Moving Forward in Asset Management

Financial Management Institute, Ontario Chapter

November 19, 2008

2

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

3

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.

4

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.

5

Management Accountability Framework

Financial Administration

Act

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

TBS Policy on Investment Planning

(new)

Support departmental strategic plans

Are assessed on performance and risk

Consider alternatives and innovative options

Considers whole-of-life cost and stewardship

Investment Process

Select projects that:

Federal Accountability

Act

6

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

7

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

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;

8

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

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.

9

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.

10

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;

11

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.

12

The Key Asset Related Aspects of Investment Planning?

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.

13

The Key Asset Related Aspects of Investment Planning

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.

Fall Winter Spring Summer

Investment Planning within the Annual Government Expenditure Management Cycle

Go

ve

rnm

en

t o

f C

an

ad

a

Bu

dg

eti

ng

In

ve

stm

en

t

P

lan

nin

g

Tabling of DPR

Supplementary Estimates A

ARLU decisions

TB Government Performance

Report to Parliament

Speech from the Throne/ Economic

Update

Federal Budget Tabled

Supplementary Estimates B

RPP Due

Government Expenditure Plan Main Estimates Part

I & II Tabled

DPR Due

Report on Plans and Priorities

Branch and Regional

Business Plans finalized and

PMAs completed

Branch/ Regional

notional budget allocations determined

CFOB

Confirmation of Departmental

Budgets

Integrated Business Plan Call Letter to

NHQ Branches

MAF assessment and discussion

P6 Forecast P8 Forecast P10 Forecast

Draft Business Plans from NHQ Branches

for functional guidance

Budget Allocations

finalized

Based on functional guidance, Regions

prepare and submit

business plans

SCMB Fall Retreat

Strategic priorities / key

initiatives

ME Due To TBS

Supp (B) Due To TBS Budget Adjustments

due to Federal budget

Departmental Performance Report

Environmental Scan and Corporate Risk Profile

P4 Forecast

SCMB Discussion on

proposed approach for

business planning

Supp (A) Due To TBS

Update Value Assessment

Tool

Stage 1 Assessment of

Proposals

Stage 1 Approved List of

Investment Proposals and Funds required

Investment Allocation finalized

Update Investment

/Plan

Investment Plan to TBS

Start of approved projects

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

Stage 1 Investment Proposals - List

Tools, training, development

TB Investment Submission (if required)

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

15

Investment Plan 2008/09 – 2012/13

Investment Process - List of Projects

Investment Measuring BenefitsProcess

Knowledge Mgmt System (HRSDC)

Registered Disability Savings Plan (HRSDC)

Enterprise Resource Planning (CFO/HR/IITB)

Modernizing the delivery of the Labour Program (Labour)

Program Payment Solution (Ops)

Contact Center Transformation (Ops)

NHQ Long Term Accomodation Strategy (CFOB - NAP) - approved Fall 2007

Mainframe Transition - Mainframe Upgrade Project

Registration and Authentication - ID Management (Integrity)

EI Processing and Automation - National Workload System - Automated Correspondence Solution (Ops, IITB-lead)

Points of Service Strategy and Service Experience Model (Ops) (supported by National Accomodations Plan (NAP) Scenario 4a )

Automated Performance Platform (PPCA)

Generic Intake (Ops) CPP Modernization: ITR Delivery System Release 8 (Ops, IITB Lead)

Web Channel (CSB) Business Rules Engine (Ops) EI Data Consolidation (Ops)

Registration and Authentication - Physical (Integrity)

Distrubuted Computing Renewal - Strategic Options (IITB)

Common Imaging Solution (Ops)

Distrubuted Computing Renewal - Collaboration Tools (IITB) -

Reintegraton of My Service Canada Account

Mainfram Transition- Phase 3 Application Renewal (IITB)

Record Document & Information Management System (CFOB)

In developing the LTCP, IPRC considered:National Accomodations Plan (NAP) Scenario 2a (CFOB)

Infrastructure Moderization - refresh and rationalization (IITB) -Shared Application Development Environment (SADE) -Business Continuity- Information & Communications Technology Renewal (ICTR) - Host Production Modernization

