austin College (Sherman, TX) in Business

    and Finance. E.A. brings structural and analytical skills to the project team.

    Rolando Fernandez serves as the Assistant Director for the Contract Management Department in the

    City of Austin, TX, which is responsible for administering the procurement of professional and

    construction services and executing and managing contracts essential for the delivery of efficient

    capital improvements while complying with all City and Texas State statutes and policies. Rolando

    earned his Master of Public Administration from the St. Marys University and has six years in local

    government experience. Rolando brings to the team nearly two years in Capital Improvement Projects

    procurement, contracting, and implementation and nearly fourteen years of project management

    experience.

    Adam Chapdelaine currently serves as the Town Manager of Arlington, MA, a town of 42,000 people,

    approximately 10 miles north of Boston. He has earned his M.B.A. from Suffolk University and hasserved in various governmental positions for the past nine years. Adam brings a combination of

    analytical ability and organizational problem solving to the team.

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    Scope of Project

    The LICMA Edmonton Capital Projects Team was tasked with evaluating Edmontons framework for

    prioritizing capital projects, conducting research on best practices and emerging trends, and

    proposing recommendations to Edmonton for improving their process. After visiting Edmonton, thescope was refined to:

    Create an outline providing the recommended structure for the initial discussions between theCorporate Leadership Team (CLT) and Capital Projects Planning Committee (CPPC), includingthe overall level of funding, the corporate, Council and departmental priorities, and thecommunication strategies and timeline with Council.

    Develop/recommend a timeline for a multi-year CIP with a rolling Progress Update Program tothe City Council, allowing for reasonable deadlines and process flow.

    Assist with the initial messaging (transmittal letter/kick-off event) from the CLT to the CPPC byhelping to develop:

    Revised Business Case and scoring templates streamline to reduce strain onstaff resources

    Enhanced definitions of growth, renewal, and functionality also providingguidelines on to how to differentiate between them

    Assist with guidance to Branch Managers on how to incorporate Council and CLTperspective (The Ways) into initial prioritization documentation.

    Assist with developing recommendations for the structure and membership of the CPPC as wellas their function in the prioritization process.

    Methodology

    The LICMA Team performed an on-site assessment of the Edmonton capital planning process using

    facilitated group discussions with the CLT and CPPC and documented existing conditions and

    strategies being utilized. Following this assessment, the LICMA team began research on a number of

    peer cities in Canada and the United States to isolate best practices and trends in capital project

    prioritization. The team also investigated practices recommended by several professional

    organizations. This combined research resulted in the teams findings, which are contained within this

    report, as well as their recommendations for Edmontons process.

    Limitations

    While conducting the research for this project, several limitations became clear. First, there are no

    clearly defined best practices for balancing renewal projects versus growth projects. Second, while

    scoring matrices and risk models provide valuable information for decision makers, these tools are no

    substitute for local knowledge and experience about specific asset categories or the public desires for

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    service levels. Third, Edmonton became interested in exploring specific challenges with information

    technology capital planning, but a detailed analysis is outside the scope of this project. These

    limitations are addressed further in later sections of the report.

    Overview of Peer Cities and Professional Organizations

    The table below shows the eleven North American cities the team chose as peers for Edmonton. Using

    each citys online capital planning information and seeking opportunities for personal contact to

    answer a set of survey questions, the team collected information about each city.

    City Population CIP Budget

    Austin, TX 812,025 $600M

    Baltimore, MD 650,000 $765M

    Boston, MA 610,000 $1.8B

    Calgary, AB 1,100,000 $6.02B (5yrs)

    Edmonton, AB 812, 200 $2.8B (3yrs)

    Fort Lauderdale, FL 165,000 $105M

    Greensboro, NC 280,000 $213.97M

    Milwaukee, WI 595,000 $1.35B

    Phoenix, AZ 1,400,000 $1.3B

    San Jose, CA 989,000 $2.4B (5yrs)

    Tacoma, WA 199,826 $1.6B (5yrs)

    Winnipeg, MB 684,000 $2.6B (5yrs)

    The team also reviewed books, articles and case studies by several professional organizations the

    International City/County Management Association, the Government Finance Officers Association, and

    the Federation of Canadian Municipalities and National Research Council.

    The remainder of this report is divided into sections on timeline of the capital planning process,

    preparation of projects at the department level, evaluation of projects at the corporate level, and other

    findings. Appendices and a list of references are included after the conclusion.

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    TIMELINE

    Best Practices and Peer Research

    A Capital Improvement Plan (Program), or CIP, is a short-range plan, usually four to ten years, whichallows municipalities to plan for, implement, and sustain capital projects. A well managed CIP

    program provides numerous benefits to include:

    Systematic evaluation of all potential projects at the same time.

    Ability to stabilize debt and consolidate projects to reduce borrowing costs.

    A focus on preserving a governmental entity'sinfrastructure while ensuring the efficient use of

    public funds.

    An opportunity to promote collaboration amongst departments.

    Local governments should prepare comprehensive multi-year capital plans to ensure adequate long-

    term management of assets. At minimum, a plan should cover three years, but preferably covers fiveor more.3The GFOA espouses that city staff, executive leadership, and the governing body review the

    status of projects in the capital budget periodically, although it does not specify how often. Reports

    should include whether the project is on budget, on schedule, has been modified for changes in service

    level, and any other major changes.12It is generally recommended that cities begin reviewing potential

    capital projects up to a year in advance of the budget allocation for thorough vetting and to avoid the

    last minute cancellation of projects that were not carefully evaluated.

    Edmontons CIP process currently encompasses a three year period and each CIP fiscal year parallels

    the Budget Development process that operates on the fiscal year from January to December. Noted

    below are milestones of the current CIP development process:

    START

    DATEEND DATE PROJECT PHASE

    Jan-11 Mar-11 Data collection for renewal needs.

    Mar-11 Apr-11 Developed Rating Criteria focused on the Corporate Outcomes.

    1-May-11 31-May-11 Develop rating criteria based on the provincial model.

    22-Jun-11 22-Jun-11 Direction setting meet...

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