Note: Not all Projects will require Treasury Board project authority

MUST DO PROJECTS (requires stage gate approvals to confirm project plan and costs)

MUST DO - RUN THE BUSINESS (Asset renewal)

Build and Execute to Project Plan

Develop Final Business Case & Project Plan

SHOULD DO PROJECTS

Developing Preliminary Business Case / Concept

EI Processing Automation (Ops)

Discovery and Early Idea Stage

Initial Planning Definition Implementation PPAEPA

Idea Filter

TBS

Investment Plan 2008-09 to 2012-13

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

“By Stage” ViewInvestment Support

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

Key tools and templates available (or under development)

Investment Review Board

“the gate keepers”

Asset Management is Addressed Through Key Asset Plans

and Major Project Investments

16

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.

Terms of Reference of the IRB

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.

17

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

LTCP Minimum

Requirements

Base-level National Accommodations Plan

Base level IT Infrastructure

Improving Performance and Cost Effectiveness

SHOULD DO ($$)

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

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

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

COULD DO ($$$)

Accelerated long term strategy for transformational service delivery improvement

MUST DO ($)

Financial constraints and capacity are key considerations

Transform Business Delivery Model

Maintain Current Business Delivery Model

Transition Business Delivery Model

18

Key Considerations In Investments in Assets at HRSDC

Consider:

1. 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?

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

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

4. 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?

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

19

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.

19%

26%

5%2%

38%

10%Front-End 135,000 m2Processing 184,000 m2Call Centre 35,000 m2IT 17,000 m2Admin 258,000 m2Other 73,000 m2Total 702,000 m2

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…

NAP Provides an Overview of the National Real Property Portfolio

21

$16M

48 Projects11/12

The Plan Rationalized Proposed Projects Across the Country

Business Lines:

SCC:$19M

Call Ctrs:$7

Proc:$7.5M

Admin:$14

Other:3

Business Lines:

SCC:$19M

Call Ctrs:$7

Proc:$7.5M

Admin:$14

Other:3

Business Lines:

SCC:$38M

Call Centres:$10

Processing:$35

Admin:$15

Other:$2

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:$22M

Call Centres:$3

Processing:$23

Admin:$11

Other:$1

Business Lines:

SCC:$7

Call Centres:$0

Processing:$.8

Admin:$8

Other:$.3

Business Lines:

SCC:$7

Call Centres:$0

Processing:$.8

Admin:$8

Other:$.3$100M

130 Projects

09/10

Business Lines:

SCC:$8M

Call Centres:$10

Processing:$15

Admin:$11

Other$0

Business Lines:

SCC:$8M

Call Centres:$10

Processing:$15

Admin:$11

Other$0

$49M

94 Projects

08/09

$60M

77 Projects

10/11

$44M

32 Projects

12/13

(Rent $176M)

(Rent $180M)

(Rent $182M)

(Rent $186M)(Rent $191M)

…that far exceed the 07/08 Baseline

22

NAP Plan is integral to

the InvestmentPlan

- Sound Plan = an investment strategy - Effective governance (PWGSC)- Project/financial and Information management - End-to-end process – sound basis for accountability

Strategic Alignment of Investments

- 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

Basic Business Requirements

- Acquisition - Operation

- Maintenance - Disposal

= Refit/Fit-ups & Lease actions

The investment priorities for the next 5 years – Strategic Alignment

23

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

Call Centre / Processing Criteria

Call Centre Strategy

Meets/aligned with Call Centre Strategy

Processing Strategy

Meets/aligned with Processing Strategy

Financial and Program Management

Affordability

Program Management

Capacity to Deliver

24

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

25

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

26

Technology PlanArchitecture 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

27

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

28

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

29

Stage

Full Team Commit $

Stage

Small TeamSmall $

Stage

Larger TeamMore $

The Stage Gatetm Methodology

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.

30

Summary of Role/Responsibility of Project OversightThe 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

31

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 output from Risk Assessment Workshop

Business Case Structure

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 Business Requirements Document

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

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

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

Summary of the Procurement Strategy and Plan

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.

Summary of options analysis done by the Project Team and of Options Analysis/Risk Assessment Workshop in Concept Initiation